We’re blogging about this quite often here at The Healthcare Entrepreneur, but in case you haven’t noticed, the souring economy is having an impact on the healthcare provided through private medical, physical therapy, and dental practices.  People are delaying care, paying more slowly, and losing insurance coverage - all of which have a direct impact on the ability for private practices to run strong.

It seems that women are no exception.

In this article from WebMD Health, a new study released by the National Women’s Health Resource Center (NWHRC) is said to indicate that the rising costs of healthcare combined with the economic downturn is having a major impact on women’s decisions regarding their care.

• 28% of women said they put off going to the doctor during an illness for financial reasons.
• 19% said they had skipped recommended medical procedures, such as Pap smears or mammograms, because of cost.
• 18% said they had taken less than the recommended dosage of a prescription drug in order to make it last longer and 18% failed to fill some prescriptions.
• Only 4% said they had put off taking their children to the doctor because of the cost.

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Click here or call (888) 827-5613 for information on a free program dedicated to helping private practices throughout the U.S. strategically adjust to the slowing economy.  Free program runs through March 31st, 2009 and is open to practice owners and administrators of any healthcare discipline.

Tannus Quatre PT, MBA is a practice consultant and principal with Vantage Clinical Solutions, Inc., a national healthcare consulting and management firm located on the west coast.  Tannus can be reached through the Vantage Clinical Solutions website by clicking here.

Maybe we only think we are recession proof.  With the seemingly never ending spiral of credit, housing and banking crises ravaging through the global economy, investors are starting to take notice that healthcare doesn’t exist in a silo.

Medical practices, hospitals, and physical therapy clinics get paid by someone, and if that someone is in financial trouble, you can bet the problems don’t stop at the practices’ front doors.  The someone just so happens to be “everyone,” or so it seems in our economy today.

This article from the ChicagoTribune.com discusses Moody’s downgrade of the healthcare industry’s 12- to 18- month outlook.

The New York-based financial ratings firm has issued reports in the past two weeks on various sectors, from hospitals and medical devices to insurance companies, revising the health-care industry’s 12- to 18-month outlook to “negative” from “stable.”

Moody’s sees fewer patients seeking medical care, particularly elective surgeries, while more people could lose their health-care coverage altogether. Such trends will lead people to delay getting medical care or avoiding treatment.

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Click here or call (888) 827-5613 for information on a free program dedicated to helping private practices throughout the U.S. strategically adjust to the slowing economy.  Free program runs through March 31st, 2009 and is open to practice owners and administrators of any healthcare discipline.

Tannus Quatre PT, MBA is a practice consultant and principal with Vantage Clinical Solutions, Inc., a national healthcare consulting and management firm located on the west coast.  Tannus can be reached through the Vantage Clinical Solutions website by clicking here.

Our economic woes are far from over.  This article published by the Medical Group Management Association (MGMA) validates some of what many of us already know to be true:

1. Healthcare services are being viewed as discretionary.  Patients are foregoing certain operations, services, and prescriptions simply because they can’t afford it.  This is impacting private practices through reduced volumes of services rendered and procedures performed.

2. The uninsured are increasing.  With increasing job losses, reliance on COBRA coverage has increased, but at a significant cost to the insured.  As coverage expires and patients become unable to pay for the expensive coverage, growth in the uninsured population will likely continue. 

3. Payment for services are slowing.  For those patients that do seek healthcare services, payments for those services are slowing.  Co-pays and responsible portions of claims that go to the patient find themselves competing against payment of other household bills such as credit card debt, mortgages, and groceries.

All is not bleak, but private practice owners must be prepared. Make sure you are collecting your co-pays at the time of service, setting up reasonable payment plans with paying patients, and stockpiling cash reserves in order to weather the economic storm that is likely to last a while.

Published in July, the Rockefeller Foundation/Time Campaign for American Workers Survey revealed that because of costs:

• 23 percent of respondents had not filled a prescription, up from 17 percent in 2007;
• 23 percent had gone without health insurance, up from 20 percent in 2007; and
• 25 percent had not visited a doctor, up from 18 percent the year before.

