How do surgeons in private practice handle poorly-paying patients?

[GeraldMonroe]

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The way I understand it, patients fall into 4 main categories in terms of how well they pay.

1. Upper Middle Class/Wealthy patients with cash reserves and good insurance. These patients are the most favored, as they are willing to pay cash for better perceived services and they have insurance policies that reimburse well.
2. Middle class patients with decent insurance, but little cash. Bread and butter : these patients have trouble coughing up the deductible, but they generally can scrape together the funds. Their insurance pays well enough that the surgery is profitable.
3. Patients with the crappy private insurance / medicaid / medicare. I think medicare may actually pay ok for some stuff, but in general these patients are probably a money losing proposition. The crappy insurance almost never pays claims, and government insurance pays poorly and requires a ton of worthless paperwork.
4. Poor patients who aren't quite poor enough to qualify for medicaid/SCHIP and who have no insurance at all. Essentially, treating these patients is the equivalent of opening up your wallet and giving the patients money.

Obviously, if one wants to stay in business, one would need to strongly prefer patients in categories 1 and 2. But how do most private practice surgeons deal with the hordes of un and underinsured? Do they simply refuse to see any of them, or do they assign some kind of quota? How do you look someone in the face and say you won't do a procedure if they won't pony up the thousands of dollars it costs?

I'm especially curious about how surgeons handle this, because malpractice insurance is typically extremely high for surgeons, and there are a great deal of fixed costs. A PCP doctor might in principle be able to give some care away free, and even the poor can usually scrape together $60 or so for an office visit. But an operation costs thousands of dollars in supplies and malpractice insurance and nurse/tech labor and drugs and god knows what else. I don't see how a surgeon could do much work "pro-bono" as one "free" case must wipe out the profit margin of 3 or 4 paying cases.

 

[Winged Scapula]

I don't see patients without insurance unless:

1) they pay the entire office visit up front (yes, I have turned away patients who claimed to only have $10 even though they were told the consult was X amount)

2) they understand that if they need a biopsy or surgery, the consult fee doesn't cover it and again, my charges must be paid up front and they do not cover hospital, anesthesia, etc. I also tell them that while I may give them a break on their charge, I cannot negotiate with the other providers for them.

For most benign diseases and a patient with resources, this isn't a problem (its not like most general surgery cases are thousands of dollars for the surgeon). However, for the truly underserved, I refer them to the county hospital (which is also what the medical oncologists do - a single dose of chemo or radiation can be tens of thousands of dollars). I don't have a problem "looking someone in the face" and telling them that if they cannot afford my services, I need to refer them elsewhere (because frankly I generally never see them, my office tells them). Its the way of the world...if I have enough money to buy shoes at Nordstrom's I do; if not, I go to WalMart. Unfortunately, it overburdens the public health system.

Co-pays for patients with insurance are also collected up front. I do not take insurance which does not pay me at least crappy Medicare rates plus. There are a couple of "insured poor" plans that I am required to take as part of having privileges at some hospitals. I keep a log of what the companies say they will pay, what I actually get paid and if there is someone who consistently doesn't pay, the plan is to drop that insurance company. Many physicians never pay attention to whether or not they get paid, or how much.

 

[GeraldMonroe]

Thanks for the response, Winged Scapula.

So, the end result is that if there isn't a good chance the patient or their insurance will pay up, you don't see them, and you have your office staff turn them away. I've read that general surgeons typically clear around $200k a year : is that with a hard policy like this? Is overhead so high that even if you work 60+ hours a week and treat only patients that pay you only end up with 200k?

If so, I imagine running a practice feels a lot like treading water, since the profits are dwarfed by the expenses. Even a few unpaid insurance claims would put you in the red. And student loans...you'd have to work 2 or 3 years straight just to pay back a $200,000 loan balance, once you factor in taxes. My state school charges only $10k a year tuition, yet I'll owe at least $200k after residency.

In any case, the news media claims there are millions and millions of uninsured. If you include the underinsured who have the scam health insurance, it must be a good 1/3 of the population. If none of the pool of private practice surgeons, nor private practice PCPs can afford to see these patients, who does?

 

[Winged Scapula]

So, the end result is that if there isn't a good chance the patient or their insurance will pay up, you don't see them, and you have your office staff turn them away.

They are told that up front when they call for an appointment. Their insurance is verified with the company before they see me. Any confusion or problem (ie, can't get verification) means the appointment is rebooked. We haven't had any major problems, AFAIK.

I've read that general surgeons typically clear around $200k a year : is that with a hard policy like this? Is overhead so high that even if you work 60+ hours a week and treat only patients that pay you only end up with 200k?

Overhead for a surgical practice is typically much lower than for a medical practice. We simply don't need the equipment and supplies that a medical practice does, nor the allied staff.

How much you make depends on what types of patients you see, what cases you are doing, and how much volume you generate. $200K would be on the low end for an established general surgeon, AFAIK but cannot comment on other's earnings.

If so, I imagine running a practice feels a lot like treading water, since the profits are dwarfed by the expenses. Even a few unpaid insurance claims would put you in the red.

