Fees, Famine, or Freedom

There’s going to be, as we’ve already seen in this market, gut wrenching changes in this business, in an industry that’s not ready for it.  People haven’t been prepared for it. And there’s going to be a lot of disruption…There are a lot of people out there who are scared: scared by what it means to them personally; scared of what it means to their job, their company and something else.  They are scared, too, because there’s probably not going to be a place for small players as survivors.”

Interview with Richard Burke, first CEO of United Health Care, by Richard Reece, MS,  in Who Shall Care for the Sick, Media Medicus, Minneapolis, 1988

You know you’re getting old when you start quoting yourself and an nterview you conducted long ago.

Back then, in 1988, the handwriting was on the wall, Richard Burke saw it and read it clearly.

Even then, it was clear what Burke’s strategies were.

1) Win market share by offering innovative health plans with low premiums, comprehensive benefits.

2) Narrow the list of hospitals with which United would deal by guaranteeing large numbers of patients in exchange for fee discounts.

3) Narrow the list of physicians by dealing only with those doctors who were most “cost-effective” – i.e., didn't burden the plan with expensive services for patients.

4) Cut the cost of physician expenses by redistributing income from high-cost specialists to less-well paid primary care physicians.

5) Implement the strategy quietly in steps to leave HMOs in control of the system with the power to control hospitals and physicians.

      I thought of Richard Burke today when I read “Insurers Cut Doctors’ Fees in New Health-Care Plans: Move Sparks Worries Pans Will Attract Fewer Doctors,” Wall Street Journal, November 21, 2013.

      In New York City, according to confidential documents reviewed by the Wall Street Journal, these fees will be less than $40 for  office visits and  $20 for reading a mammogram.

     These fees may even be less than what doctors now receive for Medicaid;   Blue Shield of California has asked doctors to accept fees up to 30% lower than commercial rates.

      This is important because doctors now accept only 30% to 50% of Medicaid patients depending on the section of the country surveyed.   It is important too because only a fraction of doctors may accept the predicted 20 million patients expected to enroll in health exchange plans.  Twenty nine percent have not decided whether to  participate in health exchange plans.    In a September survey conducted by the Medical Group Management Association, of those doctors who had heard of wht exchange fee would be, 37% said the fees offered were lower than Medicare, and 18% were lower than Medicaid.

     What are doctors to do if fees don’t meet the cost of doing business? Should they just suck it up and stay in practice, see fewer patients from exchanges, stop seeing exchange patients all together, and go to the negotiating table with the health plans?

      The choices are fees, famine or freedom.   Freedom may come in the form of concierge practices where doctors reject third parties and charge a month or annual retainer fee.  For patients, the choices are: search for a doctor who will accept exchange fees or go to a federally supported Community Health Center.

Tweet:   Insurers are cutting doctor fees in health exchange plans. Doctors may not accept exchange patients, who will have fewer doctor choices.