How is private practice doctor pay determined?

[cowme]

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I'm a little confused as to how this all works. Take radiologists for example. We can make nearly double in rural areas than we would in a big city. But how? Rural areas tend to have more patients with crap insurance, versus a place like manhattan. Is it just insurance pay per study minus overhead? Shouldn't the good insurance in manhattan pay more than the patients who can't afford good insurance in rural Iowa?

Do insurance companies/Medicare just pay more for rural doctors?

Also, how does prestige factor in? Will insurance pay more for a prestigious private practice group than they will for an equally busy, but not particularly reputable private practice group in the same city?

Sorry, I'm just a little naive..

 

[tkim]

I'm a little confused as to how this all works. Take radiologists for example. We can make nearly double in rural areas than we would in a big city. But how? Rural areas tend to have more patients with crap insurance, versus a place like manhattan. Is it just insurance pay - overhead? Shouldn't the good insurance in manhattan pay more than the patients who can't afford good insurance in rural Iowa?

Do insurance companies/Medicare just pay more for rural doctors?

Also, how does prestige factor in? Will insurance groups pay more for a prestigious private practice group than they will for a busy, but not particularly reputable private practice group in the same city?

Sorry, I'm just a little naive..

Insurance doesn't pay more for prestige.

Rural hospitals pay over and above to attract people who otherwise would not work there.

 

[gutonc]

Insurance doesn't pay more for prestige.

Rural hospitals pay over and above to attract people who otherwise would not work there.

This.

And in academics (which I know is not what you asked about), the more prestigious an institution, the less they pay.

Rural/less popular locations are also much cheaper to operate in. So a group in Manhattan that bills $2M (a number I pulled out of my butt...it's for illustration purposes only) is going to have a much higher overhead than an identically sized group in Olathe, KS that bills the same amount. So where the Manhattan group now has $1.25M to split among the docs, the KS group is probably going to have an extra $300-500K...just due to overhead.

 

[michaelrack]

occasionally a prestigious private large clinic can negotiate higher rates- though this is pretty unusual.

 

[michaelrack]

Do insurance companies/Medicare just pay more for rural doctors?
..

I believe medicare does pay more to rural hospitals, not sure about rural outpt docs

 

[tkim]

I believe medicare does pay more to rural hospitals, not sure about rural outpt docs

Rural or 'critical access' hospitals can receive more funding from Medicare, which in turn can cover the cost of physician coverage.

 

[reno911]

This.

And in academics (which I know is not what you asked about), the more prestigious an institution, the less they pay.

Rural/less popular locations are also much cheaper to operate in. So a group in Manhattan that bills $2M (a number I pulled out of my butt...it's for illustration purposes only) is going to have a much higher overhead than an identically sized group in Olathe, KS that bills the same amount. So where the Manhattan group now has $1.25M to split among the docs, the KS group is probably going to have an extra $300-500K...just due to overhead.

It's funny that you chose Olathe, KS as your random rural city, since Manhattan is also a city in KS about 100 mi away. I don't think it's going to confuse anyone, though. Just an odd coincidence.

 

[laserbeam]

Rural or 'critical access' hospitals can receive more funding from Medicare, which in turn can cover the cost of physician coverage.

For a physician's salary, how much comes from medicare?

 

[tkim]

For a physician's salary, how much comes from medicare?

That will vary with your payor mix, so hard to say.

 

[docu]

Ur salary depends on what insurances u take. each insurance company varies in reimbursement. With medicare, for each Office visit u get about 70$ (for 20 min visit established patient), and more for new patients. Then factor in additional procedures. That is ur total medicare pay. Medicaid pays a lot less. U can limit ur insurances so u don't have to work so hard to earn ur keep.

 

[Dr. USMLE]

.

 

[ShyRem]

ok, I must be the odd person out because I just have a difficult time reading posts with "u" and "ur". Reminds me too much of Orwell's 1984.

 

[michaelrack]

ok, I must be the odd person out because I just have a difficult time reading posts with "u" and "ur". Reminds me too much of Orwell's 1984.

"ur" reminds me of the Stephen King novella

http://en.wikipedia.org/wiki/Ur_(novella)

 

[docB]

Admittedly I have an ERcentric view but I don't think you should assume that people in NY will be better insured as a group than those in a rural area. Excluding the uninsured (who are a big issue for us in the ED but not for the private clinic docs) it will be your penetration of HMOs and your Medicaid patient's who determine what your payer mix is.

The other thing about a big city is that you can't just decide to only accept the best paying insurances. If you try that you will be competing with a lot of other doctors because there are lots of doctors in that area. That hurts you ability to negotiate with the insurers. In a rural area there will be fewer groups fighting for the pie.

