Thursday, April 17, 2014

Holy shit! I'm rich!

Last week, for those of you who are keeping score, the government released its list of how much Medicare pays doctors. The total for 2012 was...


$77 billlion dollars.

If you like zeroes, that's $77,000,000,000.

"Are you sure? That's a lot of zeroes."

Now, there are roughly 850,000 docs out there who take Medicare. Which means (on average) each of us is getting $90,588.24 from Uncle Sam (this is ONLY Medicare, not other insurance companies).

Of course, that isn't even close to the truth. The released data also shows that 2% of the doctors out there are getting 25% of the take. So for those 2%, they're each getting $4,529,411.76.

As I'd expect, none of those guys are neurologists. And the last number (as big as it is) is peanuts compared to what your average insurance company or hospital CEO got as a Christmas bonus alone.

"My kid found these. We didn't know what else to do with them."

So which docs are getting the big Medicare money here?

1. Hematology/Oncology

2. Radiation Oncology

3. Ophthalmology

4. Rheumatology.

WOW! Those guys must be rich!

Nope, that's not it either.

Figures are misleading. While I believe in transparency, the raw numbers can be manipulated easily to make them show pretty much what anyone (usually a politician) wants.

That giant government payout is, in large part, what they're getting for supplies. These specialties have a few things in common:

1. They're primarily office based.

2. They have high overhead costs.

3. The first three are at high risk of being sued.

4. The first 2 are dealing with horribly sick patients, which cost more money to take care of.

I'm sure you're saying "why isn't neurosurgery on the list?" The office-based cost is the main reason. Most of their good work is in a hospital, and the facility supplies the medical equipment, drugs, staff, and operating room. The surgeon, like me*, shows up and brings her expertise (and the charges for it) with her, but the rest of the costs (and billing for them) get paid to someone else. 

*That noise you hear is the horrified inhalation of neurosurgeons because I just mentioned them in the same sentence as neurologists.

So, okay, the oncologists must be rich.

Of course they are! They're part of the secret government-medical conspiracy that's making you smoke tobacco and eat horribly unhealthy food against your will, causing you to get cancer and need their services.

Get real. Yes, they're getting reimbursed a decent chunk of change. But that's gross, not net. Most oncology practices have an office infusion suite to do chemotherapy. This is done there because it's more convenient for the patient, and a helluva lot cheaper for the insurance, to do it in an office than a hospital. But cheaper is a relative term.

Let's look at drugs. One commonly used for breast cancer is Herceptin. This is given once a week, and the list price is $3344 per vial. Another one, Neupogen, is $310 a pop. There's a lot of them like that.

Yeah, but the doctor must charge, like, 2 or 3 times that amount, right? That's why they're rich!

Keep dreaming. You can charge whatever the fuck you want. Medicare will only pay you 106% of the MSRP. Which means, for that $3344 vial of Herceptin, you'll get roughly $3544 back.

So? The doctor is still getting a $200 profit on each vial! That's a lot, you greedy bastards!

Stuff it. Consider the following:

Infusion nurse: $40/hour + benefits.

Infusion chairs: $1500 each.

Mayo stand (a metal table, has nothing to do with condiments): $110 each.

Code cart fully loaded (because disasters happen): $1800 (and it's $1400 to reload it each time it gets used).

Cardiac defibillator (same reason): $1200

IV poles: $70 each

TV set and cable subscription (the patients need something to watch for a few hours)

Wheeled medical stool: $50 each

Then you get into bags of saline, IV tubing, needles, phlebotomy equipment, band-aids, gauze, other medications (Zofran, Benedryl, Phenergan)... you get the idea.

And all of that comes out of the Medicare payments. Of course, the raw number doesn't mention that key point at all.

"And another thing..."

Another point: like many docs these days, the oncologist may have an NP or PA seeing patients. Of course, that person is likely working under the doctor's billing ID (called an NPI). So if both of them get, say, $100,000 back from Medicare, it's listed as money that ONLY went to the doc. And what you're seeing doesn't take into account the salary, benefits, and malpractice coverage for the NP, not to mention all the office supplies and support staff.

Wait, so you mean the money meant for 2 or more people can show up in the Medicare data as being all paid to one doc? Exactly. Doesn't give you a clear picture, does it?

