physician, Uncategorized

Do Patients Pay Less for Cheaper Care? Why the CVS/Aetna Deal Matters

On a recent trip to urgent care for my child, I began to more clearly see how the changes in medicine are affecting our patients and who is benefiting from the bottom line of what is occurring in the US health care system.

A minor injury to my 2 year old son had me waiting patiently to be seen at a local urgent care center.  Eventually, a nurse practitioner evaluated, correctly diagnosed, and successfully treated my son.  (I make it a habit not to treat my own children as I feel it more appropriate to be “mom” instead of “Dr. Jones” to my children in these types of situations).  I appreciate nurse practitioners and feel they provide a great service and are filling in gaps in areas of need, especially in this time of physician shortage.

My concern arose as I considered how this medical care visit was truly playing out financially.  I paid a copay with my insurance- no big deal, it was $30.  My insurance would be covering the majority of the visit.  However, ultimately the company running the urgent care facility would be charging the same rate to my insurance, and same copay to me, for my care regardless of whether I saw a physician or a nurse practitioner.  I even went as far as calling a billing specialist in membership services at my insurance company to ask if this was the case.  She indeed confirmed that there is not a separate charge for urgent care visits depending on the level of provider seen.

My question to anyone who has seen a nurse practitioner or other qualified individual, is your co-pay lower for the service? Do you receive a discount for not seeing the higher paid/more trained physician?  In my situation, there was no reduction of copay.  So, if they are collecting the same amount for the service provided despite a disparity in income level of the provider, who benefits from this profit?

The company running the urgent care center reaps all of the benefits of employing a health care provider with a lower salary than that of a physician.  Their smaller salary likely means more profit for the company.

Again, I am in no way against using mid-level providers, nurse practitioners, midwives, etc.  They are here to stay and provide an important role in healthcare moving forward.  However, my argument is that if a company is benefitting financially from hiring “cheaper” people to provide care to their patients they should at least be passing the savings on to the patients who are receiving the care.  Often, these companies are looking for the financial bottom line and what they can get away with to reap the most profit.  It is a primary responsibility of top administrators to make money for the company, and we can hardly blame them for successfully completing the role they were hired to fulfill.

Transparency is required in these situations.  The patient must know they are not seeing a physician- when they could be- for the same cost to themselves and their insurance company.   They should have the ability to demand physician care if desired.

A prime example how this business scenario is becoming the future of medicine can be seen in the recent proposed merger of CVS and Aetna. The companies involved are in a massive media campaign to make patients think this is to their benefit.  Please remember, these are businesses at the end of the day and their ultimate goal is to increase financial return to investors.  The basic facts are still at play- a drug store is buying an insurance company.

On Wall Street, the widely held belief behind this merger is that by teaming up, CVS and Aetna can have a fighting chance against the behemoth that is “Amazon”, as this online giant attempts to get into prescription drug sales.

Often, the patient is the one to suffer in situations such as this merger, as they will actually pay more and receive less choice.  It’s a monopoly and if your insurance is owned by a drug store company, guess which prescription you will likely receive?  The one on formulary at CVS of course!  So, if the prescription chosen to treat your condition is on formulary at CVS, there most certainly is less overall cost in the health care transaction.  So, does the patient pay less since their prescription costs less or a lower copay for seeing a mid-level provider in a “clinic” that is now part of the plan to have in CVS stores?

You guessed it, the company will profit each time a prescription is written for a drug under their formulary instead of one that isn’t.  The company will also profit each time a midlevel provider sees a patient instead of a physician.  Again, is this in the best interest of the patient?

One last piece of information to consider, the Aetna CEO will walk away with $500 million in cash and stock if this deal goes through.  This executive, who is not a physician, has much to gain from this merger.  I don’t begrudge anyone good fortune, but I also don’t believe the media should portray that the patients are the primary ones to benefit in a deal such as this.

Patients and physicians are no longer accepting the status quo and what everyone outside of health care is telling us is “in our best interest”.  We see and understand what is going on.  We are speaking up and demanding better.

retirement

The FINANCES behind retiring from medicine at 37

I originally wrote this article as a guest blog for the site http://www.physicianonfire.com/ last month.  The physician author of this blog specifically requested I write on this topic as his site deals with financial independence and retiring early (FIRE).  I am now posting here since I have had requests from readers to share the financial decisions that allowed me to retire early from a medical career. Please let me know if you have suggestions/thoughts, or what has worked for you in the comments below.

Usually, when I tell people I retired from my physician career at age 37 they respond with shock.  Some look at me like I am the most foolish person they have ever seen.  Some with disdain (“all that medical education wasted”).  Some doubt that my future will be secure without having a steady paycheck.  However, as it is only my close friends/family I discuss this with, they mostly respond with sincere happiness as they understand this is a life choice I made after much deliberation and know that it is the right decision for me and my family in pursuit of the life I want to lead.  There are many factors that led to this decision and I have written about some of it in previous articles Retired at 37: Breaking Up With a Career in Medicine.  However, this article focuses on the financial aspect.

Finances can be a tough subject for physicians.  We are notorious for being poor money managers.  Most of us don’t have the time or desire to commit to understanding personal finances in detail. Who has time to learn about 401K’s, the stock market, and budgets while learning about anatomy, pharmacology, and immunology while in medical school?  Or while working 80+ hours per week in residency?  Besides, we won’t be earning an attending physician paycheck for years.  By the time we earn a real paycheck we are so exhausted by the delayed gratification of our 20’s that we want to splurge a little, right?

