Healthcare Facts and Fiction: What the General Public Needs to Understand About Healthcare in America.
Understanding healthcare delivery, pricing, payment and business is a complex topic dissection. As such, we initially approached healthcare in a general fashion for Part I. Part II explained drug procurement and pricing. In Part Three we will explore the education, practice, and payment of physicians. Leave your pretensions at the door. It's not what most people think it is....
Part III: The doctor investment: time, education, licensing, expenses, and income.
He drove down the street in his new Cadillac, an annual spring automobile ritual for as long as you can remember. You also remember the garage to the house he pulled into. The one in the exclusive neighborhood. His wife gorgeous, his children in new clothes every season of every year. They bought the latest electronics, bicycles, and gadgets of all types. First in the neighborhood to have color TV. The family vacationed as regularly as the seasons changed. The life of a town doctor was self-directed, income steady and professionally rewarding. That was the 60s, 70s, and even into the 80's. The upscale life of most physicians is long gone along with autonomous and satisfying work. It's a tough way to make a living in 2018.
The Education and Cost:
An aspiring 18 year old future physician must first attend a basic four year undergraduate school typically majoring in biology, pre-med, or some similar life science based degree. This cost is widely variable so let's look at Lancaster County, Pennsylvania where there is a private Ivy League (Yes, Ivy League.) school and a state university. Franklin and Marshall is the private institution that will set you back $69,243 per year including tuition, fees, room and board. If eligible for grants the cost drops to $28,157 per year according to CNN Money (1). Either way it is four years and between $112,628 and $276,972. We will take the $276,972 as the cost as grants and scholarships are like the weather, unpredictable and uncertain. For state residents on a budget there is Millersville University where a four year degree, including in-state tuition, fees, room and board for state residents tolls in at $114,700 (1) pre-grants and scholarships.
Undergrad Cost: $114,700 at a state university and $276,972 at a private college.
Medical school is the next step for this now 22 year old hopeful physician. Here begins the real fun. First you must take the MCAT exam for a mere $315 and you must do well on it so you pay varying costs for prep classes and materials. The next fee faced is the American Association of Medical Colleges (AAMC) who will charge you $160 for your first medical school application submission and $39 for each additional school thereafter. Keep in mind there may be a secondary application fee of up to $200 demanded by the medical school. Additionally some colleges charge "... a small fee to forward your college transcript" (2). There will be a live interview, which means travel and probably an overnight stay to add to the cost.
Like undergraduate school costs, actual medical school tuition varies from in state to out of state. Let's say our above Pennsylvania student wishes for Harvard and the $53,581 per year price tag or Johns Hopkins for nominally less $47,284 annual tuition (3). Ok, the cost is too great so this student chooses Penn State University charging $41,860 yearly for in state residents. So that leaves us on the less expensive PSU Med School side at $167,440 and another four years of time and study.
Medical School Application Process and MCAT exam: $475 minimum to as much as $4000.
Medical School Tuition: $167,440.
The now 26 year old student is currently $282,615 in debt for a state resident attending a state university and a state medical school. Intern/Residency is the next educational step and not as financially destructive as undergrad and med school. This physician education phase lasts 3-5 years. The first year, usually known as PGY-1 (Post Graduate Year 1, sometimes known as the "intern year"), exists as a general introduction to all medical areas like emergency, obstetrics, internal medicine, general surgery, and orthopedics among many others. Our future physician then spends the next two to four years in their chosen area of practice. For example, cardio-thoracic surgery may require five years total residency while cardiology may be three years.) Our fledgling doctor wants to be a cardiologist so her residency is three years. All is not lost as she now is paid $62,000 per year with the average resident pay over all specialties listed at $57,200 (4). Sounds pretty good except this is for 60-80 plus hour work weeks that were much longer and more rigorous in years past. If you find a doctor over age 45 or so, you can bet they worked 100 hour or greater weeks routinely as residents.
Now 29 years old and not so young anymore, our student really desires the allure of the cardiac cath lab. That Interventional Cardiology job requires a Fellowship of, yes, four more years. Ok, now our student is ready to embark on her medical practice journey at age 33 and with probably a few more thousand dollars debt, especially if she married and became a mother. Let's round up to $300,000 debt in a very conservative number and best case scenario. The interest rate is 4.56% on the undergraduate loan, 6% to 7% for the graduate (med school) loan (6). While our intrepid doctor does not need to pay off her student loan principal yet, she will accrue interest from day one of her undergraduate loan so waiting to pay until after her fellowship is not in her best financial interests.