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Click here or call (888) 827-5613 for information on a free program dedicated to helping private practices throughout the U.S. strategically adjust to the slowing economy.  Free program runs through March 31st, 2009 and is open to practice owners and administrators of any healthcare discipline.

Tannus Quatre PT, MBA is a practice consultant and principal with Vantage Clinical Solutions, Inc., a national healthcare consulting and management firm located on the west coast.  Tannus can be reached through the Vantage Clinical Solutions website by clicking here.

It goes without saying that it’s the portion of payment for healthcare services that the patient is responsible for that is the hardest to collect.  And it doesn’t matter if it’s a co-pay or a patient responsible portion invoiced to the patient after services, it’s not easy to move the money from the patient’s pocket to the clinic’s bank account.

This is not to say that collecting from insurance companies is a walk in the park either, but at least insurance companies aren’t sitting across the room from you, benefiting from your services, then realizing that they don’t have the resources to pay.  It’s a bit tricky when you’re collecting money from those with whom you’ve helped, and likely have established a good interpersonal relationship.

Patients, as a whole, should absolutely not be held in contempt, as healthcare for the most part is not a discretionary, scheduled service.  You get it when you need it, and money doesn’t necessarily happen that way.  I know that my responsible portion has drifted beyond the “current” column in an A/R aging report or two, and I think I’m pretty responsible.  Sometimes patients just can’t pay their part when they need to.

So how does this drive the practice of medicine, dentistry, physical therapy, and the like?  Do doctors, physical therapists, dentists, and other healthcare professionals treat patients differently based on their ability or willingness to pay?  Should they?  We would all hope not, right?

Well, a few comments found in this post from Kevin, MD show that some providers do admit to treating the uninsured differently, and it might just surprise you.

With some states considering cutting already low Medicaid payment rates, those with this insurance are rapidly joining the uninsured by being treated with preferentially poor care.

Over the past few weeks, healthcare has not been the top story in the news.  America’s money has been the focus recently, and rightfully so.

The two are very much related though, as money buys healthcare, and good health allows our economy to generate money. 

For those that have been following the presidential race, it should be clear that one of the biggest fundamental differences between the candidates has to do with the level of regulation applied to the healthcare industry.  Obama believes that healthcare is a right, and should be available to every American.  McCain believes that healthcare is a responsibility, and that government’s role should be to create an environment where Americans can have the choice to access affordable healthcare through specific incentives and tax credits.

As a healthcare entrepreneur myself, I certainly believe in the power of the free market to drive innovation, creativity, and progress.  In fact, helping physicians, physical therapists, dentists, and the like to leverage the entrepreneurial spirit for the benefit of their patients and themselves is the sole focus of our company.

This said, this question over whether or not healthcare is a right or a responsibility shouldn’t be taken flippantly, and deserves some thought and reflection from those of us that focus our professional careers around the issue.  While free market principles undoubtedly play a positive role in catapulting forward our technologies and business models within the healthcare industry, there is a role for the protections afforded Americans through systematic oversight.

I appreciate the comments made by Paul Hsieh, MD in his blog, We Stand Firm, in regard to the view that healthcare is a commodity, but would add that a balance can be achieved whereby one person’s right to access healthcare doesn’t necessarily have to infringe upon another’s right to (or to not) provide it.

The fact that modern health care is essential for human life makes it all the more crucial to allow the free market to work and to restrain the government from violating the rights of patients and health care providers. Any attempts by the government to guarantee health care as a “right” necessarily violates someone’s actual rights — either the providers or those forced to pay for others’ health care against their will or both. Hence, Americans must reject the flawed notion of health care as some sort of “right” and embrace the fact that it is a commodity.

And for those that are interested, here is an excerpt from the presidential debate last Thursday night on the topic of the right to healthcare, provided by CNN:

Brokaw: Quick discussion. Is health care in America a privilege, a right, or a responsibility?

Sen. McCain?

McCain: I think it’s a responsibility, in this respect, in that we should have available and affordable health care to every American citizen, to every family member. And with the plan that — that I have, that will do that.

But government mandates I — I’m always a little nervous about. But it is certainly my responsibility. It is certainly small-business people and others, and they understand that responsibility. American citizens understand that. Employers understand that.

