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Program for physician empowerment

By Gary C. Brown, M.D

There is little doubt that the medical profession is changing at an exponential rate. The signs are ubiquitous: the increasing role of for-profit entities in the field, hospital closures, physicians layoffs in California and Boston, widespread nursing layoffs, and loss of physician voice in medical care to an unprecedented degree. In all likelihood, the changes will continue posthaste for the next several years.

How did this happen?

The answer is really not that complex. We blew it. We relinquished control and participated in failing to keep the costs within reason.

We in the medical profession for years had the arrogance to believe we were immune to the more mundane problems of society. We were not. We failed the public by allowing costs to burgeon astronomically. We, the physicians, actively or tacitly approved of the changes. We enlarged our residency programs, we supported extravagant and unnecessary hospital expansion programs and we encouraged our hospitals to outpace those in the neighboring communities. We ignored economic issues, scoffed at politicians and had no tolerance for business-related matters in medical school curricula. Most importantly, we were so busy and presumptuous that we relinquished control to the businessmen who parlayed the patronizing perception that they understood medical business issues so much better than we.

The consequences? Society has taken our voice, taken the privilege of making many of the decisions that will ultimately affect our patients and ourselves. We have allowed ourselves to be excluded from many of the decision-making processes. Had we been more attentive and appreciative of the effects of economics upon health care and its administration, we would have realized this natural consequence ten years ago.

Left unchallenged, the course of the present system is grim. The for-profit forces that have arisen to counteract the changes caused by our neglect may have been temporarily effective in halting health care inflation, but they are not altruistic, to say the least. Remember, the earnings of a successful for-profit company must increase every year. Thus, it must cut operating expenses by continuing to leverage the providers on a regular basis. Although the for-profit insurers and hospital chains can initially cut the fat out of the system, eventually the unchallenged quest for profits must drive down quality and cut corners in a detrimental way. You might say, “Then the for-profits will destroy the industry and eventually ruin it for themselves. Therefore, they won’t let it happen.”


The reality that most physicians forget is that most for-profit companies in medicine are here for the short-term only, unlike the physicians. When the system is on the verge of collapse, the for-profit insurers and chains will exit the industry, taking their vast profits and leaving the physicians and the public with the health system rubble.

Enough about our mistakes. What can we do to improve the situation? A lot. Then how do we do it?

First: We must learn the business language. My wife, also a physician, and I are both enrolled in an MBA program. Compared to medical school the course of study is not difficult. Not easy, mind you, but certainly not insurmountable. And what does this allow one to do? It allows one to speak the language, to be a player in the game. It gives one the credibility we need to have voice in the hospital systems, in the insurance industry and with the business community.

How often have you heard businessmen say that doctors are notoriously poor businessmen? Over and over. It’s almost a dictum. And there are probably some valid reasons. Unfortunately, this business incompetency myth has been fostered to an inordinate degree by those who have control of the business aspects and would prefer to minimize physician voice.

While our lack of business talents as physicians has been denigrated by others, physicians also have to realize that business skills are not all smoke and mirrors. In many instances the skills are as scientific as our medical skills. It is important to truly understand financial statements, organizational structure, logistics, budgeting, marketing, global markets, the equity markets and the economy.

Once physicians learn the language we will also be able to stop being victimized by a subgroup of the consultants who now prey upon us. So often I’ve heard intelligent and competent physicians fall for a smooth-talking consultant’s line. In actuality, once we speak the business language we will have a broader understanding of the issues than most consultants.

Second: We must learn the value of teamwork. All too often groups of physicians form to carve out a market from the for-profits, only to find that in the long run no one is better off. The primaries and the specialists must learn to work together, now and in the future. Yes, this is still the era of the primaries, but there are storm clouds on the horizon. Over 50 percent of U.S. medical school graduates enter primary care, nurse practitioners can prescribe without a physician in over twenty states and health plans are now allowing nurse practitioners to function as primary care physicians. As Ben Franklin said, “Either we all hang together, or most assuredly we will all hang separately”.

