Will this situation appear in Malaysia soon? I am afraid the time will come. In fact it has already started to happen. I am beginning to see doctors closing shop and jumping from one hospital to another for survival. With the glut that is coming, the situation will only get worst. This article appeared in CNNMoney and below this I have attached some info regarding 1Care system.
Small Business: Doctors going broke
By Parija Kavilanz | CNNMoney.com – Thu, Jan 5, 2012 12:37 PM EST
Doctors in America are harboring an embarrassing secret: Many of them are going broke.
This quiet reality, which is spreading nationwide, is claiming a wide range of casualties, including family physicians, cardiologists and oncologists.
Industry watchers say the trend is worrisome. Half of all doctors in the nation operate a private practice. So if a cash crunch forces the death of an independent practice, it robs a community of a vital health care resource.
“A lot of independent practices are starting to see serious financial issues,” said Marc Lion, CEO of Lion & Company CPAs, LLC, which advises independent doctor practices about their finances.
Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat. But some experts counter that doctors’ lack of business acumen is also to blame.
Loans to make payroll: Dr. William Pentz, 47, a cardiologist with a Philadelphia private practice, and his partners had to tap into their personal assets to make payroll for employees last year. “And we still barely made payroll last paycheck,” he said. “Many of us are also skimping on our own pay.”
Pentz said recent steep 35% to 40% cuts in Medicare reimbursements for key cardiovascular services, such as stress tests and echocardiograms, have taken a substantial toll on revenue. “Our total revenue was down about 9% last year compared to 2010,” he said.
“These cuts have destabilized private cardiology practices,” he said. “A third of our patients are on Medicare. So these Medicare cuts are by far the biggest factor. Private insurers follow Medicare rates. So those reimbursements are going down as well.”
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Pentz is thinking about an out. “If this continues, I might seriously consider leaving medicine,” he said. “I can’t keep working this way.”
Also on his mind, the impending 27.4% Medicare pay cut for doctors. “If that goes through, it will put us under,” he said.
Federal law requires that Medicare reimbursement rates be adjusted annually based on a formula tied to the health of the economy. That law says rates should be cut every year to keep Medicare financially sound.
Although Congress has blocked those cuts from happening 13 times over the past decade, most recently on Dec. 23 with a two-month temporary “patch,” this dilemma continues to haunt doctors every year.
Beau Donegan, senior executive with a hospital cancer center in Newport Beach, Calif., is well aware of physicians’ financial woes.
“Many are too proud to admit that they are on the verge of bankruptcy,” she said. “These physicians see no way out of the downward spiral of reimbursement, escalating costs of treating patients and insurance companies deciding when and how much they will pay them.”
Donegan knows an oncologist “with a stellar reputation in the community” who hasn’t taken a salary from his private practice in over a year. He owes drug companies $1.6 million, which he wasn’t reimbursed for.
Dr. Neil Barth is that oncologist. He has been in the top 10% of oncologists in his region, according to U.S. News Top Doctors’ ranking. Still, he is contemplating personal bankruptcy.
That move could shutter his 31-year-old clinical practice and force 6,000 cancer patients to look for a new doctor.
Changes in drug reimbursements have hurt him badly. Until the mid-2000’s, drugs sales were big profit generators for oncologists.
In oncology, doctors were allowed to profit from drug sales. So doctors would buy expensive cancer drugs at bulk prices from drugmakers and then sell them at much higher prices to their patients.
“I grew up in that system. I was spending $1.5 million a month on buying treatment drugs,” he said. In 2005, Medicare revised the reimbursement guidelines for cancer drugs, which effectively made reimbursements for many expensive cancer drugs fall to less than the actual cost of the drugs.
“Our reimbursements plummeted,” Barth said.
Still, Barth continued to push ahead with innovative research, treating patients with cutting-edge expensive therapies, accepting patients who were underinsured only to realize later that insurers would not pay him back for much of his care.
“I was $3.2 million in debt by mid 2010,” said Barth. “It was a sickening feeling. I could no longer care for patients with catastrophic illnesses without scrutinizing every penny first.”
He’s since halved his debt and taken on a second job as a consultant to hospitals. But he’s still struggling and considering closing his practice in the next six months.
“The economics of providing health care in this country need to change. It’s too expensive for doctors,” he said. “I love medicine. I will find a way to refinance my debt and not lose my home or my practice.”
If he does declare bankruptcy, he loses all of it and has to find a way to start over at 60. Until then, he’s turning away new patients whose care he can no longer subsidize.
“I recently got a call from a divorced woman with two kids who is unemployed, house in foreclosure with advanced breast cancer,” he said. “The moment has come to this that you now say, ‘sorry, we don’t have the capacity to care for you.’ ”
Small business 101: A private practice is like a small business. “The only thing different is that a third party, and not the customer, is paying for the service,” said Lion.
“Many times I shake my head,” he said. “Doctors are trained in medicine but not how to run a business.” His biggest challenge is getting doctors to realize where and how their profits are leaking.
“On average, there’s a 10% to 15% profit leak in a private practice,” he said. Much of that is tied to money owed to the practice by patients or insurers. “This is also why they are seeing a cash crunch.”
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Dr. Mike Gorman, a family physician in Loganvale, Nev., recently took out an SBA loan to keep his practice running and pay his five employees.
“It is embarrassing,” he said. “Doctors don’t want to talk about being in debt.” But he’s planning a new strategy to deal with his rising business expenses and falling reimbursements.
“I will see more patients, but I won’t check all of their complaints at one time,” he explained. “If I do, insurance will bundle my reimbursement into one payment.” Patients will have to make repeat visits — an arrangement that he acknowledges is “inconvenient.”
