Sunday, February 7, 2010

The Fee-for-Service Follies: The Good, the Bad and the Ugly - Part II

As detailed in Part I, FFS or Salaried Medicine, I was a salaried gastroenterologist for 10 years. I resigned, but not in search of the fee-for-service (FFS) cornucopia. The multispecialty group (MSG) that employed me had been purchased by one of Cleveland's medical behemoths a few years before I signed on. After happily practicing gastroenterology (GI) for several years, the corporate owner emerged from the background and forcefully exercised its ownership rights. The business edicts they issued conflicted with our professional mission to advocate and care for live human patients. For example, the community hospital that we had served for half a century was now verboten. This meant that our elderly patients who lived near this hospital, and had been treated there for their whole lives, now had to be hospitalized downtown, if they wanted us to be their physicians. You get the idea.

While I acknowledge that these decisions promoted the corporation’s health, they jeopardized our patients’ well being. An irreconciliable conflict was created once the business’s interests and our patients’ interests were no longer alligned. The businessmen were pleased, but the physicians and patients were increasingly frustrated. Since I am a physician who cares about patients more than balance sheets, I resigned.

I entered the FFS universe. My income increased, but this was never my motivation to change positions. In fact, had our corporate overseer not poisoned our beloved MSG, I would still be there. A few years after I left, the group vaporized.

Adjusting to FFS medicine was not a seamless transition for me. Previously, I never performed a colonoscopy unless I believed that the procedure was necessary and that no preferred alternative existed. I had never practiced as a technician. While those ideals sound noble and virtuous, they will not pave a pathway to success in the private practice world. In this milieu, procedurists are subject to many external pressures. While I hopefully still practice at a high ethical level, I no longer enjoy complete ‘ownership’ over the procedures I perform.

Private Practice GI FFS Medicine - The Good!

• More money. This is not evil.
• Personal freedom. Time off when I want it.
• Improved orthopedic health. Preserves knee function by no longer genuflecting before administrators.
• Enhances professionalism. While no doctor who is still breathing practices autonomously, private physicians can practice more freely. For example, we can send a patient to a rheumatologist we select, rather than refer to an official consultant list, as we did in in the MSG arena. [At the MSG, we were never expressly forbidden to consult outside the network, but those who dared to do so, would spend a few weeks in reeducation camps to reflect on their errant behavior. After a voluntary confession, the rehabilitated physician would rejoin his brethen.]
• Camaraderie and esprit de corp in an ever shrinking pool of private practitioners. These doctors will soon be on an endangered species list here in Cleveland. Then, we will be eligible for federal protection.
• Increased technical proficiency from the excessive volume of procedures we FFS doctors perform. Since numerous medical studies confirm that volume = quality, our office should qualify as a Center of Excellence.
• We hire our own staff.
• The FFS model is an incentive to improve service to patients and referring physicians.

Private Practice GI FFS Medicine - The Bad!

• Financial conflicts of interest. Sorry, my FFS confederates, but we need to admit this.
• Sending fruit baskets, candy, wine and other delectables to primary care physicians. Our practice does not do this, but our competitors do. I’d like to think it doesn’t matter. How many candied cashews is a colonoscopy worth?
• Every hour of vacation is lost income.
• Ruthless competition from regional medical industrial conglomerates.
• It’s our business. We pay for every paper clip.
• Do medical procedures on request, similar to radiologiists. Don't 'own' the procedures anymore.
• Read repeatedly that we FFS profiteers are the cancerous lesion in our health care system.
• In Fee-for-Service, fees decline but services don’t. The letters should appear as FFS to reflect proportionality.
• Personal sacrifices from missed and interrupted family events. In general, the lifestyle of private practice is more stressed than that of our salaried colleagues. It's a tough lifestyle. I doubt that any of our 5 kids will pursue a medical career, although we have tried to maintain neutrality on this issue.

Private Practice GI FFS Medicine - The Ugly!