Third: We must decrease the rate in rise of the number of physicians. Is this good for patients? No. Excess doctors, whether from U.S. medical schools or foreign medical schools theoretically mean excess care, potentially greater expenses and a greater chance for the for-profits to divide us. If we flood the market, it will cost the taxpayers billions and will also minimize the chances of physicians remaining cohesive and regaining our voice. To its credit, the AMA has finally awakened in this regard.

One only need to look at the simple principles of microeconomics, the laws of supply and demand. The law of supply states that as prices (or reimbursements) rise, more firms (or physicians and hospitals in our case) will enter the market. But the force that counteracts the supply is that of demand—when the prices increase the demand will decrease and bring the system back into equilibrium.

The HMOs and the business community (the payors) are reducing the demand. Yet we are still producing more and more doctors. Right now the supply of physicians is vastly outgrowing (on a percentage basis) the number of patients. This is a recipe for disaster.

Despite rhetoric to the contrary, medical students are a source of revenue to medical schools, negating the incentives to decrease class size. The economic incentives are even a greater factor at the level of residency training programs. When a hospital can make over a hundred thousand dollars in pure profit from each resident through Medicare incentives, why should it have any reason to reduce the number of residency training positions? The consequence will eventually be increasing physician unemployment. Not a pleasant idea, since it typically takes 25 or more years of schooling and a huge amount of debt to become a practicing physician.

Fourth: We must take an active role in the political process. Fortunately, more physicians and their spouses are doing so. An unprecedented number have entered Congress and the state legislatures during the past year. Is it enough? No!

I was stunned last year when several other physicians and I attended a political fundraiser. A prominent politician in attendance stated, “This is the first time in fifteen years I’ve ever seen a doctor at one of these events.” Small wonder that we have difficulty promoting our agendas. The time to become involved is now, not show up whining when the next crisis precipitously appears.

Fifth: We must halt the trend of physicians selling their practices. Forty-five percent of us have become employees, as versus 28 percent in 1993. A big change? Yes. A healthy one? Debatable.

Selling a practice might make sense for the physician who is 60 or older and intending to retire in the near future, but certainly not in most cases for the younger physician. The physician loses his or her leverage markedly upon selling. As an employee the only major option for strong voice is to form a union (which, importantly, is not a legal option for self-employed physicians). And do unions work for doctors? Just ask our colleagues in Canada. The public frowns decidedly on physician unions, no matter how just the cause.

To understand a situation it is often helpful to put yourself in the shoes of the other party. In this instance, put yourself into the role of the firm buying your practice. What does the firm want? To create a wonderful new health care system? No; to maximize profits on a long-term basis.

Ask yourself, can a firm that buys your practice allow you to be much more efficient, increase your market share? Does the firm understand medicine much better than you? Can it promise you vastly improved economies of scale? Doubtful in most cases.

At the present time, only 17 percent of purchased practices turn a profit for the owners. That cannot go on forever. At some point the piper must be paid his dues. We shall soon see how physicians fare as employees when many of the five year contracts come up for renewal.

I believe that physicians will eventually retake control of the health care field. Why? Because, if we can do it in a fiscally responsible way, this is what the public wants. But it may take ten years and it won’t happen without some degree of pain and hard work. Could we be derailed? Perhaps—if we all sell our practices, open the floodgates to the profession and continue to ignore basic business principles. Hopefully we won’t allow these things to continue to happen. Although we my be naive, we are not stupid. We are waking up, realizing that while it is late, it is not too late.

To me, a more important question than Will we be able to retake control is, What will be left by the time our voice is back? If we truly intend to adhere to the Hippocratic Oath, we long-termers must take it back in a timely fashion, before the system is left in an absolute shambles.

Gary C. Brown, M.D is Retina Vascular Unit Director of Wills Eye Hospital, and Chairman of the Board of Pennsylvania Physician Healthcare Plan.

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