Lee Rogers, DPM, is PRESENT's Health Policy Columnist. He is the past chair of the Foot Care Council for the American Diabetes Association. Lee's published over 100 articles and book chapters and most of them on topics related to diabetic foot care or policy. He's a contributing editor to JAPMA and also an associate editor of the new Journal of Diabetic Foot Complications. He is the co-director and co-founder of the Amputation Prevention Center at Valley Presbyterian Hospital in Los Angeles, CA.
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Lee C. Rogers, DPM
Co-Medical Director
Amputation Prevention Center at
Valley Presbyterian Hospital in Los Angeles, CA
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MedPAC Pay Proposal Threatens Future
of Physician Workforce
The Medicare Sustainable Growth Rate (SGR) formula has been a source of worry for doctors and patients for some time. The SGR was intended to prevent doctor payments from exceeding the growth in GDP. The formula has not worked as anticipated and Congress has had to repeatedly pass delays in SGR cut implementations. On January 1, 2012, the SGR is calculating a 29.4% cut in physician reimbursement.
Let's put into perspective a 30% pay cut. There are different practices of physicians, private practice and employed practice. While many physicians seek employment, there are still about 40% of physicians in private practice. These practices are more likely located in rural or smaller communities. Overhead expenses average 50 - 70% of gross revenue for physicians. These expenses pay for staff, insurance, supplies, building costs, and utilities. This means that a physician's net income is 30 - 50% of their gross. If a revenues are cut by 30%, it results in a 60% reduction in physician net income.
Recognizing this, the Medicare Payment Advisory Committee (MedPAC) has made a proposal to freeze primary care doctors payments for 10 years and cut specialists payments 5.9% yearly (17.7%) for three years, then a freeze for the next seven years. It is already difficult for Medicare beneficiaries to find specialists accepting new patients, but this cut will greatly exacerbate the problem. This will also overwhelm primary care offices with caring for patients that really need specialists.
Already we're seeing changes in the physician workforce. A recent Merritt Hawkins survey of 2400 physicians revealed that 74% anticipate making one of the following changes in their career in the next three years: 19% plan to reduce their hours, 16% plan to retire, 11% plan to move
from private practice to employed practice, 14% plan to work temporarily, and 12% plan to seek a job outside of healthcare. Only 26% plan on continuing in their current practice.
Who will want to be a doctor when the average graduate owes more than $150,000 in loans, faces an increasing workload, and decreasing reimbursement? A Wall Street Journal Report on the Coming Doctor Shortage states that not only is our population aging, but our physicians are aging too. One third of doctors are over 55 and plan on retiring by 2020, at the height of a looming physician shortage. The government caps the number of physicians graduating from residency programs at about 16,000 doctors per year. We need an additional 8,000 per year over the next 20 years to make up for the shortage and the growing aging population needing care.
What is clear is that we don’t have enough money to fund everything that our current legislators have promised us. They have been used to the blank check policy of governing. Now, responsible people will be forced to prioritize our expenditures. Most people would rate few things above health care in importance. But that means we’ll have to limit foreign aid, nation building, and subsidies and tax breaks to wealthy companies. Additionally, we’ll have to reduce health spending per capita by concentrating on making our population healthier and not just treating illnesses once they occur.
Please be sure to share your thoughts and comments in our eTalk forum. See you next time.
Lee C. Rogers, DPM
Director of the Amputation Prevention Center
Valley Presbyterian Hospital
Los Angeles, CA
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