How are doctors paid?

[Oh Haha]

Kinda bored on a Saturday night.........


How does a doctor in private practice pay themselves?

[ckelly78z]

It seems here lately that I walk in the door, and their prayers are answered.......lots of treatments and tests.

[Tobra]

Depends on a lot of things. A private practice, solo practitioner is becoming a rare item. Much more common is multi disciplinary groups where the doctors are employees and/or shareholders.

I am self employed solo guy, I pay myself as little as possible.

[Oh Haha]

[QUOTE=Tobra;7191282]Depends on a lot of things. A private practice, solo practitioner is becoming a rare item. Much more common is multi disciplinary groups where the doctors are employees and/or shareholders.

That makes sense. Most doctors in our area are associated with the large hospitals in the region.

It is pretty rare to see a practice NOT tied to one of the hospitals.

So would the doctors draw a salary from the hospital?

[John Rogers]

The doctor we have had for well over 20 years has a corporation with several other doctors, nurses, front desk employees and the coding/billing people. She is also contracted with the closest hospital and as such pulls E/R duty, she was there when my wife had pneumonia last year but she does not do any surgeries although she used to many years ago. One of our friends from the Porsche club is the E/R chief and as well as doctor stuff he also has to do a lot of administration stuff.

[Moses]

I'm like Tobra. Self employed solo practice. Although my practice is hospital based, I don't get paid by the hospital at all. I just use their operating rooms. They make money when I admit my patients to their hospital.

I bill my patients insurance companies for office visits and surgery. I pretend to work and they pretend to pay me.

[craigster59]

Very slowly. But they have a lot of patients...

[Noah930]

That's a surprisingly complicated question to answer.

Traditionally doctors were in solo private practice. After completing internship/residency training, a doctor would hand a shingle and start seeing patients. In the traditional model of fee-for-service, the doctor would bill the patient and the patient would pay the bill.

More recently health insurance companies have popped up. If a doctor wants access to the patients/customers within a pool covered by a particular insurance company, the doctor signs up to be a recognized provider under that health insurance plan. The doctor is then allowed the see the patient and bill the insurance company for the treatment. The fees are agreed upon in advance (based upon a contract). The doctor agrees to accept that fee schedule. Usually/almost always the fee schedule is loosely based upon Medicare reimbursement rates; for example, the contract may specify that the insurance company will reimburse 125% of the Medicare fee schedule. Whether the insurance is Blue Cross or Medicare, the concept is fairly similar. If a doctor is not "within network" then the doctor is not bound by that fee schedule and can bill whatever is usual and customary for him/her; the insurance company will pay whatever they feel like and the patient is technically responsible for the rest (obviously how much each party covers is the big part of the debate). The benefit for the doctor is an available pool of potential customers provided by the insurance company. The detriment is that the agreed upon fee schedule is going to be lower paying than the usual and customary billing practice. Hence, patients usually don't want to be stuck with a big bill ("hey, isn't that what I'm paying insurance for?)" and will often not want to stray from the medical provider network of their insurance plan. But with insured patients (within network) the doctor will bill the insurance company. Part of this includes providing proof (via medical records/charting) that the service billed for was actually performed; a doctor can't just bill for a procedure or diagnosis--he/she has to demonstrate via medical records that the procedure/diagnosis exists. If a patient is out-of-network, then the doctor will often bill the patient directly and let the patient sort it out with his/her insurer.

Either way, there is a difference between what's billed, and what's collected. You can bill a million dollars for something, but that doesn't mean you're going to get paid a million dollars for it. So in traditional private practice, a doctor earns a living via his/her collections. Whether that's money collected from a patient directly, or from the patient's insurance company. Increasingly people "pay" via insurance. There are statistically few people who pay out of their own pockets. Technically those patients are referred to as "self pay" or "cash pay" patients. That's also the euphemism for those patients (i.e. typically in the ER or if you're called for an in-hospital consult) who wind up not paying you anything for your efforts.

And obviously, like in any other business, a doctor doesn't just take home whatever's collected. There's a business to run--an office to cover. So for every dollar collected, perhaps 45-75% may go to office overhead. If a doctor collects a dollar, he/she may really take home 25-55 cents. This is the traditional "eat what you kill" model. A doctor's income depends on what's collected. And what a lot of people (and doctors) don't realize is that just because you're busy doesn't mean you're making money.