 

[laserbeam]

Admittedly I have an ERcentric view but I don't think you should assume that people in NY will be better insured as a group than those in a rural area. Excluding the uninsured (who are a big issue for us in the ED but not for the private clinic docs) it will be your penetration of HMOs and your Medicaid patient's who determine what your payer mix is.

.

What does penetration of HMO mean? The deeper the better, or the opposite?

 

[docB]

"Penetration" is the jargon term to denote how many people are insured by HMO. In general, or at least in the past, more HMO was considered bad for doctors. In reality it depends on what the rest of your patients have (or again - what your payer mix is). If you see your percentage of HMO going up compared to better reimbursing insurers then that's bad. If your HMO goes up compared to your Medicaid load then that's usually good.

 

[Paddington]

I'm a little confused as to how this all works. Take radiologists for example. We can make nearly double in rural areas than we would in a big city. But how? Rural areas tend to have more patients with crap insurance, versus a place like manhattan. Is it just insurance pay per study minus overhead? Shouldn't the good insurance in manhattan pay more than the patients who can't afford good insurance in rural Iowa?

Do insurance companies/Medicare just pay more for rural doctors?

Also, how does prestige factor in? Will insurance pay more for a prestigious private practice group than they will for an equally busy, but not particularly reputable private practice group in the same city?

Sorry, I'm just a little naive..

Actually in a place like Manhattan, you will take a lot more garbage insurance like Medicaid due to the large numbers of poor people there. The real Manhattan is not like the one you see on TV.

 

[laserbeam]

"Penetration" is the jargon term to denote how many people are insured by HMO. In general, or at least in the past, more HMO was considered bad for doctors. In reality it depends on what the rest of your patients have (or again - what your payer mix is). If you see your percentage of HMO going up compared to better reimbursing insurers then that's bad. If your HMO goes up compared to your Medicaid load then that's usually good.

Thanks a lot for the explanation. Could you please name several insurers that are better or worse than HMO, and how much better or worse are they? Thanks.

 

[docB]

Thanks a lot for the explanation. Could you please name several insurers that are better or worse than HMO, and how much better or worse are they? Thanks.

I really can't. It's too region specific. For example where I am Blue Cross is run like an HMO and it reimburses poorly. Other places it's great insurance. Some places HMOs pays better than Medicare, others worse. Some places have several HMOs competing, others have one predominant HMO.

 

[Winged Scapula]

I really can't. It's too region specific. For example where I am Blue Cross is run like an HMO and it reimburses poorly. Other places it's great insurance. Some places HMOs pays better than Medicare, others worse. Some places have several HMOs competing, others have one predominant HMO.

And don't forget about the dozens of sub plans these insurers have as well which have different rates. Its insane.

 

[Obnoxious Dad]

I'm a CPA. My kid is in med school.

I have noticed that when it comes to picking a specialty, physicians do seem to choose the specialty that pays the best. This is generally the reason that the highest paying cushiest specialties draw the people with the highest step scores.

However, when physicians choose a place to work and live, they turn economic logic on its head. Physicians seem to prefer the coasts over the Midwest even though their after tax purchasing power might be twice as high in Sheboygan, Wisconsin as it would be in San Francisco. I see people on SDN screaming about their debt and their inability to ever afford a house and at the same time whining that they'll never get back to California. This is just stupid.

 

[Winged Scapula]

I'm a CPA. My kid is in med school.

I have noticed that when it comes to picking a specialty, physicians do seem to choose the specialty that pays the best. This is generally the reason that the highest paying cushiest specialties draw the people with the highest step scores.

However, when physicians choose a place to work and live, they turn economic logic on its head. Physicians seem to prefer the coasts over the Midwest even though their after tax purchasing power might be twice as high in Sheboygan, Wisconsin as it would be in San Francisco. I see people on SDN screaming about their debt and their inability to ever afford a house and at the same time whining that they'll never get back to California. This is just stupid.

You've forgotten two very important things:

1) people like to live close to or at home, in familiar surroundings, with family and friends nearby

2) people like to live in nice places. I'm not saying that Sheboygan isn't nice but San Francisco is often cited as one of the most beautiful cities in the world.

I know just as many people who wouldn't leave the Midwest for anything as those of us who want to be back home in Cali; I can't understand wanting to live there but then again, its not home for me. I agree that whining about the economic realities in places like SF are ridiculous but not everything comes down to money (I know that might be difficult for a CPA to understand ) so people chose where to work for other reasons.

 

[bennybrak]

I know that might be difficult for a CPA to understand
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