Losing proposition: When doctors take in less than what goes out

Physicians are struggling to cope with outlays that are rising faster than their reimbursements. Is there a way to tame growing cost?

By Julie A. Jacob, AMNews staff. Jan. 7, 2002.

When your costs are rising and your reimbursement is declining, how do you make ends meet? That's the dilemma facing many doctors today who have overhead costs that are going up faster than their revenue.

Physicians around the country say it's not easy to figure out ways to trim costs without affecting patient care. They said they are coping by eliminating staff positions, dropping health insurance benefits for employees or switching to higher-deductible plans, working longer hours, buying supplies through purchasing alliances, moving to electronic medical records or even cutting their own salaries.

His malpractice insurance premiums jumped 59% last year, he said, and health insurance premiums for himself and his five employees increased 20% -- and that was after he dropped family coverage for his employees because it was simply too expensive.

At the same time, one of the managed care companies that he has a contract with cut reimbursement by 42%.

He's coping by taking home less money for himself. "If I was a younger physician I don't know what I'd do ... but I'm 63 years old and I don't need that much money. The kids are educated, we can live on less, and we will," Dr. Jakubec said.

Edward Reichelt, MD, a family physician in Arlington, Texas, said his practice costs had gone up about 15% last year while his revenue went down, he said.

"Medicine, supplies -- we're paying more for everything," he said.

He's simply trying to work harder to make up for it, he said. [...]