Samuel W. Vallery, MD, PA
2212 Malvern Ave., Suite 8
Hot Springs, AR 71901
(501) 609-2300

Posts for: April, 2014

By Dr. Vallery
April 09, 2014
Category: Uncategorized
Tags: Untagged

I am not a policy wonk or a number cruncher. I am just a member of an increasingly rare breed in this country: a solo, private practice physician with no ties to big business and “organized medicine”.  Here are my thoughts:

It wasn’t so very long ago that most physicians in the United States were either in “solo” practice, or they were members of free-standing medical groups with other physicians of their own specialty, or larger groups that contained members of multiple different specialties. However, even those larger, “multispecialty” groups were usually owned and managed by the physicians in the group.  These solo physicians and groups set their own prices, and either charged patients directly, or sent the bill to an insurance company, which then reimbursed the patient or the physician for the charged amount, depending on the agreed upon arrangement.

During World War II, wage freeze laws were passed, to prevent employers from coercing prospective employees to change jobs. In an effort to attract and keep good employees, companies started offering health care benefits. Over time, this became a normal, and even expected job benefit. Employers were given tax write offs for money spent on employ insurance costs, and most people were happy.

During the late 1950’s and early 1960’s, many politicians began pushing for a socialized health care system for citizens of retirement age. After much political wrangling, Medicare was passed. To insure passage and physician participation, doctors were promised payment of their billed amount.

As time passed, the cost of providing medical and surgical care increased. Eventually, it became obvious to most observers that the increasing burdens of health care costs needed some serious analysis and changes.  But, instead of letting the market control costs, along with supply and demand, the Federal government (both politicians and bureaucrats), insurance company executives, pharmaceutical companies, and hospitals all began making deals among themselves, starting a long process that ultimately has about brought the United States’ health care system to its knees.

As Medicare reduced its reimbursement rates, private insurance companies followed, usually paying a certain percentage above what Medicare was willing to pay.  Hospitals began making deals with insurance companies, to take care of large groups of patients at reduced costs, under the condition that every patient was forced to use only that hospital, or its subsidiaries. The hospitals and insurance companies, in cahoots with each other, then began pressuring physicians and groups of physicians to become members of “exclusive panels”, which were guaranteed to get all of the patients. Any physicians/hospitals not included in the panel could see none of those patients. And thus, the HMO was born. The sales pitch to physicians was that they would get to treat all the patients, so even at reduced reimbursement rates, things would work out, due to increased patient volume. The insurance companies then went to work selling the plans at lower rates.

After passage of a little more time, the HMO’s started becoming dysfunctional, for a variety of reasons. Doctors were forced into capitation (holding back some percentage of the physicians’ payment), so that basically, if the insurance company or the hospital lost money, the physicians never got paid the rest of the money owed them.

As HMO’s and other similar experiments began falling to the wayside, the crony capitalists came up with another idea. That idea was that if hospitals could own/employ a significant number of physicians, then they could make deals with insurance companies and the government, independent of significant physician input. This idea swept the nation, and soon, hospitals were hiring new physicians directly out of residency training, as well as any local physicians that they could buy out. Of course, the employment agreement always stipulated that all, or a vast majority of patients treated by the employed physicians must be taken care of in hospital owned facilities. Any physicians who refused to sell out, or were intentionally left out of any “buy out” negotiations were excluded from treating any patients that the hospital could control, by way of sweetened deals with large employers and with crony insurance companies.

The employment and buy-out deals offered by hospitals were often for more money than a physician or physician group was actually worth, and guaranteed more short term income than could be generated in traditional private practice. Since rates of reimbursement had steadily been cut, it was very tempting to jump ship, sell out, and become a hospital employee. Several different terms were used to publically portray these “sell-outs”, but the most common was “integrated physicians”. But, make no mistake, the physicians were employed (and still are), and gave up any remaining autonomy that they might have enjoyed when they signed the employment/practice sale agreements. Hospitals across the nation have much deeper pockets than physicians, and their only goal has been gaining control of the medical dollar. They have been very willing to “lose money” in the short term, in order to reach the long-term goal of “owning” the physicians and the patients in their respective local markets. None of these physicians work for their patients any more. They work for a corporation, and decisions are made over their heads. “Bucking the system” is grounds for losing one’s job.

