Published On: 2.17.2012 Charlotte, NC
Why Are More Doctors Closing Their Doors
On behalf of Charles G. Monnett III & Associates
CNNMoney.com recently revealed a disturbing trend in the medical community that more and more doctors in America are going broke. This list of casualties includes many different practice areas, such as family physicians, oncologists and cardiologists. These doctors operate private practices and the lack of funds is causing many to close their doors. This leaves the community with one less health care resource, which can have a big impact, especially on smaller communities.
So what is causing this growing trend? Many would like to point the finger at medical malpractice lawsuits and greedy attorneys, but it appears the cause is much simpler. Many doctors are attributing their dwindling funds to shrinking insurance reimbursements, changing regulations, and rising business and drug costs.
A primary issue with doctors today is that they are not paid by their patients anymore. Instead they are reimbursed by third party vendors, such as Medicare and insurance companies. This means that doctors cannot set their own prices for their services and are paid only what these third party vendors deem appropriate. This often results in the doctor receiving insufficient reimbursement, which hardly covers the cost of service. The doctor is left struggling to cover costs for medical equipment, medications, and staffing. It also sets up a situation where the doctor has a 10%-15% profit leak due to being owed payment by third parties.
Recently, Medicare implemented steep cuts in the amount of reimbursement for some medical services. This cut alone will cause a decrease in revenue for many doctors who have multiple Medicare patients. Private insurance companies typically follow the Medicare rates. This means following the Medicare cuts, private insurance companies will make cuts as well, so more doctors can expect to see a decrease in revenue soon.
This same situation can be applied to pharmaceutical companies. Increased prices for medications and regulations decreasing reimbursement rates has caused a substantial problem for private practices. Many doctors now have to turn away new patients because they cannot afford to take on anymore. Other doctors require patients to have separate appointments for each ailment. Otherwise, the insurance companies will bundle reimbursement into one payment.
A final issue that could play a factor is that doctors are trained to be doctors, not small business owners. A doctor can be very competent and the best in his field, but that does not mean he is a businessman. Perhaps if the doctors could turn more profit, they would be able to hire a financial advisor or someone else to help with the business decisions.
This ineffective system of health care is causing highly qualified physicians to fall into debt and eventually close their practices. It is not only the doctors, but also the community that is suffering form this situation. Needy patients are left with only a few options to turn to for health care services. More attention should be paid to this situation instead of focusing on frivolous lawsuits and attorneys as scapegoats.