Let’s Talk About Money

By Lance Kugler, MD (bio)

Much of the focus of the national healthcare debate so far has focused on the concept of a “single payer” or a “government option” for health insurance. The question of whether physicians and hospitals should be reimbursed by a government insurance plan versus a web of private plans is a common thread in the discussion. As physicians, this debate seems perfectly reasonable as we are all accustomed to our services being reimbursed by a third-party payer, whether it is Medicare, Tricare, Medicaid, or private insurance. The concept of a patient paying directly for care out of his or her own pocket is foreign to most U.S. physicians, and when a patient without insurance is encountered, they immediately become a charity case. How this became to be the norm is a complicated topic beyond the scope of this article, however it is prudent to take a step back from the current debate and realize how different medicine is from other industries in our free market economy. Regardless of the outcome of the national debate on health care reform, in order to maintain the same standard of care patients are likely to be more directly responsible for the cost of their care. Ophthalmology, in particular, is uniquely positioned to provide life-changing procedures to patients outside of the third-party payer world. Physicians, however, are typically uncomfortable discussing the cost of care with patients which creates an unusual business model.

For decades U.S. physicians have practiced in a business environment unlike any other. We have provided expensive services to our patients, and generally been reimbursed well for such services by a third-party to whom the patient pays a relatively small amount. Imagine if employers paid a premium to an “Auto-Plan” on behalf of an employee. The employees could then go to their local auto dealer and pick out the car he or she desired. The auto-dealer would then send the bill to the Auto-Plan and receive payment a few weeks later. Obviously this is not a perfect metaphor, but it illustrates the uniqueness of the third-payer model in healthcare. This arrangement has allowed physicians to virtually ignore discussing the cost of the services they are recommending to their patients. We have been able to pass the burden of discussing the bill on to the insurance companies, or to our own internal billing specialists.

Medical schools and residency programs have understandably taught us to practice within this model. We are taught that discussion of money taints the doctor-patient relationship. We order imaging tests, perform sophisticated laboratory evaluations, and provide state-of-the-art surgical procedures--each for thousands of dollars--with virtually no discussion with the patient as to the costs. In more recent years, as reimbursement from third party payers has declined, we have become more aware of the costs and have worked toward containing our overhead expenses, however a discussion of the specific cost of services with our patients has remained generally unnecessary. Many physicians chose medicine as a career partly because of a lack of interest in salesmanship or financial matters. Had they excelled in sales or finance they likely would have gravitated toward other industries.

There are certain segments of medicine that are exceptions to this model. Cosmetic surgery is an example, as is refractive surgery, and more recently premium cataract surgery with presbyopia correcting or astigmatism correcting IOLs. Successful surgeons in these fields have developed the necessary skills to discuss the cost of their services with their patients, and often engage in salesmanship. Some practices have designated staff members to do so on behalf of the surgeon, but in other practices the surgeons have frank discussions directly with their patients. I have found in my own experience that patients appreciate when their doctor has an honest discussion with them about pricing. They are accustomed to discussing price in every other sector of our economy, particularly when the costs are as high as they are for elective surgery.

Although these skills are uncomfortable for most surgeons, the good news is that ophthalmologists have a tremendous product. Ophthalmologists are uniquely positioned to provide life-changing technology and surgical procedures to our patients. The CMS ruling several years ago allows us to offer technology with significant benefit to our patients, separate from third-party payers. Most elective procedures in other fields, such as cosmetic surgery, are cosmetic in nature and do not offer significant functional benefit. Refractive and presbyopia correcting cataract surgery, however, provide functional benefit as well as cosmetic benefit. A recent survey confirmed that patients are much more interested in the functional benefits of presbyopia correcting IOLs than they are the potential cosmetic benefit [1].

The political forces shaping the future of our healthcare system are powerful, and change is inevitable. Our unprecedented business model of high-priced payment from a third-party will likely change significantly. As third-party reimbursement continues to decline, and more of the cost burden shifts to patients and providers, discussion of cost will continue to increase in importance. In order to be successful, physicians will be required to actively hone their skills in this area. Doing so will allow patients to continue to receive high quality care and feel comfortable with the associated costs, and will allow physicians to continue to cover their overhead expenses and remain solvent.

Reference

1. Mahdavi. A survey of consumer demand for premium cataract surgery. SM2 Strategic, 2009