In the meantime, while all of these changes have continued to occur, laws and regulations, as well as insurance company rules, have been steadily imposed upon physicians, requiring more and more paperwork/documentation, computer software purchases/upgrades, telephone calls for approval to treat patients, etc. The end result has been that it is progressively harder to treat patients and get fairly paid for the services provided.  Physicians have been attacked from all angles, and accused of being the problem. Trial lawyers have had a heyday suing physicians and hoping for quick settlements.  Malpractice insurance has skyrocketed. Staff wages and benefits have steadily increased. The number of employees needed just to bill, collect, fight with insurance companies, Medicare and Medicaid has steadily increased. Lease payments for space, office supplies and equipment, utilities, and taxes of every type imaginable have increased steadily, while physician reimbursement rates for services provided have continued to decline.

And now, we have Obamacare. As many are now aware, this was a law cobbled together by big pharmacy, big insurance, big hospitals, and one party of government. It seeks to set up the next type of beast in the saga of “managed care”.  These beasts will be called ACO’s (accountable care organizations). Under these arrangements, the all powerful hospital will accept payment for services, and then dole out the money as they see fit, starting at the top with the CEO’s, all the way down to the physician pawns whom they own. All of the work over the past few years of consolidating, buying out doctors (“integrating physicians”), hiring new physicians, and squeezing out local competition under the guise of providing better/cheaper care is supposed to come to fruition. The “corporate suits”, politicians, and non-elected government bureaucrats will control everything, and the patients and physicians will be “forced into line”.

There are now three separate groups of doctors in the Untied States.

The first group is made up of the older physicians who are nearing retirement. They see the writing on the wall. They can either get run out of practice by big business, or they can sell out. They may as well sell out (if they haven’t already done so), work a couple of years for the local hospital CEO (who often is paid multiples of what a physician earns every year), and then simply ride off into the sunset.

The second group of physicians is comprised of young doctors just completing residency training.  It is nearly impossible to go into a city or town anywhere and start a private practice. Even if they want to purchase the needed equipment and risk going it alone, the big local hospital will make sure that the new doctor gets no patient referrals from their employed doctors, and even if they are allowed to become members of insurance networks, they must often be “2nd or 3rd tier” providers, or remain “out of network”. “First tier providers”/in-network physicians are the doctors who work for the hospital. Patients have to pay exorbitant amounts out of their pocket to see anybody but “1st tier”/in-network physicians.

The third group of physicians is those like myself, who are stuck in the middle. Most of us probably own our equipment, and have good reputations in our communities. We have worked countless hours and sleepless nights to care for patients in need, build a practice, and earn trust. We are horrified at the current reality of the medical system in our country.  We are pressured to go out of business, leave town, or go ahead and sell out to a hospital from all angles. Insurance companies and government third party payers do all that they possibly can to prevent us from caring for patients properly, and then after care is given, they do all that is within their power to withhold payment.

I believe that it is up to this third, shrinking group of doctors, and patients who believe in controlling their own health care decisions to lead the way toward affordable, compassionate, patient-centered care.  As a group, we must be willing to devise workable, affordable options that exist entirely outside of the dysfunctional nightmare that has been spawned over the last few decades, most recently culminating in what we know as Obamacare.  I don’t claim to have all the answers, but I do believe that up-front, transparent pricing for all goods and services is necessary. The “middle man” system of modern insurance companies and Medicare/Medicaid needs to be drastically changed.  Insurance plans for individual situations need to be available, and sold across all state lines, much like homeowners and automobile insurance. Patients need to be able to see any doctor,  use any hospital that they prefer, and be allowed to shop and negotiate for the best prices. If the consumer of healthcare is in control of the spending, the free market will take care of the rest. Billions (and perhaps trillions) of wasted dollars could be saved, and at the same time, pools of money could be set aside for the truly unfortunate, those with pre-existing conditions, and catastrophic care under certain circumstances. Hopefully, it is not too late to change things in these wonderful United States. But, opportunity is rapidly slipping away unless more and more brave, entrepreneurial souls are willing to “step outside the box” and work toward real change in our health care system.

Samuel W. Vallery, MD

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