Better (13 page)

T
o become a doctor, you spend so much time in the tunnels of preparation--head down, trying not to screw up, just going from one day to the next--that it is a shock to find yourself at the other end, with someone shaking your hand and offering you a job. But the day comes. Mine came as I was finishing my eighth and final year as a resident in surgery. I had got a second interview for a surgical staff position at the hospital in Boston where I had trained. It was a great job--I'd be able to do general surgery, but I'd also get to specialize in surgery for certain tumors that interested me. On the appointed day, I put on my fancy suit and took a seat in the wood-paneled office of the chairman of surgery. He sat down opposite me and then he told me the job was
mine. "Do you want it?" Yes, I said, a little startled. The position, he explained, came with a guaranteed salary for three years. After that, I would be on my own: I'd make what I brought in from my patients and would pay my own expenses. So, he went on, how much should they pay me?

After all those years of being told how much I would either pay (about forty thousand dollars a year for medical school) or get paid (about forty thousand dollars a year in residency), I was stumped. "How much do the surgeons usually make?" I asked.

He shook his head. "Look," he said, "you tell me what you think is an appropriate income to start with until you're on your own. If it's reasonable that's what we'll pay you." He gave me a few days to think about it.

M
OST PEOPLE GAUGE
what they deserve to be paid by what others are paid for doing the same work, so I tried asking various members of the surgical staff. These turned out to be awkward conversations. I'd pose my little question, and they'd start mumbling as if their mouths were full of crackers. I tried all kinds of formulations. Maybe they could tell me how much take-home pay would be if one did, say, eight major operations a week? Or how much they thought I should ask for? Nobody would give me a number.

Most people are squeamish about saying how much they earn, but in medicine the situation seems especially fraught. Doctors aren't supposed to be in it for the money, and the more concerned a doctor seems to be about making money the more suspicious people become about the care being
provided. (That's why the good doctors on TV hospital dramas drive old cars and live in ramshackle apartments, while the bad doctors wear bespoke suits.) During our hundred-hour-a-week, just-over-minimum-wage residencies, we all take a self-righteous pleasure in hinting to people about how hard we work and how little we earn. Settled into practice a few years later, doctors clam up. Since the early 1980s, public surveys have indicated that two-thirds of Americans believe doctors are "too interested in making money." Yet the health care system, as I soon discovered, requires doctors to give inordinate attention to matters of payment and expenses.

To get a sense of the numbers involved, I asked our physician group's billing office for a copy of its "master fee schedule," which lists what various insurers pay our doctors for the care they provide. It has twenty-four columns across the top, one for each of the major insurance plans, and, running down the side, a row for every service a doctor can bill for. Our current version goes on for more than six hundred pages. Everything's in there, with a dollar amount attached. For those who have Medicare, the government insurance program for the elderly--its payments are near the middle of the range--an office visit for a new patient with a "low complexity" problem (service No. 99203) pays $77.29. A visit for a "high complexity" problem (service No. 99205) pays $151.92. Setting a dislocated shoulder (service No. 23650) pays $275.70. Removing a bunion: $492.35. Removing an appendix: $621.31. Removing a lung: $1,662.34. The best-paid service on the list? Surgical reconstruction for a baby born without a diaphragm: $5,366.98. The lowest-paying? Trimming a patient's nails ("any
number"): $10.15. The hospital collects separately for any costs it incurs.

