The proverb goes: “Physician, heal thyself.” However, the business of doctoring is too often out of the control of its practitioners. Exorbitant medical malpractice insurance premiums, mountains of paperwork associated with their patients’ medical insurance or the doctor’s participation in a managed care group, government regulations governing their operations and financial accounting, and the growth of non-physician medical professionals are reshaping the way doctors do their job.

Chip Frame, managing director of the Center for Healthcare Leadership and a professor of marketing at Emory University’s Goizueta Business School, notes that doctors who have been practicing for the past decade or two are finding it particularly hard to work in the current environment. These physicians remember a time when HMOs, medical malpractice insurance and various insurance reimbursement issues didn’t play a significant role in their profession. “Many of these doctors are retiring earlier,” notes Frame. “They’re spending more time dealing with insurance reimbursement issues, and caps are being placed on procedures, so the reward balance is changing, and it is not for the better.” As well, a doctor’s office can literally be awash in a sea of paperwork related to their patient’s health insurance. Frame describes the administrative functions of the modern physician’s practice as “their ancillary business.”

Frame notes that today’s medical students, while aware of the constraints on their profession, still remain somewhat naïve as to the increasing economic and social pressures at work on the field. “They often don’t know what they are really getting into when they become medical students,” he says. To that end, Frame lectures for a course at Emory’s School of Medicine, titled “The Business of Medicine,” which introduces second-year medical students to the organizational and market realities of the American healthcare system.

For most physicians, skyrocketing medical malpractice rates, particularly for obstetrics, anesthesiology and surgical specialties, continue to drive them from the higher risk path. Recent findings from the American Medical Association (AMA) and from the U.S. General Accounting Office note that doctors are bowing to the pressure. Some are choosing to restrict the services they offer in order to reduce their premium costs, by ending their obstetric care in favor of gynecological services or by funnelling specialized and risky surgical procedures to other doctors.

Without effective caps on medical liability settlements, say industry insiders, medical malpractice premiums will continue to increase at a tremendous pace. Indeed medical malpractice premiums for doctors topped the $21 billion mark in 2001, double the cost of a decade before. In May, The Joint Economic Committee of the U.S. Congress issued a report titled “Liability for Medical Malpractice: Issues and Evidence,” noting that increasing lawsuit settlements did serve to dramatically boost medical malpractice premiums. Various proposals to limit the awards made in malpractice cases have met with considerable opposition from trial lawyers and other interests, effectively stymieing efforts to make any significant legislative change on the national front.

While most physicians complain about the state of the medical malpractice insurance industry and the growing hit to their pocketbook, the restructuring of the way care is delivered remains an equally sore spot. What once was a trip to the friendly neighborhood doctor or local medical center has now become a visit to a more corporate and money-conscious enterprise. Individual practices are fast going the way of the dinosaur, as doctors work in groups to maximize efforts and minimize costs. Dr. J. Edward Hill, a family practice physician and a trustee of the AMA, says that federal regulators are now establishing a standard cost for care, out of the control of the doctors. Medicare and Medicaid, both federally funded health insurance programs, act as the primary insurance coverage for many Americans. In turn, federal regulators approve and limit the amounts that physicians can bill for medical procedures through these insurance programs, effectively acting as the body setting the pricing on much of this same care.

Additionally, Hill confirms that doctors are spending inordinate amounts of time on the paperwork associated with their patient’s medical insurance, additional federal regulations, or on contractual matters as a part of a managed care (HMO) group. The lack of control that physicians have over their own fate does trouble those in the profession, says Hill.

Unfortunately, this “corporatization” of medicine is a large reason for the growing malaise among doctors in the U.S.,” says Dr. Benjamin Druss, a professor of health policy and management at Emory’s Rollins School of Public Health. “For many years, physicians had a clear identity of themselves as a group with a unique set of skills, training, and responsibilities to their patients,” he notes. “This sense of professionalism made them willing to undergo the long course of training, extended work hours and to do the kind of emotionally draining work that is often required.” Now, he says, those in the field complain about the decline in independence that they once had in their work lives.

Today, the influence of HMOs on the medical profession is clear. Total market capitalization of HMOs grew from $3.3 billion in January 1987 to $38.9 billion as of the end of November 1997, according to The Henry J. Kaiser Family Foundation, a nonprofit, independent national healthcare philanthropic organization. Healthcare organizations are on the radar of Wall Street, since the sector remains relatively recession-proof and a consistent earner.

A 1999 report titled “A Financial Overview of the Managed Care Industry” from the Kaiser Family Foundation notes, “Market incentives have been both credited for eliminating unnecessary care and blamed for forcing providers to skimp on quality and quantity of care.” Despite the debate, says Frame, a more “corporate” approach to doctoring and the bottom line has resulted from this industry transformation, and many physicians are unhappy with the new environment.

The same budget constraints that led to the creation of HMOs have also resulted in the creation of less expensive non-doctor medical professionals, such as nurse practitioners and physician assistants. They are performing a portion of the work the doctor used to handle. Dr. Druss, the lead author of the study titled “Trends in Care for Nonphysician Clinicians in the United States” published earlier this year in the New England Journal of Medicine, notes that in the 1990s state legislatures passed laws allowing for these nonphysician medical practitioners to perform many of their services. The changes further accounted for a shifting in the nature of care. Dr. Brant Mittler, a practicing cardiologist and attorney, adds that the percentage insurers pay to the non-physician practitioner, while less than that generally paid to the doctor, is still not that much less. Since there doesn’t appear to be a great differential in the pay structure, says Dr. Mittler, doctors interpret this to mean that the system does not value their time spent training and practicing.

So, what’s a doctor to do in such a complex and challenging work environment? Dr. Mittler admits that there are no easy answers. He notes that many doctors simply refuse to deal with the situation as they find it too overwhelming. However, for such things as managed care issues, Dr. Mittler says that more doctors will need to opt out of the contracts if any sweeping changes are to be made in the system. 

In 1999, the AMA began a union for its doctors, and outside independent labor unions also exist for physicians. However, participation remains limited. Physician protest demonstrations and a limited number of short-term strikes and work slowdowns have occurred in various states across the country, including Pennsylvania, Illinois and New Jersey, further indicating the serious discontent at work in the profession. Still, says Goizueta’s Frame, market forces will continue to dramatically alter the face of medical care. He notes that as healthcare costs continue to rise faster than the rate of inflation, and doctors face increased industry pressures, it seems inevitable that a more “retail-type” model of healthcare will result in the U.S.

This “retail” model has already resulted in more of the medical insurance costs being transferred to the patient and the employer, in the form of increased deductibles for the former and rising premiums for the latter. As that pattern increases, says Frame, this environment will also eventually require the patient to consider the price of medical procedures, with the doctor’s staff providing the costs to the patient in advance of the service. The physician has and will continue to see the backlash from the patient, as far as this shifting burden of costs. Says Frame, “He or she is the one that delivers the bad news about the cost of the service or test. They’re on the front lines.”

Dr. Druss admits that this continued scrutiny from patients, regulators and insurance factions only serves to make the work environment more difficult for the doctor. He concludes, “The challenge now for physicians  is to maintain their professional identities in a system that increasingly sees them as cogs in a larger healthcare machine.”

(September 2003)