I don’t proclaim to be an expert by any stretch.  However, I found the freedom that comes with financial independence to be life changing and something that should be attainable for all physicians. I am not here to encourage everyone to retire in their 30’s from medicine, but to gain financial freedom.  I hope you can continue practicing medicine into your 60’s (if this is what you want), but to not feel trapped in a situation when encountering unsustainable job structure, illness, divorce, etc.  Of course, finances did factor into my decision to retire.  I have 3 kids and wouldn’t stop working if I needed a steady paycheck to support them. Luckily, some decisions along the way helped me not to rely on this paycheck moving forward.  There are many different paths to financial independence.  Here are some steps that led me down my path to financial freedom and ability to retire early:

  1. Kept medical school loans to a minimum. Yes, you do have control over this. Most people outside of medicine are shocked to find out that medical students are essentially able to get loans for as much as they want.  You can determine your own “living expenses” and someone will be ready and willing to give you this loan as medical students are typically good about ultimately paying it back (although years down the road and with a ton of interest).  I was lucky my parents paid for my undergraduate studies but medical school was on my own.  I probably started my “frugal” mentality at this time.  My husband, who I was dating at the start of medical school, would often make fun of me for my bare cabinets with canned green beans and ramen noodles as my main staples.  Of note, he also had loans from undergraduate school that we had to factor in as well. Don’t worry, we didn’t eat like that forever!
  1. Started paying off loans immediately after forbearance ended at the maximum amount we could, not the minimum required.
  1. Lived well below my means. We continued living in my residency townhouse for a while, even after accepting an attending job.
  2. Looked for job with high earning guaranteed right from the start. Many positions I was offered entailed low salary the first few years and then potential for partnership and jump in salary but not until 4-6 years down the road. This was downright scary to me.  What if I didn’t like the job? What if they never actually promote to partner?  The writing was on the wall for private practice in ob-gyn with soaring malpractice premiums and it seemed unsustainable to me for most of these private practices.  I wasn’t willing to take the chance. I had also heard that many people may leave their first job after 2 years.  So, I figured why not at least get a large salary those first two years while I get a better feel for the landscape? Luckily, my job did not have a non-compete agreement, so I knew I would have options if I decided to leave (I actually stayed with my first job as I was initially very happy with my choice out of residency- this lasted for about 7 years).
  1. Maxed out yearly contributions to retirement vehicles. 403B during residency, 401K with new job (which also had a pension that vested after 5 years), and started a Roth IRA. I had to devote some time to learn about what all of these things are and why they are important! Investing is key.finance
  1. 529. My first child was born in residency, but I did not start a 529 at that time as wanted to maximize retirement account yearly contributions first. Once those were being maxed out, I started 529 for oldest child and then when subsequent children were born funded those too.
  1. Lived off one income. I feel this one factor made the absolute most difference!! Certainly not all, but most of my colleagues are in a dual income household.  We always lived off one income (mine) and paid off loans with the other.  This always forced us to live within our means. This may be hard to accept initially as many physicians feel that the delayed gratification never ends, but trust me it’s worth it! I do have to admit, our one splurge was a nice vacation every year.  “Work hard, play hard” is my motto and I probably wouldn’t have made it without those necessary times of respite to recharge. Travel is one of my passions.
  1. Got Creative. For those who have a partner who does not have a career in medicine, there may be options opened for them since a physician job is very secure.  You will always be able to find work as a physician and it is quite unlikely you would lose your job. In addition, health benefits are common with employed physician jobs and therefore you can take a big burden off your partner to worry about this.

–          This can free up some room for ingenuity with your partner if their job allows for different payment structures. Commission based jobs with a low salary and no health benefits may be unsustainable for someone supporting a family. However, if you use the idea of living off one person’s salary (your physician salary) and allow your partner to get creative it can really pay off.  Employers may jump at the opportunity for this type of pay structure which would have very little risk for them but could have huge potential upswing for the partner.   We chose to take this risk. We couldn’t have done it without the stable physician salary/benefits component.  It was possible my husband would make barely anything certain years or alternatively, make large sums depending on the work flow.  Nothing was guaranteed to last and so any windfall that came from his work was immediately placed into debt repayment or kid’s college funds.

When starting out of residency at my first attending job, I planned to continue to practice medicine until my 60’s, cutting back on hours if needed, but I assumed my love for medicine would keep me wanting to work indefinitely. Several things changed my mindset, including financial independence.  Once I knew I didn’t “have” to work, I started to view my career a little differently.  Maybe I wasn’t honest with myself previously with how the stresses of on call nights, sleep deprivation and increasing administrative workload was negatively impacting my life and health. It sometimes feels like you are on this treadmill that keeps going and you don’t have the time or energy to ever stop and think about what you are doing and if you are leading the life you envisioned for yourself.

time

Once financially independent, it became my choice whether or not to work.  The frustrations of salaried work in ob-gyn, the negatively changing healthcare climate, and missing time with my young children was weighing on my mind.  I wanted (needed) out for myself and my family.   However, I needed a push to get off that treadmill and realize what was going on.  “Luckily” for me I had a major health scare that also occurred at the same time that I reached financial independence.   Decision made.

Now, the choice can be mine if I decide to ever return to medicine.  I’ll never close that door completely, although I don’t see it in my future if you ask me now.  There is so much out there I am still excited to explore.