A Practice Manager's Perspective on Health Care Reform


health-reformWhen I decided to start the blog, I made a commitment not to complain about how bad things were in the health care industry without at least providing some resolution to the issue at hand. 

So, when I was asked last week to give a practice manager’s perspective on health care reform, how doctors  ought to be paid, and what needs to change so people can get the best quality of care at the lowest possible price, I jumped on the opportunity to give my point of view on what needs to be done to move forward with health care reform.  

Trade Offs 

If Americans want the highest quality of care at the lowest possible price, there is going to be some trade offs. Health care is expensive to provide. How much does a person have to pay to become a doctor? How much does it cost to research and develop a drug or a vaccine?  How much does a doctor have to pay for malpractice insurance, rent, highly qualified employees, equipment, and all the other things that go along with providing care?


There is a lot of talk about reducing the cost of health care. And although I agree cost is an issue, I think we need to be careful not to pursue the lowest possible price while comprising quality health care. Otherwise, we will run into the Wal-Mart model. A product at Wal-mart is in fact the best quality one can get at the lowest possible cost. But we know that in order to provide the lowest possible price, quality is compromised. If one wants a higher quality product, then Wal-Mart is not the place. In other words, you get what you pay for. Health care is no different.  

An example of health care delivered at the lowest possible price is MinuteClinic. Their prices may be a little more affordable than visiting a primary care private practice (although their prices are not much less than our practice), but there is a trade off. Nurse practitioners staff MinuteClinics. In fairness, nurse practitioners do have advance degrees, but they certainly do not go through the rigorous training and cost that an MD has to endure to become a physician.

MinuteClinic’s model allows them to reduce health care cost because of several factors. For starters, they do not staff MD’s. Secondly, MinuteClinic can leverage the synergy afforded by CVS, a multi-million dollar corporation. The model also forgoes continuity of care, referral coordination, coordination of care, chronic disease management, counseling, and many other issues that primary care physicians deal with on a day-to-day basis.

 You see the trade off?

It is not about how much your make, but how much you spend

In financial business matters, we often hear experts say, it is not always about how much you make, but rather how much you spend.  Thus, before we can discuss payment reform concerning how doctors should be paid, we need to examine what drives cost in health care, particularly for private practice doctors.

Insurance Companies = Increase in Cost = Bad

We can achieve savings – and as a result drive the cost of health care downward –  by removing many of the excesses that hinder our ability as service providers to deliver health care. Therefore, I would consider removing the power health insurance companies have over doctors. Insurance carriers make up rules that suit themselves, and then change them whenever it is to their advantage, which happens frequently. 

To give you an idea of how many changes insurance carriers make, take a look at the Verden Group’s report (here), which outlines insurance carrier’s changes. Keep in mind the report only highlights quarterly results. Susanne Madden, president and CEO of The Verden Group, gave a great interview that summarizes the challenges primary care faces when dealing with insurance companies. You can check out the interview here.

Our small pediatric office of two doctors deals with about 80 different insurance companies. Each company has it own rules, forms, pre-requisitions, fee schedule, reimbursement rates and many other unique things for us to do in order to be paid. The larger insurance company have different product offerings within each plan. This adds to the complexity and uniqueness of each plan. We have patients, for example, that work for the same company and insured by the same insurance carrier, yet the insurance policy pays out differently for the same services.

Managing this process drives cost upward. By removing the administrative burden of dealing with insurance companies, doctors could increase revenues by spending less on administrative cost. The extra money and time can be spent caring for patients, which increases quality of care.  

The problem with insurance companies is that they decide the rules and make changes to their rules at will without letting anybody know about them. There’s no transparency in pricing; no transparency in contracting; no transparency in rules.

Who should set reimbursement fees?

Insurance companies ought not to be allowed to set reimbursement fees. They have a conflict of interest when deciding what is appropriate reimbursement for medical care. Therefore, in order for doctors to offer the best care possible, they must be paid fairly for their services without a third entity –who has a conflict of interest- decide what is proper compensation for their work.

 Malpractice insurance = increase in cost = Bad

Malpractice insurance is another area that should be looked at as well in an effort to reduce the cost of health care. Doctors spend outrages amounts of money on malpractice insurance. According to the AMA, 20 states have a true malpractice crisis. The reason for the high cost of malpractice insurance, is because of the US legal system; which does very little to protect honest doctors.

The current legal system encourages health care providers to practice medicine defensively. More often than not, test, labs, referrals are not necessary, thus in an abundance of caution, a physician will move forward with an unnecessary treatments to reduce the liability of a medical malpractice suit.

I do acknowledge that medical negligence does exist and some doctors are more careful than others. But what I am suggesting is that if doctors were protected from the legal system, they would not have to practice medicine defensively. Consequently, malpractice insurance premiums would decrease and as a result, so would health care cost. I also believe quality would improve because the doctor can focus without the distraction of a potential lawsuit.

But wait… there is more.

I’ve only begun to scratch the surface of how I think health care ought to be reformed. But from a practice manager’s perspective, these are the two main issues I consider hinder medical offices’ ability to provide high quality care at an affordable price.

Our leaders, the ones that can reform health care, are required to understand more than ever the need to carefully rethink each component of the health care system. For the survival will require bold and decisive actions.

How would you start to put health care reform on the right path?








  1. Nice start on a big, hairy issue.

    It’s not entirely clear how things will play out, with the new incentives to inject at least healthcare IT into the reform equation. There’s a bit of the carrot > stick going on, thus incentivizing folks to modernize (way overdue). And one aspect of HIT is at least potentially, the availability of trackable data — how long it takes your pts with XYZ to get better compared to Dr. Smith across town, how much money is spent on brand vs. generics, what diagnostic codes you’re seeing lots of, etc.

    The problem, is that there’s been no shortage of IT at the insurer level, for example. And things there aren’t any less “Star Chamber” or opaque because of it. See the hilarious “Insurance Company Rules” video: http://www.youtube.com/watch?v=bVpX5fUvPlg.

    And legal reform, to allow any hope in heck of malpractice reform? There are an awful lot of hungry MedMal trial attorneys who’d have a thing or two to say about that.

    But, if there really is a national will to save this sinking ship — and as most doctors know, it *is* going down, or at least heading towards an iceberg — change will happen.

    We’re in the position now, that Greenspan wishes he were in a few years back: there’s no shortage of healthcare industry insiders screaming that the sky is falling, and the media pretty much agrees. No WAY anyone will be able to claim that The Collapse of the American Healthcare System came as a stunning surprise.

    The writing is on the wall. Heads will roll if the USS Healthcare tanks.


    • pediatricinc says:


      Even if the current administration implements some of things they are proposing, things are going to get worse before they get better.

      I find it a disheartening that as a country, we are poised to make a huge leap into the right direction as far as health care is concerned, however, it seems that the leadership is not doing a very good job in managing the priorities.

      The question I have for them is, is primary care important?

      Thank you for sharing your thoughts.