Making a Difficult Transition

I have spent about 20 years studying most of the healthcare reform ideas floated in the U.S.. I look at the proposals primarily as a technical expert, but secondarily for political feasibility (this is my 30th year of working with Medicare and Medicaid, do I get a cake or something?).

It is my studied opinion that in a single payer system physicians will take a 30% hit in pay and benefits. This is after factoring in savings from simplifying the billing function, a huge expense in physician practices. Billing will still require a substantial investment in technology and staff.

The 30% is a rough average estimate and obviously some specialties will take a bigger percentage hit, others less. I think family practitioners will take a lesser percentage hit, but they are already on the low end of the pay spectrum so this will be painful. This is relevant because we need more family practitioners (and internists and gerontologists), and they work ridiculous hours (including call coverage).

So what are the ramifications?

Physicians will be happy if the billing function is simplified, but extremely unhappy about taking a pay cut. Younger physicians are fighting student loans and the opportunity costs of getting established (young docs rarely start new practices these days, the entry cost is too high and the initial cash flow too slow). Older docs have income expectations and retirement ideas. Many have considerable debt associated with keeping the practice running and real estate. Some capital investments will go sour, I think there will be a lot of MRI magnets available cheap.

So how do we make this transition? How could we go to single payer? How do you convince your physician that taking a pay cut is for the greater good, after he/she spent 4+4+1+3 years in college and training? How do you convince the spouse, who gets to listen to the 3:00 am phone calls, that the spouse really isn’t as valuable as an annuity salesman?

I may be too close to the problem to look at it properly.

Your thoughts? Should we care?

More on healthcare reform in future posts.