The notion of a schedule like this, with services and fees laid out a la carte like a menu from Chili's, may seem odd. In fact, it's rooted in ancient history. Doctors have been paid on a piecework basis since at least the Code of Hammurabi; in Babylon during the eighteenth century
B.C.,
a surgeon got ten shekels for any lifesaving operation he performed (only two shekels if the patient was a slave). The standardized fee schedule, though, is a thoroughly modern development. In the 1980s, insurers, both public and private, began to agitate for a more "rational" schedule of physician payments. For decades, they had been paying physicians according to what were called "usual, customary, and reasonable fees." This was more or less whatever doctors decided to charge. Not surprisingly, some of the charges began to rise considerably. There were some egregious distortions. For instance, fees for cataract surgery (which could reach six thousand dollars in 1985) had been set when the operation typically took two to three hours. When new technologies allowed ophthalmologists to do it in thirty minutes, the fees didn't change. Billings for this one operation grew to consume 4 percent of Medicare's budget. In general, payments for doing procedures had far outstripped payments for diagnoses. In the mid-eighties, doctors who spent an hour making a complex and lifesaving diagnosis were paid forty dollars; for spending an hour doing a colonoscopy and excising a polyp, they received more than six hundred dollars.

This was, the federal government decided, unacceptable. The system discouraged good primary care and corrupted
specialty care. So the government determined that payments ought to be commensurate with the amount of work involved. The principle was simple and sensible; putting it into practice was another matter. In 1985, William Hsiao, a Harvard economist, was commissioned to measure the exact amount of work involved in each of the tasks doctors perform. It must have seemed a quixotic assignment, something like being asked to measure the exact amount of anger in the world. But Hsiao came up with a formula. Work, he determined, was a function of time spent, mental effort and judgment, technical skill and physical effort, and stress. He put together a large team that interviewed and surveyed thousands of physicians from some two dozen specialties. They analyzed what was involved in everything from forty-five minutes of psychotherapy for a patient with panic attacks to a hysterectomy for a woman with cervical cancer.

They determined that the hysterectomy takes about twice as much time as the session of psychotherapy, 3.8 times as much mental effort, 4.47 times as much technical skill and physical effort, and 4.24 times as much risk. The total calculation: 4.99 times as much work. Estimates and extrapolations were made in this way for thousands of services. (Cataract surgery was estimated to involve slightly less work than a hysterectomy.) Overhead and training costs were factored in. Eventually, Hsiao and his team arrived at a relative value for every single thing doctors do. Some specialists were outraged by particular estimates. But Congress set a multiplier to convert the relative values into dollars, the new fee schedule was signed into law, and in 1992 Medicare started paying doctors accordingly. Private insurers followed shortly thereafter
(although they applied somewhat different multipliers, depending on the deals they struck with local physicians).

There is a certain arbitrariness to the result. Who can really say whether a hysterectomy is more labor-intensive than cataract surgery? A subsequent commission has reexamined and recalibrated the relative values for more than six thousand different services. Such toil will no doubt continue in perpetuity. But the system has been accepted--more or less.

E
VEN WITH THE
fee schedule in front of me, I had a hard time figuring out how much I'd earn. My practice would primarily involve office visits, some general surgery (appendectomies, gallbladder removals, bowel and breast surgery), and--given my interest in endocrine tumors--a lot of thyroid and adrenal surgery. Each of these procedures pays between six hundred and eleven hundred dollars, and I could expect to do eight or so a week. Assuming I worked forty-eight weeks, it seemed that I could make a flabbergasting half-million dollars a year. But then I'd have to spend thirty-one thousand dollars a year on malpractice insurance and eighty thousand dollars a year to rent office and clinic space. I'd have to buy computers and other office equipment and hire a secretary and a medical assistant or a nurse. The department of surgery deducts 19.5 percent for its overhead. Then there are the patients who don't have insurance and can't afford to pay--15 percent of Americans are uninsured, and like many other doctors, I believe we're obligated to care for such patients insofar as we can. Furthermore, even when patients are insured, some insurance companies pay far less than others. Studies also indicate that
insurers find a reason to reject payment for up to 30 percent of the bills they receive.

Roberta Parillo is a financial-disaster specialist for doctors who is called in by physician groups or hospitals when they suddenly find that they can't make ends meet. ("I fix messes" was the way she put it to me.) She started out in graduate school in American literature ("I was going to be a writer") but when that didn't pan out, she began working with a group of Connecticut doctors, helping them figure out insurance forms. She's now in her fifties, living on airplanes and in hotels and still doing much the same. At the time I spoke to her, she was in Pennsylvania, trying to figure out where things had gone wrong for a struggling hospital. In previous months, she'd been to Mississippi to help a group of a 125 physicians who found they were in debt, to Washington, D.C., where a physician group was worried about its survival, and to New England (she didn't want to say exactly where), for a big anesthesiology department that had lost fifty million dollars. She'd turned away a dozen other clients. It's quite possible, she told me, for a group of doctors to make nothing at all.