But they certainly are a little nervous when Sen. Obama says, if you don’t get the health care policy that I think you should have, then you’re going to get fined. And, by the way, Sen. Obama has never mentioned how much that fine might be. Perhaps we might find that out tonight.

Obama: Well, why don’t — why don’t — let’s talk about this, Tom, because there was just a lot of stuff out there.

Brokaw: Privilege, right or responsibility. Let’s start with that.

Obama: Well, I think it should be a right for every American. In a country as wealthy as ours, for us to have people who are going bankrupt because they can’t pay their medical bills — for my mother to die of cancer at the age of 53 and have to spend the last months of her life in the hospital room arguing with insurance companies because they’re saying that this may be a pre-existing condition and they don’t have to pay her treatment, there’s something fundamentally wrong about that.

So let me — let me just talk about this fundamental difference. And, Tom, I know that we’re under time constraints, but Sen. McCain through a lot of stuff out there.

Number one, let me just repeat, if you’ve got a health care plan that you like, you can keep it. All I’m going to do is help you to lower the premiums on it. You’ll still have choice of doctor. There’s no mandate involved.

Small businesses are not going to have a mandate. What we’re going to give you is a 50 percent tax credit to help provide health care for those that you need.

Now, it’s true that I say that you are going to have to make sure that your child has health care, because children are relatively cheap to insure and we don’t want them going to the emergency room for treatable illnesses like asthma.

And when Sen. McCain says that he wants to provide children health care, what he doesn’t mention is he voted against the expansion of the Children’s Health Insurance Program that is responsible for making sure that so many children who didn’t have previously health insurance have it now.

Now, the final point I’ll make on this whole issue of government intrusion and mandates — it is absolutely true that I think it is important for government to crack down on insurance companies that are cheating their customers, that don’t give you the fine print, so you end up thinking that you’re paying for something and, when you finally get sick and you need it, you’re not getting it.

And the reason that it’s a problem to go shopping state by state, you know what insurance companies will do? They will find a state — maybe Arizona, maybe another state — where there are no requirements for you to get cancer screenings, where there are no requirements for you to have to get pre-existing conditions, and they will all set up shop there.

That’s how in banking it works. Everybody goes to Delaware, because they’ve got very — pretty loose laws when it comes to things like credit cards.

And in that situation, what happens is, is that the protections you have, the consumer protections that you need, you’re not going to have available to you.

That is a fundamental difference that I have with Sen. McCain. He believes in deregulation in every circumstance. That’s what we’ve been going through for the last eight years. It hasn’t worked, and we need fundamental change.

Healthcare has long been referred to as resistant to economic fluctuations that readily affect sectors such as retail, manufacturing, and entertainment.  In fact, we have blogged about this very point on The Healthcare Entrepreneur a number of times (see posts here, here and here).

Exposure exists though, and usually trickles down to healthcare through the bond markets (read about how bond markets affect healthcare here), and insurance companies who are affected by the capital and job markets.  A somewhat new, and significant exposure is gaining attention though, and holds the potential to affect both small private practices as well as large hospital organizations: The patient’s pocketbook. 

Co-pays have risen over the years as have the use of high deductible insurance plans which require more out of pocket payment by the users of the healthcare system.  Well, with more responsibility placed on the patient to pay for their own care, patients have used more discretion in their decisions about the services they receive. 

This makes perfect sense, as this type of discretionary use of services is the essence of the free market - people will buy goods and services at a price that they feel is reasonable (that is, they are both willing and able to pay for desired or needed goods and services).  If a price is out of reach and/or the goods and services do not possess a perceived value that exceeds the amount required to purchase them, the goods and services will go unpurchased, and pressure will exist to offer them at a lower price (read more about supply and demand in healthcare here).

So, imagine the decision making process that occured for Jack Atwell, a 58 year old mortgage broker who was referred by his physician in South Florida to have a cardiac catheterization test because of stress testing that indicated he had an increased risk for a heart attack.  Sounds like a simple decision…have the test, right?

Well, when Broward General Medical Center informed Atwell just two days before the procedure that he needed to pay his responsible portion upfront, to the tune of $2,500, he simply couldn’t afford it.  Fortunately for Atwell, he was able to get the procedure done at Holy Cross, also in South Florida, without an upfront fee.