My expenses run around $25K a month (including malpractice, office staff, paperclips, etc.) and I bill much more than that. Profits are not "dwarfed" by expenses. I make enough to meet my overhead, pay my salary (above what you quoted earlier), and still have room on my schedule to see more patients. But you have to keep on top of it...vacation? I don't get paid if I want to take time off. Billing company decides to write off a claim because its "too much trouble"? Out of my pocket. Its certainly much more work than being an employee of a hospital where all this is taken care of for you.

And student loans...you'd have to work 2 or 3 years straight just to pay back a $200,000 loan balance, once you factor in taxes. My state school charges only $10k a year tuition, yet even I'll owe at least $200k after residency.

Sure...all of us have large loans. If you live a quieter life for the first few years out, you can make a substantial dent in your loans.

In any case, the news media claims there are millions and millions of uninsured. If you include the underinsured who have the scam health insurance, it must be a good 1/3 of the population. If none of the pool of private practice surgeons, nor private practice PCPs can afford to see these patients, who does?

YOU DO. These patients go to county hospitals that have to take a certain percentage of uninsured patients. Or they don't get seen or get medical care, its as simple as that. There are plenty of general surgeons who work at county hospitals and can provide care. Excellent care in many cases.

 

[GeraldMonroe]

My expenses run around $25K a month (including malpractice, office staff, paperclips, etc.) and I bill much more than that. Profits are not "dwarfed" by expenses.

$300,000 a year in fixed costs sounded like a lot of money to me. I wasn't aware that surgeons had less overhead than PCP, I assumed it was the other way around. Do you pay for the instruments you use, or are they supplied by the hospital? The racks of equipment in a typical O.R. is vastly fancier than anything I've ever seen in a doctor's office, and I assumed at least some of that stuff you have to pay for.

 

[Pilot Doc]

$300,000 a year in fixed costs sounded like a lot of money to me. I wasn't aware that surgeons had less overhead than PCP, I assumed it was the other way around. Do you pay for the instruments you use, or are they supplied by the hospital? The racks of equipment in a typical O.R. is vastly fancier than anything I've ever seen in a doctor's office, and I assumed at least some of that stuff you have to pay for.

All the costs associated with actually operating (instruments, OR's etc) are borne by the owner of the OR - typically a hospital, for which they receive a facility fee separate from the professional fee. This is one of the most profitable parts of medicine which is why physician owned surgery centers and specialty hospitals are popping up everywhere and why hospitals are doing their best to legislate them out of business.

And 25K is probably high for surgeon overhead. Breast has a higher clinic:OR ratio that most. There were some posts several years back by a private attending in the midwest who suggested his overhead was in the 15% range. As I recall he made 500K plus or minus which would put his overhead around $10K/month. This was in a low malpractice environment and I think he had 1 day/week in clinic with multiple partners to share the staff.

 

[Winged Scapula]

$300,000 a year in fixed costs sounded like a lot of money to me.

Our overhead is under 50% which is the goal for a practice. There are 4 full time employee salaries and benefits to pay (MA, Surgery scheduler, office manager and receptionist). Mortage on office, paper supplies, equipment lease (two sonograms), supplies (the brachytherapy catheters I placed cost me nearly $3000 each, billing service, EMR, malpractice, licensing, etc.

I wasn't aware that surgeons had less overhead than PCP, I assumed it was the other way around. Do you pay for the instruments you use, or are they supplied by the hospital?

If I do a procedure in the office, I pay for the cost of the equipment (syringes, needles, lidocaine, brachytherapy catheter, formalin, etc.). The hospital pays for instruments used in the hospital.

 

[Pilot Doc]

Our overhead is under 50% which is the goal for a practice. There are 4 full time employee salaries and benefits to pay (MA, Surgery scheduler, office manager and receptionist). Mortage on office, paper supplies, equipment lease (two sonograms), supplies (the brachytherapy catheters I placed cost me nearly $3000 each, billing service, EMR, malpractice, licensing, etc.

Dissecting that out a bit - a lot of those expenses are specific to breast. Most g/s office procedures are going to be minimal scalpel/lidocaine affairs. Most general surgeons don't have ultrasound, though that may be changing. An established practice may own its office. Liability varies substantially

In terms of support staff, a bare bones single doc practice might get by with a part time $10-15/hr employee 20 hrs/week or less. Likewise, a broad GS practice with docs who spend 1 day/week in clinic would probably support 8-10 surgeons on a receptionist, office manager, scheduler and 2 MA's (0.5 FTE/surgeon)

If I recall, the benchmark for GS overhead is somewhere in the 25-30% range. Again - breast is a much more clinic intensive specialty than most.

The member I mentioned, FliteSurgn, has the best nuts and bolts how to run a practice posts I've seen, but they're back in the 2005-2006 range as I recall.

 

[BlondeDocteur]

I'd think vascular surgeons would have high equipment costs?

 

[Pilot Doc]

I'd think vascular surgeons would have high equipment costs?

Depends.

If they run an imaging lab for DVT studies, AAI's, etc, then they will have equipment and personnel costs. But the reason most vascular surgeons do this is that it pays very well.

All the operative expenses, be they traditional or interventional, are borne by the facility. (e.g. if a surgeon stents someone from groin to ankle, none of those stent costs go on his bottom line)