Doctors quickly learn that how much they make has little to do with how good they are. It largely depends on how they handle the business side of their practice. Many doctors expect patients to deal with insurance problems. But that's a recipe for not getting paid. If the doctor sends in a bill and the insurer rejects payment, unless the matter is resolved within ninety days, insurers will pay nothing. Pass the bill on to the patient and many will not pay either. So, to be successful, she said, you have to take on many of the insurance troubles yourself.

"A patient calls to schedule an appointment, and right there things can fall apart," she said. If patients don't have insurance, you have to see if they qualify for a state assistance program like Medicaid. If they do have insurance, you have to find out whether the insurer lists you as a valid physician. You have to make sure the insurer covers the service the patient is seeing you for and find out the stipulations that are made on that service. You have to make sure the patient has the appropriate referral number from his or her primary care physician. You also have to find out if the patient has any copayments or outstanding deductibles to pay, because if so, patients are supposed to bring the money when they see you.

"Patients find this extremely upsetting," Parillo said. "'I have insurance! Why do I have to pay for anything! I didn't bring any money!' Suddenly, you have to be a financial counselor. At the same time, you feel terrible telling them not to come in unless they bring cash, check, or credit card. So you see them anyway, and now you're going to lose 20 percent [about what a copayment covers], which is more than your margin, right off the bat."

Even if all this gets sorted out, there's a further gauntlet of mind-numbing insurance requirements. If you're a surgeon, you may need to obtain a separate referral number for the office visit and for any operation you perform. You may need a preapproval number, too. Afterward, you have to record on the proper billing forms the referral numbers, the preapproval number, the insurance-plan number, the diagnosis codes, the procedure codes, the visit codes, your tax ID number, and any other information the insurer requires. "If you get anything wrong, no money--rejected," Parillo said. Insurers also have
software programs that are designed to reject certain combinations of diagnosis, procedure, and visit codes. Any rejection, and the full bill goes to the patient. Calls to the insurer produce automated menus and interminable holds.

Parillo's recommendations are pretty straightforward. Physicians must computerize their billing systems, she said. They must carefully review the bills they send out and the payments that insurers send back. They must hire office personnel to deal with the insurance companies. A well-run office can get the insurer's rejection rate down from 30 percent to, say, 15 percent. That's how a doctor earns money, she told me. It's a war with insurance, every step of the way.

W
HEN
I
WAS
going through medical training, a discouraging refrain from older physicians was that they would never have gone into medicine had they known what they know now. A great many of them simply seemed unable to sort through the insurance morass. This was perhaps why a 2004 survey of Massachusetts physicians found that 58 percent were dissatisfied with the trade-off between their income and the number of hours they were working, 56 percent thought their income was not competitive with what others earn in comparable professions, and 40 percent expected to see their income fall over the next five years.

William Weeks, a Dartmouth professor, has done a number of studies on the work life of physicians. He and his colleagues found that working hours for physicians are indeed longer than for other professions. (The typical general surgeon works sixty-three hours per week.) He also found that, if you
view the expense of going to college and professional school as an investment, the payoff is somewhat poorer in medicine than in some other professions. Tracking the fortunes of graduates of medical schools, law schools, and business schools with comparable entering grade-point averages, he calculated that the annual rate of return by the time they reach middle age is 16 percent per year in primary care medicine, 18 percent in surgery, 23 percent in law, and 26 percent in business. Not bad on the whole, but the differences are there. A physician's income also tends to peak when he or she has been in practice five to ten years and then to decrease in subsequent years as his or her willingness and ability to work the long hours wane.