[Noah930]

More recently over the past few decades there are more multiple-physician practicees. These are still private practices--just with more than one doctor in the group. This has happened due to a variety of reasons: the business and logistical headaches of running a solo practice business, certain efficiencies of scale by having multiple doctors under one roof, potential marketing advantages by having multiple providers, more relaxed call schedule, etc. Either way, the essential billing and collecting practices continue: fee-for-service and/or participating in insurance plans. The doctors are still the partners/bosses running their business. How a doc earns an income within the group model will vary. Some groups will still have "eat what you kill" economics, minus a communal and equal contribution to the office overhead. Other groups may have some sort of profit-sharing or division of collections, such as where an individual may take home x% of their collections but then contribute the remaining percentage of collections to a pot that gets divided equally amongst the docs. Again, though, this is still a practice run and owned by the docs involved.

That's different than the even more recent trend of being hired by a large group or hospital. In this situation, the doctors are W-2 employees. This seems to be happening more frequently. Partly because of the economics of private practice, the hassles with running a business, the hassles of increasingly relying upon large insurers (whether private insurance companies or federal ones like Medicare/Medicaid), etc. Partly due to the increasing importance of private time (family time) desired by physicians. Effectively doctors give up a bit of their autonomy in exchange for being able to just punch a clock, so to speak. In this case, the doctor is a hospital employee. He/she draws a salary from the hospital. And in return, the hospital has a little more say in what the doctor has to do. You work when they tell you to work. You cover the shifts/times/holidays they want you to cover. You do the procedures/treat the patients they tell you to treat. Well, maybe not as indentured servitude as that, but certainly a vast difference from making all those decisions for yourself. I think if you talk to most doctors, this is the trend. This is the way more and more doctors will be practicing in the future.

[Noah930]

ER coverage is a totally different issue. Traditionally, all physician on staff were required to cover call. It wasn't voluntary or desired by most. You're usually not paid to be on call. And even if you were, who would want to be on call every 3rd or 4th night for the rest of their working careers? That means that any patient who would come into the ER or hospital and didn't already have a doc (or if their primary doc didn't have a specialist he/she would send the patient to) would get assigned to the on-call guy. Maybe other peoples' experiences have been different, but about 80% of the time I get called to the ER it's for a self-pay (aka no-pay) patient. Realistically, that's the opportunity to treat a guy, take on all the legal liability of doing so (for a particularly litigious part of the population), without any likelihood of financial reiumbursement. And usually at a socially inconvenient time, to boot.

Hospitals would conscript docs to be on call because obtaining hospital privileges would usually be contingent upon covering call. A doctor can't just walk up to a hospital and see/admit/treat patients there. First the hospital has to admit a doctor to the hospital staff. So as a condition of obtaining staff privileges, hospitals would force physicians to cover the call schedule. After all, most doctors (in the time before hospitalists) have to be able to use the hospital facilities--they can't just practice from their private offices all the time and expect that none of their patients ever get sick.

So doctors (in general) have been trying to get out of taking call at hospitals. Things like privately-owned surgical centers and ever-increasing specialization of fields of medicine have made that somewhat possible. In turn, ERs started running short of physician coverage (not including docs who specialize in emergency medicine). So there are some hospitals who will pay docs (specialists) for covering the ER, as a way to entice docs to cover them. If a patient has insurance, then the doc may still be able to bill the insurance company directly. But at least the doctor would have some guarantee (from the hospital) of financial reimbursement for their service.

[Noah930]

And all of the above doesn't even take into account issues like capitation, how many HMOs work, or how ER docs get paid.

[jyl]

How are ER docs paid? I thought they were contractors of the hospitals?

[Brian in VA]

We're a group of about 20 surgeons and vascular surgeons. We all get a base salary which comes from income from cases, paid to take call at one facility, paid to take trauma call at another, and we own some office buildings we partially rent out. Bonuses for people who bill a lot more than others. The problem is we're collecting less for each procedure, co-pays are going up and people don't pay, and we're seeing more self-pay. The thing is, to control medical costs, the govt wants to keep lowering payments, so docs have just done more, but we're maxed out. Which is funny since my bill is about 1/1000th or so of the cost. Or maybe much less.