The other fields are similar. Radiation oncology? A radiation machine will easily set you back a few million bucks. Not quite the same as say, a sofa from Penny's. But it's necessary in this line of work, because you can't practice without it (trying to irradiate tumors with the stuff you scraped off your kids glow-in-the-dark Halloween costume isn't helpful).

Then you need trained techs to operate it. Federal licenses and certifications to handle radioactive equipment. And a company that supplies/disposes of used isotopes (selling them to Al-Qaeda is frowned upon).

Ophthalmology? Have you ever been to one's office? They don't have something as simple as my Queens Square reflex hammer ($14 on Amazon). The gadgets they use are big, and to fully outfit a decent ophthalmology office will run you $100,000 to $200,000  - before you can even start seeing patients. Having your cataracts done? Each lens costs the doctor from $1000 to $3000 depending on what you need, not including all the other supplies needed for surgery. So a lot of the money is going to cover those expenses, too.

Rheumatology, like oncology, deals with some pricey drugs. Remicade, for example, is $915 a vial from the company.

Then, for ALL doctors, you have to figure in the other office expenses: computers, printers, chart system, staff, office furniture, office machines, paper, pens, coffee maker....

Yeah, but you guys get most of your office supplies free from drug reps! Sorry, Charlie. That practice was banned in 2008. Now the only thing reps can give us is samples, patient education brochures (which I throw away), and a hurried lunch of tuna sandwiches.

Office space alone can eat you alive. Between Pissy and I we have 2100 square feet. And we're paying $5100 a month for that. That's likely more than your mortgage payment for a house of similar size. And our office doesn't have a pool or wet bar.

Malpractice insurance? For non-surgical fields it's anywhere from $30,000 to $100,000 per year (or more). Surgeons? $100,000 to $300,000 (and up) per year depending on the field. That comes out of your share of the $77 billion, too.

Then, when you finally collect your money, a billing company will get 5% to 10% of it.

So, this is not exactly a high-profit-margin field (medical students: GET OUT NOW). A pretty big chunk of the Medicare money goes to cover just the overhead. Running a medical practice is not something you want to do by cutting corners. When things go wrong, they can go VERY wrong.

I'm not looking for sympathy. I'm just trying to make the point that numbers like this are misleading, and can be twisted to mean whatever anyone wants them to. But when you see how much your doctor is getting for taking care of you, that's not all going in his/her personal pocketbook.

Far from it.

But that doesn't stop me, and most of us, from doing our best to care for you, every single day.


Anonymous said...

kudos, ibee

Wendy at Taking the Long Way Home said...

But if you are a hospital or practice administrator, you can justify your large salary? For doing what? Telling physicians and NPs how to manage their patients? Just throw the providers under the bus for mismanaging $$.

Medicine is so messed up.

If you could do it all over, would you go into medicine? What if your kids want to follow in your footsteps? Would you encourage them?

Titan Mk6B said...

What you really mean is that 77 billion in revenue actually costs the doctors 150 billion.

Grumpy, M.D. said...


1. I'd do it again IF I could do it at the tuition I paid 22 years ago, but not at today's.

2. I tell my kids, and anyone who will listen, that I don't recommend this as a career anymore.

3. CEO at my hospital laid off 10% of the nurses last year and got a $7M bonus.

Anonymous said...

Thank you for helping patients. It seems like it might be a thankless job with less than ideal return for your education---but I'm grateful for doctors like you that continue to provide good quality care for all.

Packer said...

You should have cozied up with my Senator, yes the one who causes a gag reflex every time I see his name. What were you thinking ?

Your Doctor's Wife said...

Standing ovation over here. STANDING OVATION!!!!!!!!

GunDiva said...

I do my best to educate people whenever they start complaining about what doctors charge, but some people are just born to be pissed off.

Ms. Donna said...

Thank you and all the docs out there for helping us.

Lisa said...

On Monday I took bottles of wine to my medical and surgical oncologist to celebrate having survived 10 years and to thank them for all they did for me.

I can tell you first hand that their jobs suck on every level possible. And their office has immense overhead. If they were getting rich I'd be glad. They go into work everyday and tell people that they have cancer and their prognosis is dire. They watch people they sometimes see weekly for years grow weak and die and there is little they can offer. I'm sure other specialties have equal challenges, but I spent too much time in that infusion watching all the dedicated people taking care of me and wondering how it was that they weren't passing a bottles of vodka around.