So, as you can see, this is what’s happening both in our hospitals and in our private practices in America.  I’m not personally here to judge what is right or wrong, only to illustrate that there is a chapter unfolding in American healthcare that tells the story of an ethical dilemma imposed upon our healthcare businesses because of the pressure to survive financially, as well as an economic soft spot in the industry that is a direct result of patients’ inability and/or unwillingness to pay for certain services.

Click here to read the full article in the Sun Sentinel about Jack Atwell and the growing trend toward increasing patient responsibility in the healthcare transaction.

The Internal Revenue Service looked into the issue for the first time in 2006 through a voluntary survey and found 14 percent of 481 nonprofit hospitals nationwide required patients pay or work out a payment plan before being admitted.

Patient advocates said asking for payment before care is delivered, and with short-term notice, places stress on vulnerable individuals who might face life-threatening illnesses. “Somebody facing a catastrophic illness and having to be burdened with the extra stress of paying a co-pay or premium is just unconscionable,” said Laura Goodhue, executive director of Florida CHAIN, a consumer-health advocacy organization based in Palm Beach Gardens.

Hospitals argue that rising health care costs and hard economic times have caused an explosion in care for which they are not paid.

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Click here or call (888) 827-5613 for information on a free program dedicated to helping private practices throughout the U.S. strategically adjust to the slowing economy.  Free program runs through March 31st, 2009 and is open to practice owners and administrators of any healthcare discipline.

Tannus Quatre PT, MBA is a practice consultant and principal with Vantage Clinical Solutions, Inc., a national healthcare consulting and management firm located on the west coast.  Tannus can be reached through the Vantage Clinical Solutions website by clicking here.

Here is a recent post at The Independent Urologist with a discussion between a physician and an “expert on negotiating insurance contracts.”  While this post is specific to the New York market, there are a few key characteristics that would apply to practices throughout the country that are beginning to mull over the idea of calling their local payers to begin some sort of negotiation.

Here are some of the key elements as I interpreted them based on my conversation with the negotiator.

1. Unique: If you are the only one of your specialty in a 20 or so mile radius, you may have some leverage.
2. Efficient: If you can save the insurer money by operating at a lower cost to them, such as by doing in-office procedures, or with less errors due to an EMR, you may be able to make a case for the insurer to cut you a piece of the action in return.
3. Desirable: If you are one of few doctors who does something that people want or need and will pay more to the insurance company for it in the form of premiums or plan selection–then the insurer may cut you into the action as well.

And, here is the summary for those (the majority of us) that don’t have these characteristics:

Therefore, don’t feel like you are the only schmuck on the block that takes whatever contract is offered you. If you live and practice in an over saturated market and don’t have one of the big 3 characteristics in my list, you simply must sign on the line and work like a dog.

Medicare can be frustrating.  The constantly changing rules, regulations, audit requirements, fee schedules - all of it.  To receive pennies on the dollar from a system that has turned into a large distraction and huge disincentive to providers gets old for many, but it’s what we have to deal with to provide care through the failing system.

What’s even more frustrating is to hear in the Miami Herald about a South Floridian with a drug-trafficking conviction who successfully ran eight (count ‘em) medical equipment companies using fake names, submitting over $48 million in false Medicare claims during his reign of fraud.  While many of us were working hard to keep our expenses to the system low as we provided care to our Medicare population during 2005-06, this same criminal profited to the tune of $8 million, landing a quarter of that money in his own pocket.

And if he were the only one.  In South Florida alone, medical equipment and HIV-infusion fraud amounts to a loss of $7 million per day by the Medicare system, or $2.5 billion per year.  And how’s this for a statistic - investigators reported to congress that between the years 2000 and 2007, the identification numbers of 18,240 deceased physicians were used to rack up $92 million to fraudulent medical equipment providers.

Not that eliminating fraud would by itself save the Medicare system, but a $7 million-per-day hole in the taxpayers’ bucket from only one region of the U.S. is certainly evidence that there is a long way to go to get the system on the right track.

Read the full story from the Miami Herald here.