• Hustling for patients. For me, this is the ‘root canal’ of private practice specialty medicine.

So, in the case of Salary vs FFS Medicine, which side has the better argument?   You be the jury.

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Anonymous said...

The question now is whether the two can be combined, such as being employed by a hospital but being paid on a productivity basis. Would this be the best of both worlds, or the worst? said...

It would have been tough to have five kids working FFS! Nice post.

Anonymous said...

Excellent analysis of both systems. Ethical behavior needs to be the driver,
whether FFS or employed. Both systems have ethical challenges for the
physician but I think the employed model has less challenges for the doctor
IF the employer is ethical. I am glad you are not genuflecting anymore.

Toni Brayer, MD

Stephen Erickson said...

Yes. Another illuminating piece.

We have an article up today that examines the current efforts of the Obama Administration to promote electronic health records. I thought you and your readers might be interested. Check it out at

Keep up the good work.

Stephen Erickson
Executive Director

Robert Merold said...

The overarching issue here is Adam Smith's good old supply-and-demand. FFS is good old fashioned capitalism at its best however its been operating in a world where the market has largely paid what phyisicans and insurers negotiate. What we are beginning to see is those who pay - primarily the government and large companies - are simply running out of money to increase total outlays at a time when an aging population is driving utilization.

The net is that the payors are going to get far more aggressive on what they will pay because they are out of money - witness the 21% Medicare discount Obama decreed last year (due to hit March 1 unless Congress, as likely, delays it) and his $500Billion cut in Medicare in his ten year budgets.

Sadly, physicians are about to face a world where fees are going to be hammered. Fee for service providers will cut the deals with these payors leaving FFS docs to either match or, for the lucky few, build a practice on patients who have the means to pay more.

Small FFS groups will either be boutique 'doctor to the stars' type specialties or be crushed by the market forces. Their only hope is creating larger groups that can effectively negotiate on price - not to mention amortize the overhead costs of office administration. But by then the only difference vs. the big company providers will be who sets the rules for how docs operate

Anonymous said...

How do you "hustle for patients?" How do you increase demand for a product (in your case the product is a service) and maintain your ethics? As an example, in the mostly self-pay cash business of plastic and cosmetic surgery, a look at the websites of many of these physicians shows some subtly manipulative language aimed at undermining self-esteem of potential patients in order to make the sale. Prior to the recession, most of these businesses actively encouraged their patients to take out substantial loans to pay for their procedures.

They're even actively promoting new procedures like vaginal rejuvenation - because no area of woman's body is off limits when it comes to revenue opportunities. Let's tell women that their vaginas are ugly and need to be redesigned to conform to societal expectations - expectations created by the plastic surgeons themselves.

Lately, here in Denver, I've been hearing radio ads for a spinal surgery group that seems to be aimed at convincing patients that even though their procedures are "experimental" and won't be covered by insurance in most cases, they have "solutions" (in the form of high-interest medical financing) for patients seeking a remedy for their pain problems. Now, I'm all for remedies to intractable pain - but advertising an unproven service - preying on the vulnerable - I am truly horrified.

The idea of medical professionals using the emotionally manipulative practices of marketing to increase sales is appalling. It seems regressive - a return to snake oil salesmen - but with fancy new trappings and a hint of science to back up the claims.

It's getting harder and harder to trust physicians. I question the motive of every test - every recommendation. Is it necessary to treat me? Or is it necessary to increase revenue for the medical provider or facility?

Michael Kirsch, M.D. said...

Many medical practitioners, particularly in private practice, face rising pressures from many fronts. The private practice model, which provides excellent care, is under threat. We are not hucksters and are not engaging in hard marketing techniques to lure patients. We are challenged financially because our costs and overhead steadily rise, while our reimbursments decline. It is this trend that is driving practitioners to employed physicians. I agree that trust between the patient and the physician is paramount. Despite many of the concerns outlined by the anonymous commenter above, physicians, in general, are doing the right thing for their patients.

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