[Oh Haha]

Wow, thanks for the extended explananation A.

I don't have a problem with doctors being paid well Most of us "patients" probably don't realizes how much work they actually perform outside of office visits.

[Mark Henry]

Here in Canada most will start what you call an LLC and the secretary/receptionist will bill OHIP. Once a year you take it to an accountant.
Staff of two...three if you have a PT nurse giving injections.

Most will now share a practice, my GP's office has 4 doctors, 2 secretary/receptionists and one PT nurse. Bigger clinics the doctors join a corporation, the secretary/receptionists is assigned to them and it's sort of like all inclusive rent.

For the most part you only ever have to deal with one insurer and payment is as close to instant as you can get. Fraud and non-payment is almost non-existent, malpractice is also rare.

[URY914]

I remember when I was a kid in elementary school our family GP was across the street from the school. I was feeling bad at school one day and the school office called my mom. Mom told me over to walk to the doctor's office. I went in saw the doc and walked home. My mom drove up later in the day an paid the doc's wife who was the nurse/accountant/receptionist. The bill was $8.00. The good 'ol days.....

[89911]

This article came up in our local paper last month and my wife (who's a nurse) and I (Dentist) got a chuckle out of it:

Pay doctors less - Pittsburgh Post-Gazette

Talk about a quick fix idea. I can assure you that there is a lot of waste in the health care field but singling out the provider is not the problem. My 5 year old daughter went to a childrens hospital months ago and we ended up with a $1500 bill because of our large deductible. Among the $600 antibiotic fee's, room charges and other ridiculous charges, I didn't see a physicians fee. Lowering their salary would of made any difference?

[Chocaholic]

Interesting comment regarding no pay for ER coverage. Took our daughter to the ER a few weeks ago with a broken ankle. We were in and out in 45 minutes (mostly waiting). Portable X-ray (misread) and told to schedule an appointment with an Ortho.

Never saw an ER doc. Never.

Two weeks later, received a bill for "ER Physician" - $550....which I paid ($6k deductible). Saw a triage nurse, XR tech and another nurse to put a plastic brace over her ankle and send us home.

Two sides to every story I guess.

BTW...Ortho wanted an MRI done of her ankle. Strapped on the ankle coil, took the pic with a 12 year old "open" (read: POS) MR scanner. Received a bill for my portion of $1000. Paid it again (still working toward that deductible). BTW...medicare reimbursement for same is about $300. Always feels good to be a hard working privately insured payer covering the expenses for illegal immigrants and other associated dead beats that enjoy quality health care on my back.

Somebody's getting paid (maybe not the doc), that's for sure.

[Noah930]

Originally Posted by jyl

How are ER docs paid? I thought they were contractors of the hospitals?

Not an ER doc, so my explanation may not be entirely complete of the details, but in general an ER doc is a member (whether employee or partner) of a group. The group (of ER docs) then contracts with the hospital to cover the hospital. The ER doc effectively gets paid by the shift. I don't know if there are any performance bonuses and such written into contracts.

To a certain degree, that's good. The ER doc doesn't get paid directly by the patient, which minimizes any bias the doc may have due to the patient's ability to pay (or not). It's the group that bills the patient/insurance and worries about collection. Often when I get called from the ER, the doc claims no knowledge about the patient's insurance status.

I think it's somewhat important to note that except for recent times (last decade or so), in general doctors have NOT been paid by hospitals. Doctors may work in hospitals, sometimes even exclusively (ER, anesthesia, pathology, radiology). But they usually don't get paid by the hospital. Only recently, with the advent of hospitalists and the general shift of employment away from the traditional solo/small group private practice and towards W-2 hospital-employee status has that changed. Patients may not notice much of a change (though to a certain degree they will), but for the doctor side of things this is a huge change in the employment model; from being an independent to being another cog in the machine.

[Moses]

Originally Posted by Noah930

; Often when I get called from the ER, the doc claims no knowledge about the patient's insurance status.

Funny. In 20 years I've never asked an ER doc if a patient had insurance. Doesn't change a thing. I still gotta get out of bed, head to the hospital and take care of the patient whether they pay me or not. I'd rather not go in with a crappy attitude knowing I'm working for free.