Otolaryngologists understand that even their most loyal patients, with finances ravaged by the lingering economic recession, may postpone or forego endoscopic sinus surgery, tonsillectomy or a chemical facial peel in favor of paying the mortgage.
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April 2010But specialists such as Rajiv Datta, MD, a head and neck oncology surgeon and medical director of the cancer center at South Nassau Communities Hospital, are now seeing the almost unthinkable effects of financial misery on their patients. Some patients with head and neck cancers who have lost their jobs and their health insurance are skipping life-saving treatments because of financial fears triggered by the recession.
“I currently have a patient with thyroid cancer who needs endoscopy, surgery and nuclear medicine. He lost his job and is so nervous about paying his mortgage that he cancelled his surgery and won’t even talk to our social worker, who is willing to explore ways to help him financially,” Dr. Datta said. Even when Dr. Datta explained that the hospital’s charity care, emergency Medicaid and the county might cover some costs, with a radiology clinic offering pro bono services, the patient still balked.
Dr. Datta and his patients are not alone in feeling the recession’s sting. The health care industry, the largest sector in the U.S. once thought recession proof, is hurting. In 2009, overall health spending grew by only 4.4 percent, the smallest percentage increase since the Centers for Medicare and Medicaid Services started tracking spending in 1960. The recession has claimed over five million jobs, increased the rate of personal bankruptcies by 10 percent and seen COBRA coverage expire for over one million unemployed workers.
To have honest, middle class people who always paid their bills cancelling appointments and cancer surgery breaks my heart.—Rajiv Datta, MD
The 2009 Medical Group Management Association’s survey (www.amga.org) showed physicians losing ground financially to the recession. Gross revenues per physician were down 7.8 percent, from $690,032 in 2007 to $637,677 in 2008. The number of patients seen dropped 11.3 percent, while outpatient procedure volume declined 9.9 percent. Compounding the problem was a 13 percent increase in patient bad debt.
Marc Lion, CPA, CFP, a managing partner at Lion & Company CPAs, LLP, a national organization of accountants specializing in health care, explains that while the health sector is recession resistant, it’s not recession proof. “I saw elective procedures and all volume dropping one or two years ago, and as much as a 40 percent falloff in ENT practices that do a lot of plastic surgery,” he said. “While pediatric and Medicare practices had less drastic revenue and volume declines, cutbacks in insurance reimbursement can cripple ENT practices.”
Traditional remedies physicians relied upon during previous hard times—working longer hours to increase volume, hiring more staff, and investing in technology to improve productivity—may not be enough to keep practices growing. In response, otolaryngologists are devising creative strategies to address decreases in patient volume and reimbursement.
Impact on Patients
In Chicago, Michael Friedman, MD, an otolaryngologist and chairman of sleep surgery at Rush University Medical Center, heads a four-physician practice attached to the hospital. The group provides comprehensive ENT and audiological services. “We’ve been particularly hard hit because reimbursements for audiological services have been cut by as much as 50 percent because the law changed so that audiologists can bill independently of us,” Dr. Friedman, said. He was referring to the change in Medicare regulations in 2008 that directed audiologists to bill for Medicare patients using their own National Provider Identification (NPI) number rather than the NPI of a supervising otolaryngologist. Dr. Friedman also faces previously employed patients who lost their insurance, those deferring elective procedures and high deductible insurance plans that leave cash-strapped consumers vulnerable, particularly early in the year, as they spend until they reach the deductible’s limit.
Even at New York-Presbyterian Hospital, a tertiary care center with built-in referral sources to the ENT department, patients are struggling with financial uncertainty. “Even patients with jobs are more cautious. We’ve had patients put off elective surgery because they don’t want to make waves at work by being absent,” Dr. Stewart said.
The plight of some of Dr. Datta’s patients at South Nassau Communities Hospital seems even more dire. “To have honest, middle class people who always paid their bills cancelling appointments and cancer surgery breaks my heart,” he said. Despite Dr. Datta’s willingness to waive his fees for those patients, hospital and other professional fees remain. “Even though the hospital has funds for indigent care and our social workers try to obtain emergency Medicaid cards and other funds, some patients are so stressed about money that they won’t focus on their urgent health care needs,” he said.
I saw elective procedures and all volume dropping one or two years ago, and as much as a 40 percent falloff in ENT practices that do a lot of plastic surgery.—Marc Lion, CPA, CFP
Solutions
Despite the recession’s toll, doctors are taking steps to keep their practices afloat. Dr. Friedman, having seen hard times coming several years before the downturn, repositioned his practice for growth. “I looked at our practice and reimbursement rates and knew we’d lose the volume of surgeries in a slowdown. We combated that with a plan for significant growth by doubling our space and adding another physician and in-house CT scanning. We also changed the style of our practice by giving appointments promptly rather than having patients wait.” Overall, the strategy has worked; surgery volume is down but billing is up, both from ‘bread and butter’ otolaryngology services and additional revenues generated by the new doctor, Dr. Friedman said.
Quickly available appointments give the practice a competitive edge over primary care physicians and urgent care centers, as patients realize they can conveniently access an ENT specialist. Additionally, Dr. Friedman offers reduced fees and bundled services for patients without insurance.
Lion advocates improving a practice’s bottom line by monitoring employee downtime, using software that ties accounting to practice management and tracking the source of referrals versus the cost of getting referrals. “For example, many physicians take out lots of ads in local publications but they don’t capture information on what brought new patients in, so they don’t know which, if any, of their ads are cost effective,” Lion explained.
On the collection side, he advises being flexible about fees with cash-strapped patients, offering payment plans and making strong efforts to collect overdue bills rather than writing them off.
Linda Pophal, a management consultant in physician practice management, advises otolaryngologists to take a close look at drop-offs in volume and to position themselves to best meet patient needs. She outlined several scenarios. Some patients may need services and be unaware of it, she explained. Others may need elective services, have the financial wherewithal to receive such services, but are unaware the physician can provide them. Still others have health needs to be addressed, know the physician can meet them, but choose to forego treatment because of financial considerations, she said.
Pophal advises maintaining relationships with all these groups of patients and communicating a willingness to find solutions to their economic distress. She emphasizes surveying patients’ perception of your practice’s quality and value and addressing any issues that detract from customer satisfaction. “Providers need to understand what quality and value in a medical encounter means to their patients. Reaching new patients means generating positive word-of-mouth referrals, which are directly tied to a focus on quality,” she said.
The Power of Big
Practicing in large groups may also protect otolaryngologists from a downturn’s impact. Economies of scale, smoother cash flow, and high productivity from each doctor specializing in one or two procedures make a difference.
Michael Stewart, MD, chairman of otorhinolaryngology at New York-Presbyterian Hospital/Weill Cornell Medical Center said the ENT faculty, 19 strong, is weathering the recession well. “While patient volume and revenues had been growing faster pre-recession, both were still up in 2009 and we’re tracking ahead to date in 2010 compared to last year,” he said.
He added that plastic surgery is down a bit, but injections and implants are more popular. Despite this year’s good numbers, Dr. Stewart had braced for impact: “If conditions worsened, we anticipated not filling vacant positions, or even tightening physician compensation. Fortunately, we haven’t had to do those things, except for implementing a relative hiring freeze,” he said.
Marlene Piturro, MBA, is a health and business writer based in Hastings-on-Hudson, NY.