Doctors discover ways to keep practices healthy

By GETAHN WARD
http://www.tennessean.com

photoAs a solo-practitioner working longer hours but making less money, Dr. H. Douglas Holliday didn’t think twice when presented with an offer to join a new internal medicine group practice where the physicians would be employees of Saint Thomas Hospital.

Since joining West End Medical Group last year, Holliday has seen a decline in his overhead costs, including a nearly 80 percent dip in health insurance premiums for himself and his wife, who helps in the office.

Joining to form larger groups or becoming employees of hospitals is one way that doctors are dealing with what many see as a financial squeeze from tighter reimbursement policies by insurers and government health programs.

Other physicians are giving up private practice to join corporate America, or they’re adding new services to boost fee income.

“Income’s going down. You’re caught in a squeeze. What do I do?” Holliday said. He said his income dropped 12.7 percent in the most recent year before joining Saint Thomas, though patient visits rose 4 percent.

Primary care doctors like Holliday rely on office visits for much of their income, making them vulnerable to reduced payments from Medicare or private insurers. Currently, doctors who treat Medicare patients face prospects of a 10.6 percent overall pay cut effective July 1, but legislation pending in Congress could prevent that from taking effect.

“About the only thing a physician can do when his income is being squeezed from increasing expenses — and decreasing reimbursements — is to see more patients to maintain his income,” said Dr. Michael Minch, past president of the Tennessee Medical Association. “And that gives you less time with each patient.”

Overall costs increase

Overall, multispecialty practices saw costs per full-time physician rise 7.4 percent in 2006, outpacing the 1.8 percent rise in revenues per doctor, according to the Medical Group Management Association’s latest cost survey.

Over the past year, Saint Thomas Health Services has added as many as 15 primary care doctors, said Dr. Jordan Asher, physician network executive with the health system.

It’s the second time Holliday has linked with Saint Thomas.

He worked for the hospital beginning in the mid 1990s, but he left in 2001 as the system shed doctors’ practices to trim costs.

Under Holliday’s current five-year employment contract, his income is based in large part on his personal production.

“The bottom line is the more patients you see, the more you make, the less you see the less you make,” he said. “It’s a way for me to stabilize my income for five years.”

Some go corporate route

Dr. Omar Hamada had big plans to expand a primary care practice that he and another doctor started five years ago in Smyrna with the backing of HCA Inc.

But five months ago, Hamada went from practicing medicine to running a regional division of drugmaker Pfizer, where he functions as a liaison to insurers, hospitals, doctors and others.

He also teaches as an associate clinical professor at Vanderbilt University School of Medicine.

Hamada attributes his career switch to frustration with high operating costs and what he saw as an unhealthy focus on the bottom line at the expense of patient care.

“What it came down to was revenues vs. overhead, and our overhead exceeded our revenues and it led to basically having to go out of business,” he said.

Barely a year after starting Cedar Medical Group, Hamada said, HCA withdrew its support to focus on other ventures.

A spokeswoman for HCA said Hamada left the practice on his own after other doctors recruited to join him changed their minds about joining the group.

“In today’s challenging reimbursement environment, it is … incumbent on all health-care providers, hospitals and physician practices alike, to operate with a strong business and financial management acumen,” said Neil Heatherly, chief executive of StoneCrest Medical Center, the HCA hospital where Hamada was recruited.

Meanwhile, Hamada said the practice faced skyrocketing costs, including $65,000 a year in malpractice insurance premiums.

“When you add all that up, you start thinking it’s very difficult these days to make a living,” he said.

Dr. James King of Selmer, Tenn., president of the American Academy of Family Physicians, said another problem is that family doctors compete more often with new entrants to the health-care field, including retail clinics staffed by nurse practitioners.

The clinics see large volumes of patients who suffer from relatively common ailments, but the operations make money because of how many people they see in a short amount of time, doctors say.

Hamada said the danger is that too many doctors will abandon primary care. “It behooves us to find ways to maintain physician involvement in primary care,” he said.

Doctors try to diversify

Other doctors add services to compensate for lost revenues elsewhere.

Dr. Ukpong Nwankwo this week started offering physicals for people going through immigration and plans soon to expand into travel medicine, including vaccinations, at her Smyrna medical practice.

“I sat down and looked at what else I could do to improve my competition and provide quality services,” said the native of Nigeria.

Nwankwo, who is in internal medicine, began her practice three years ago after a stint teaching and earlier working as chief resident at Meharry Medical College.

The solo practitioner also has in-house equipment for X-rays and bone-density tests for patients.

She accepts walk-ins and, in some cases, allow patients to arrange payment plans to make it easier for them to get medical services.

“Everything is facing a squeeze because of the economy,” Nwankwo said. “People are having a hard time even paying their co-pays. Somebody’s sick, but because they have high deductibles before insurance kicks in, they think twice before going to the doctor.

“If you’re able to implement little things that others aren’t doing, that makes you more competitive,” Nwankwo said.

Getahn Ward covers the business of health care. He can be reached at 726-5968 or at gward@tennessean.com.

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