The Centers for Medicare and Medicaid Services, which manages the 43-year-old federal insurance program for the elderly and disabled, doesn’t have a specific amount for the cost of corruption nationwide. Internal audits mainly focus on billing mistakes, excessive payments and other waste with only a fractional measure of fraud. Therefore, the agency estimates its combined loss is $11 billion annually.

Private healthcare companies, credit card companies and other industries have implemented new technology to fight fraud aggressively, but Medicare has failed to adopt even the most basic changes that the U.S. Department of Health and Human Services’ inspector general has warned are sorely needed to combat the crisis.

Medicare, one of the government’s largest agencies, seems more intent on paying claims quickly than verifying them first, according to many critics and law enforcement officials.

One of the core services offered within the healthcare industry is time.  Time to ask questions of our physicians, one-on-one time with our physical therapists, and time for our providers to actively evaluate and make recommendations for us as patients.  As a core service, time is both a driver of revenue and costs within the healthcare model, making it one of the most important and most scrutinized variables by physicians, practice administrators and insurance payers.

The notion that a correlation between the amount of time providers spend with patients and the quality of service provided is conceptually valid and serves as a platform for many of the ethical debates waged in today’s healthcare arena between providers and insurance companies.  If providers are increasingly paid less by insurance companies for the time they spend on their patients, it’s easy to see that incentives will be in place to increase the volume of patients seen, and decrease the amount of time seen with each patient.  From a qualitative standpoint this sets the stage for the ethical and political battlefield between providers, patients and payers.

Interestingly, a recent systematic review of 5 studies performed in the United Kingdom has called into question the correlation between time spent between provider and patient and the quality of care delivered, bringing another variable into the equation - the way that the time is used.  Appearing in the Cochrane Library, the review suggests that patient satisfaction was not significantly higher when more face time with physicians was made available and physicians did not practice in a manner significantly different depending upon the amount of time they spent with their patients.

Now, I don’t believe this review in any way wipes out the validity of the argument that there is a correlation between time and quality in healthcare - it simply stands to reason that providing more time allows for the opportunity to provide better care.  It does however bring to the table fodder for discussion about the “elements” of time that are important as relates to quality of care, rather than simply the time itself.

Some patients might feel like they spend more time in the waiting room than actually talking with their doctor, but a new review of studies suggests that these consultations would not be much different if patients had more face time with their physicians.

In five studies conducted in the United Kingdom, doctors did not discuss more problems, prescribe more drugs, run more tests, make more referrals or do more examinations when they had a few additional minutes with patients.

In healthcare finance, numbers are - unfortunately - a game.  As much as we’d all like to focus on the practice of quality care and little else, the amount we charge for services and the amount we are paid are distinctly different concepts, and therefore must be understood (better yet, managed) as such.

Fee schedules upon which payments for services are (loosely) based, must be higher than the amounts allowed by each payer if a practice is to maximize their revenue.  You can rest assured that an insurance company is never going to whisper into your ear, “achem…you know you can charge a bit more for that,” or better yet, “you’re charging less than we’ll pay, so we’ll give you the higher of the two.”  This isn’t the way it works, or will ever work.  Practices must look out for themselves, and must keep on top of payer contracts on a regular basis to make sure that they are getting paid to the extent allowed.

Now, the difference between the fee schedule and the allowable amount creates a game of sorts (I prefer backgammon myself) when managing practice financials.  Because the fee schedule can generally be what you’d like it to be, as long as it’s above the allowable amounts, this can inflate (or deflate) gross revenue (total charges based on the fee schedule) depending on where it sits in relationship to the allowed amounts.  Net income will be the same, but there can be wide swings in the amount of revenue “discounted” which can be confusing to the practice owner if not entirely understood.

In this post, Peter Lucash over at the Medical Practice Business Blog makes the point that fee schedules must remain consistent with what services are worth, AND be higher than the allowable amounts per payer contract.  By doing so, an accurate representation of the value of services provided as well as the “value” (or lack thereof) of certain contracts can be properly evaluated.

Some disagree with billing at full (private) fee as an exercise in self-deception. But it’s not – it reflects what your services are worth, and what some patients are undoubtedly paying. Financial statements always have to be in context, which is why any footnotes are very important.