“This system pits doctor against patient,” he said. “But it’s the only way to beat the system and get paid.”
— Are you a doctor who has made financial decisions you came to regret? E-mail Parija Kavilanzand you could be part of an upcoming article. Click here for CNNMoney.com comment policy.
Salient points – 1Care
1. The government plans to introduce a new healthcare system called 1-Care. It includes an insurance system to fund for healthcare.
2. The National Healthcare Financing Authority will be in charge of 1Care – and …it is likely to be turned into a GLC.
3. Based on available information, every household will be made to pay up to 9.4% of gross household income for social health insurance. The payers will be the individual, the employer and the government via taxes, exact proportion still being worked out)
4. There shall be no choice. Everyone has to pay. There is no opting out. We have to pay upfront. It will no longer be fee-for-service; it is fee-before- service.
5. There has been no information on exactly how this payment will have to be made or how the government will collect from self-employed people.
6. The government will be expected to contribute to the insurance premiums of government pensioners, civil servants and five dependants.
7. But the problem is: 1Care does not cover all your medical expenses. Only for a prescribed basic list of what “you can have” healthcare items. Anything more than basic you will have to pay your own.
8. Your long-serving independent family doctor will have to join the system or will not be allowed to see you under the 1Care scheme. The robust, cost- effective independent clinics serving the country will be replaced by 1Care clinics.
9. You cannot pick your own doctor. 1Care will allocate a doctor to you.
10. If you want to see a doctor of your choice, you’ll need to pay for that from your own pocket. Your allocated doctor will decide when and which specialist you can see if the need arises (a process called gate-keeping).
11. The NHFA will pay GPs RM60 (present proposal) for each patient as consultation fees. It does not include medicine. Compare this with presently, for cough and cold visit, the GP would charge RM20-RM30 for consultation and medicine. With 1Care: consultation for GP visit is RM60 and this does not include medicine
12. You cannot see your doctor as and when you feel the need arises. There will be a rationing system in place as well. There will also be rationing for specialist care with the GP as the gate-keeper. Likewise if you wish to see the specialist of your choice or go to a hospital of your choice, unless referred by your allocated doctor, you will also have to pay out of your pocket.
13. Even if you only see the doctor once in a year, you will not get a refund from 1Care. Your medical costs are prepaid in advance irrespective of whether you become sick or not.
You are also expected to make an additional co-payment for your visit. This is to discourage you from seeing doctors too often.
14. You will be prescribed only medicines from a standardised list of not-the- original medicines in keeping with WHO List of essential Medications.. This will save cost for 1Care and maximise profit for the insurance companies. Insurance companies will have major say in the price and the range of this standardise medicine list. It will likely to be the cheapest medicine.
15. The doctor will only give you injections. You’ll need to get all other medicines from a pharmacist, even if it means hauling three sick children with high fever along a hot, dusty busy street looking for the nearest pharmacy.
16. If you do not like what is given to you, you can get alternative care by paying out of your own pocket.
The Big Picture
Each year, we all pay a total of RM44.24 billion a year for healthcare – now called National Healthcare Hospitals and clinics ( an integration of public hospitals and clinics, private hospitals and private GPs. which in essence is a privatisation of public and nationalisation of private healthcare facilities)
All this will now go under 1Care.
This means 1Care will get almost RM45 billion a year.
The administrative cost is likely to be 10% or about RM 4.5 billion
The poor
Who will then care for the poor and the marginalised population when the private and public healthcare corporatize and turned into independent commercial entities each competing with the other for business and profits?
Public hospitals and clinics are service-driven will become corporatize/privatise and have to be profit-driven
So who will serve the people in remote places?
Who will serve the very poor people?
Situations
What happens when the government introduces 1Care?
The whole system of independent one-stop GPs will be restructured and converted into 1Care clinics like the UK NHS general practitioner system.
Before:
Ali has always having skin rashes for many years. He has to see his doctor once a month to get treatment. That would mean he will have to see his doctor 12 times a year just for this illness. What if he has other illnesses?
Now:
But now, Ali’s doctor has allocated only a budget equivalent to six visits a year. Regardless of how many time Ali would need for his yearly treatment. What happens then? A rationing system will kick in. If the doctor sees Ali too many time, his “P4P” (Pay for Performance) profile will be poor and he will be paid less.
To start with, Ali will probably cannot just walk in and expect to be treated. He will have to make an appointment. There will be a long waiting list. What if Ali needs to be treated for fever or some painful joints? He will also have to wait for his appointment. If he cannot wait and wants immediate treatment from another doctor he will have to pay on his own. This is what the NHS UK system is offering its patients.
Lim has an appointment to see his doctor over a knee ache. Just before his appointment, he has an ingrown toe nail that has become painful. At the clinic, after his doctor treats him for his knee ache, he asks his doctor if he could look into his ingrown nail. His doctor says “No, the system does not allow me to do that. You must make another appointment. This visit I can only treat and bill for your knee ache. 1Care will accuse me of over-servicing my patients. I have no discretion here, all is by SOPs” This is what the NHS UK system is like today.
Mutu lives in a remote rubber estate. One day he had chest pain and went to the nearby 1Care clinic..He has blood pressure problems since young and has had fits. A hospital assistant saw him. Because of a change of his medications to the cheapest not-the-original medications, his blood pressure went out of control and his seizures returned. He developed a fatal stroke and died This is already what is happening when essential original medications are replaced with the cheapest .The cheapest medications is not necessarily the best for the patient and certainly not the safest.See More
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