Economic Blues Trickle Down to Physicians

Robert Lowes
Information from Industry

December 28, 2008 — Although most physicians are not losing their jobs or homes, they're nonetheless feeling the repercussions of the recession that began in December 2007 and deepened during the financial crisis in the fall of 2008. Symptoms large and small abound of a financial slump in medicine:


Fifty-six percent of hospitals told the American Hospital Association in November that physicians were seeking more financial support, ranging from reimbursement for on-call duty to outright employment.
Roughly 1 in 2 physicians plan to attend fewer continuing medical education conferences in 2009 that require overnight travel, according to a September survey by the publication Medical Meetings.
Some physicians may be receiving fewer holiday gifts, a sure sign of belt tightening among patients. Internist Sheree Lipkis, MD, in Glenview, Illinois, has noticed a decline in such gifts from previous years from her patients. "Some of them have lost their jobs," Dr. Lipkis told Medscape Medical News.

Physicians like Dr. Lipkis might expect that rising unemployment and curtailed consumer spending would reduce patient volume, but that's not a universal pattern. To be sure, elective surgery has tailed off. Six in 10 plastic surgeons, for example, report a decrease in cosmetic procedures during the first 8 months of 2008, according to the American Society of Plastic Surgeons. Yet most primary-care physicians interviewed by Medscape Medical News say they haven't slowed down. "Patient numbers are stable," said internist C. B. Dehlin, DO, in Lansing, Michigan. "Maybe we're just caring for the 90% of Michiganders that have jobs."

Patients Postponing Care, Skipping Tests and Treatments

Full schedules for primary-care physicians may be misleading, though. Thirty-six percent of Americans are postponing needed care, while another 30% are skipping tests and treatments outright, according to a survey in October 2008 by the Henry J. Kaiser Family Foundation, and both categories are up 7 percentage points since April 2008. However, with many primary-care physicians ordinarily drowning in patients, reduced demand may simply translate into a shorter waiting time for an appointment slot as opposed to an open slot.

Also, the payment cycles of commercial insurers may have temporarily softened the effect of the recession for physicians who enjoyed crowded waiting rooms in late 2008. By that time, many if not most insured patients had met their annual deductible, motivating them to load up on needed care before year's end while it was less expensive. Dr. Lipkis said that's the reason why the last few months of 2008 were busier than usual for her. Come January 2009, the prospect of shouldering the entire cost of an office visit or procedure may discourage insured patients from making an appointment.

If patients — insured or not — do book an appointment, there's also the possibility that they may not pay up afterward. The Kaiser Family Foundation found that one third of Americans were struggling to pay their medical bills in fall 2008, up from one quarter in 2006. Not surprisingly, a St. Louis collection agency called Account Resolution has seen the dollar volume of delinquent accounts received from physicians increase by roughly 25% in the last half of 2008, says company president James Hill, Jr. "These trends are happening all across the country," Mr. Hill said. And they only stand to worsen with unemployment expected to hit 8.3% by the end of 2009, according to financial research firm Standard & Poor's.

One component of the current recession — the credit crunch — has made it harder for some physicians to borrow money to start a practice or expand an existing one. "Automatic loans for anyone with a medical degree are a thing of the past," practice management consultant Michael LaPenna in Kentwood, Michigan, told Medscape Medical News. Besides requiring physicians to put up security for term loans, cautious banks are asking physicians with an existing line of credit to prove that they have enough accounts receivable to justify the amount of money made available.

Bolstered Medicaid, Medicare Spending May Help

Prognosticators such as Standard and Poor's expect the recession to last well into 2009. How physicians fare will depend partly on the success of federal bailout efforts enacted under the Bush administration — bankrolling banks to loosen up credit, for example — as well as the economic stimulants that President-elect Barack Obama has said he will administer. Mr. Obama has contemplated pouring billions of dollars into state Medicaid programs that have experienced budget cuts in the face of higher demand (the Kaiser Family Foundation estimates that every 1% increase in unemployment adds 1 million people to Medicaid and the State Children's Health Insurance Program). For many physicians, bolstered Medicaid spending could mean the difference between poor compensation versus none at all.

The American College of Physicians (ACP) is asking the federal government to be just as generous with Medicare. It is recommending that for 18 months, Congress fund a 10% bonus for all Medicare services performed by primary-care physicians. "Without funding to stabilize primary-care practices, many will go under and have to close" in light of the credit crunch, investment losses, slower collections, and uncompensated care, the ACP states in a letter to the incoming Obama administration.

While everybody, it seems, is waiting for federal largesse, physicians can act on their own to cope with the forlorn economy. For starters, tune up your billing and collection operation. With patients losing insurance coverage or switching to a spouse's policy after a job loss, it's imperative to verify insurance eligibility and benefits at the front desk so you know whom to bill, said practice management consultant Mr. LaPenna. Collecting copays and patient balances at the front desk is another must for the sake of maximizing revenue. If patients are short on money, offer them an installment plan. It can be as simple as keeping their credit card number on file — with the patient's authorization — and automatically charging it over a set number of months.

Improve Marketing to Current and New Patients

Practices with openings in their schedules should try to make it easier for patients to make appointments, suggested Hobie Collins, a practice management consultant with the Medical Group Management Association in Louisville, Kentucky. Extended weekday hours, for example, cater to employed patients who might find it hard to come in otherwise. "Eliminate as many barriers as you can," said Mr. Collins.

Stepped up marketing can also help fill up the waiting room. Target your existing patients first, advises practice management consultant Jeff Denning in La Jolla, California. "Go through your charts and see who's overdue for preventive or follow-up care, and give them a call," Mr. Denning said. A practice Web site may help a surgical specialist attract new cases.

Cost control is an indispensable virtue during a recession. "Remember the motto from the Great Depression," Mr. LaPenna said. "Use it up, wear it out, make it do, or do without." To achieve the right economy of scale, Mr. LaPenna said, physicians may have to go beyond mere downsizing and consider merging with another practice.

How drastic the solution needs to be, of course, depends on the length and severity of the recession. Dr. Lipkis, for one, will be watching how many tins of popcorn and bottles of wine she receives from patients when the winter holidays come around in 2009. In the meantime, she's giving thanks.

Dr. Lipkis said: "We remind our staff during stressful days how lucky we are to have jobs and be financially afloat."