Dr. Mike Gorman has taken out an SBA loan to keep his rural solo practice running in Logandale, Nev. "If things don't improve fast, I will have no choice but to close my doors," he said.
NEW YORK (CNNMoney) -- Doctors in America are harboring an embarrassing secret: Many of them are going broke. This quiet reality, which is spreading nationwide, is claiming a wide range of casualties, including family physicians, cardiologists and oncologists. Industry watchers say the trend is worrisome. Half of all doctors in the nation operate a private practice. So if a cash crunch forces the death of an independent practice, it robs a community of a vital health care resource.
"A lot of independent practices are starting to see serious financial issues," said Marc Lion, CEO of Lion & Company CPAs, LLC, which advises independent doctor practices about their finances.
Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat. But some experts counter that doctors' lack of business acumen is also to blame.
Loans to make payroll: Dr. William Pentz, 47, a cardiologist with a Philadelphia private practice, and his partners had to tap into their personal assets to make payroll for employees last year. "And we still barely made payroll last paycheck," he said. "Many of us are also skimping on our own pay."
Pentz said recent steep 35% to 40% cuts in Medicare reimbursements for key cardiovascular services, such as stress tests and echocardiograms, have taken a substantial toll on revenue. "Our total revenue was down about 9% last year compared to 2010," he said.v. "If things don't improve fast, I will have no choice but to close my doors," he said.
This is also happening in Puerto Rico. In my 20+ years of experience in the financial industry I knew of several cases of private practitioners going bankrupt specially since the public health system was privatized. This trend has increased in the last 10 years.The are the same as the CNN/Money article mentions plus the fact that most physicians in Puerto Rico live a lifestyle beyond their means.
ReplyDeleteAlso, a recent article on the Journal of Banking mentions that the business model for the physician in the USA is shifting from a private practitioner to a healthcare provider employee. This will have profound changes in the way physicians will deal with their financial obligations. And for their patients it will represent a change for the worst with less personalized service and medical decisions based on what is best for their employer and not for the patient.