Fifteen years of Training
Our student has taken exams, lots of exams to cross the physician finish line, but the biggest lies ahead: Board exams. Initial internal medicine boards cost $1385 followed by interventional cardiology boards priced at $2905 for our young physician. Enter one of the more nonsensical situations facing physicians. To remain "boarded" physicians are required to sit for their respective boards every ten years (Family Practice is every seven years.)! There is a cost break at $650 for the internal medicine board exam and $1200 for all subspecialties. The option is a "knowledge check" for internal medicine every two years costing $150 ($650 over ten years) and $240 for all other subspecialties ($1200 over ten years). Additionally there is a maintenance of certification (MOC) annual fee of $155 per year for another $1550 over ten years (5). So for our newly minted interventional cardiologist it will cost $2200 for IM boards/MOC plus $2750 for interventional cardiology boards/MOC.
$4290 for initial board exams then $4950 for MOC/Boards every ten years
So why all the fuss over "Boarding?" Board certification becomes important based on insurance payments, the financial life blood of all medical practices and systems. Boarded physicians are usually readily accepted to "participate"meaning receive payment from an insurance company. An unboarded doctor down the street practicing the same medicine for the same time span who is not boarded may not be allowed to "participate". That means insurance companies can limit competition and control pricing more easily with fewer participating physicians. Insurance companies love this quirk as squeezing prices downward and paying less is always in their best interest. A currently boarded physician is more clinically astute and therefore worth more money remains both ABIM's and insurers' battle cry even though there is no objective proof this is true after initial boarding. There was and still is considerable push back from physicians to this entrenched money extracting policy by both insurances and ABIM. It is simply not feasible for most physicians to carve out the time to study and shell out after tax dollars to retake an exam every ten years. Fortunately there is the new ABIM, every two year knowledge check in lieu of the every decade year exam. There is no other profession requiring retaking board exams after initial passing. The norm is maintenance by verifiable continuing education units (CEUs). I did review the twelve top ABIM executives and found no overt, formal insurance company relationships, but that doesn't prove unequivocally their are none.
Board Certification exams are monitored and offered by ABIM (American Board of Internal Medicine), which is the governing umbrella for most MD physician (DOs have their own boards) board exams and certifications in America. ABIM turns out to be a very lucrative "gate holder" industry. From the ABIM website, fiscal year 2017 shows a $54.8 million budget of which 15% goes to administration and 6% to governance totaling $11,508,000. "Physicians working for ABIM earn $400,000 to nearly $1,000,0000 annually" and "It has been estimated ABIM receives approximately $4,000 for each [exam] test question it develops" (7). Great work if you can get it. Many physicians are no longer taking this financially extractive situation lightly. Currently over 22,000 doctors have signed a petition challenging ABIM and forming a new organization: National Board of Physicians and Surgeons (NBPAS) causing the new ABIM MOC/Board process change to include the new every two year knowledge check as a very contentious and open physician revolt expanded and still rages.
Fifteen years of training and I make what and pay $45,000 annually for malpractice insurance?
Physician pay isn't what it used to be. Our interventional cardiologist is now 33 years old, at least $300,000 in debt, probably more, and has lost out on eleven years of true income producing work that many of her high school classmates with undergraduate degrees in science and technology enjoyed. Bluntly assessed, she has lost eleven years of earning time. Now the good news: the national average annual salary for interventional cardiology is $427,000 (8). For perspective a primary care internal medicine doctor sees $219,000 average annual pay with most internists under the $200,000 threshold (8). Our doctor's salary sounds good and it is good until you look at servicing her school debt, malpractice insurance, taxes, and office overhead including Electronic Medical Records (EMR).
Malpractice insurance for our interventional cardiologist who will now practice in Pennsylvania falls somewhere on the lower end of general surgery rates or about $45,000 annually (9). Again for reference, the general internist pays on average $21,500 annually and Pennsylvania has the second highest malpractice rates (Only NY is higher) in the country (9). Malpractice insurance rates are based on court payouts and PA is a terrific payout state. And taxes! The 2018 new federal income tax rates place our doctor solidly in the 35% tax bracket. Servicing a $300,000 debt at 6.00% (The probable interest rate on her loans as discussed earlier.) over twenty years means $2149 per month payment. And electronic medical records (EMR)! EMR is legally mandated for obtaining Medicare and Medicaid payments and will cost an exorbitant $25,000 if she is an "add on" to an existing system meaning she has partners already on an EMR system (10). If she is solo, which is cost prohibitive, the expense can reach $100,000 or more.
Medical professionals spend 55 cents of every earned dollar on overhead (9). Outside of the costs discussed, much of this is related to medical coding and billing, and meeting EMR requirements. Medicare and Medicaid represent about 16 million patients in the US with Heart and/or cardiovascular disease. Many health insurances are also pressuring EMR adoption with slower physician payments as the steady pressure to those not submitting bills electronically.
So Let's Work: Another $735 every two years for medical licensure and $731 every three years for a DEA License
Yes, the medical doctor in our example must also obtain specific state mandated CMEs plus CMEs of choice to total 50 every single year to maintain an unrestricted Pennsylvania state medical license. More time and sometimes more money. Time to work....
Not so fast! Enter the insanely labyrinthine insurance credentialing process and individual state medical licensure craziness. A physician must have a National Provider Identification (NPI) number, a state medical license, a DEA number, and in some states a Pharmacy License. Credentialing is the process whereby the physician must fill out a grossly long (about 25 pages), nonsensically complex and laborious questionnaire so the physician may "take part" with a specific insurance. Oh, and she will get to perform this unbelievably silly exercise for every insurance company she wishes to participate with: code for "paid for her work and told what her work is worth, not what she charges". Insurance companies love dragging their feet in what seems an exercise in asserting dominance. The entire licensing and credentialing process can take 3-6 months and sometimes longer. Pennsylvania does not list its costs and time for medical licensure but adjacent NY does: $735 and 8-12 weeks.
If the physician moves from 10 Main Street to 12 Main street, guess what? They get to redo the entire tortuous credentialing process again based on a simple address change. One can only look at this situation and wonder why anyone would want to become a doctor in the United States. Insurance controls the industry at the political level (Medicare Part D and ACA are the most recent examples) and the provider level (Insurances "negotiate" what doctors will be paid and hold the right to deny physician payment or lower it.). Free market? Hardly.
Many of these year to year practice expenses like malpractice insurance, EMRs, re-boarding and licensing can be mitigated if the physician decides to join a hospital/health care system. The trade off is a lower salary for less initial financial output and ongoing medical business headaches particularly in the coding and billing realm.
The final tally: 15 years and approximately $375,868 in debt to join a private practice or start a practice with some other newbies, or $300,000 to become a health system employee. Forget a solo practice as it is cost prohibitive. Return On Investment may be minimal or negative based on physician life span and uncertain future medical system legislative changes. Don't forget the long hours, call time (Anyone out there like being awakened in the middle of the night, weekends, holidays?), and other myriad regulations not mentioned in this short article.
Keep in mind this is a general example and there are many variations and considerations. Inclusive information would take volumes. The salient points: Becoming a doctor is expensive in money, time, and bureaucratic red tape. Financially extractive policies exist throughout boarding and licensing for the doctor to remain legally qualified to work. Insurance controls healthcare.
We haven't covered the AMA, coding and billing, insurance price negotiations, insurance care directives, and other health insurance industry shenanigans. They await in Part IV...
(1) https://money.cnn.com/tools/collegecost/collegecost.htm
(2) https://students-residents.aamc.org/financial-aid/article/the-cost-of-applying-to-medical-school/
(3) http://medical-schools.startclass.com/compare/24-70/Harvard-Medical-School-vs-Penn-State-Milton-S-Hershey-Medical-Center-College-of-Medicine
(4) https://www.medscape.com/slideshow/residents-salary-and-debt-report-2017-6008931#9
(5) http://www.abim.org/maintenance-of-certification/moc-faq/moc-fees.aspx
(6) https://www.accesslex.org/xblog/2017-2018-interest-rates-announced
(7) http://bilhartzmd.com/?p=1010
(8) https://www.glassdoor.com/Salaries/interventional-cardiologist-salary-SRCH_KO0,27.htm
(9) https://www.gallaghermalpractice.com/blog/post/how-much-does-medical-malpractice-insurance-cost
10) https://www.usfhealthonline.com/resources/.../electronic-medical-records-mandate/
(11) https://medicushcs.com/physician-licensure-application-fees-and-timelines-by-state/