I looked at those numbers and they are garbage. There isn't anything you can make of them. How is that suppose to make the cost of medical care more transparent?

Allison said...

That was an excellent piece of writing. Thank you for taking the time.

Anonymous said...

If it's really that bad, I wonder why I have never seen an established physician struggling to make ends meet.

Sure, students and residents don't get paid for crap. But once you've got a few years under your belt, it gets a whole lot easier.

Compare the net hourly income of your average neurologist, after subtracting insurance and loan payments and taxes everything else, to the net hourly income of your average nurse. Even better, compare the income of a physician to that of a PhD scientist, who has the same years of schooling and years of experience.

I'm not claiming every physician is rich, but they're certainly better paid than most other people.

Struck by a Turtle said...

People every day throw his or her health into the toilet by eating, drinking, smoking, doing drugs, or just flat out being sedentary.

The providers that reach into the abyss and pull those people from certain death SHOULD be rich. And thanked, and worshipped. Sorry.

Live in good health, reduce risk of needed a specialist and stop complaining about how much doctors are paid.

Bobbi said...

Well said, Sir. And great choice of illustrations!

LicensedtoPill said...

I work at a medical oncologist's office, and I have a pharmacy technician. Add pharmacist's salary, pharmacy tech's salary, laminar flow hood . . .

Anonymous said...

I certainly didn't read this as Dr. Grumpy trying to elicit an "Oh, WOE is me! I'm a poor, pitiful, underpaid physician".

No, I read this more as media wants the average person to believe that the doctor him/herself pockets EVERY last dime of the Medicare reimbursement when, in fact, (except for like the top few doctors) they're taking home only a miniscule percentage of that figure. Yes, it might be a larger salary than most other professions - but it ain't no multi-millions of dollars for each physician.

And clearly, Dr. Grumpy, if your toilet paper roll is made out of single dollar bills instead of fifties or hundreds....then apparently you're doing something wrong!

Anonymous said...

Why didn't cardiologists make the list? I've read that in general, cardiology hospital divisions bring in approximately one third of the operating revenue for the entire hospital. Definitely money makers.

Many doctors would not recommend medicine as a career in this day and age. On the patient side of things, for profit medicine is a crock and not worth crapola. It's total garbage. No cures for ANYONE. Lots of profits for CEOs and of course stock options.

Other than traveling nurses,have never heard of an average RN making $ 40.00 an hour though.

Cari Swanson-Sim said...

Amen! My doc hubby told me about the overhead of running a practice and I think my jaw is still hanging open.

Anonymous said...

Even medicinal leeches are pricey, and the patient has to take an antibiotic prophylactically to avoid picking up any 'bugs' that the leech is apt to pick up along it growth process. BUT, do not worry. The leech is NOT reused after its medicinal use.

Library-Gryffon said...

I've pointed out the costs to folks who scream about doctors making several hundred thousand a year. After office expenses, and malpractice insurance, and student loans, there isn't really that much left, and doctors can't start saving for retirement until about 10 years later than most others.

My hematologist walked into the office one day a few years back and told me to never let any of my children become doctors. (I assume he had just paid either his malpractice premium or his daughter's med school tuition.) I laughed and said yes, I keep asking them if they really don't want to become plumbers or mechanics. My doc got a rather wistful look in his eye as he said "My neighbor is a plumber. He repaints his house every five years. He owns a boat." I.e., the plumber of a similar age to my doc has far more disposable income available to him than the doc does.

WarmSocks said...

Great illustrations!

I looked up the data on my PCP. It was broken down by number of patients, number of flu shots, number of various other vaccines, and so on. I was surprised at how low the number was.

@Library-Gryffon - my plumber worked his way through medical school as a plumber's assistant. Six months into his residency, he decided he liked plumbing better. All in all, the length of training was about the same for all the certifications he has, but he's a lot happier and makes better money.

Anonymous said...

I find it interesting that my worst doctor (rheumatologist, arrogant, refuses to make himself available EVER after hours, works a very firm 4 days a week and stays in the office not one minute more) happens to bill and get 10x more from Medicare than any of my other docs, who are the complete opposite of him. He has definitely figured something out that the rest of them haven't.

Anonymous said...

Anonymous said...


Good job not reading what Grumpy wrote.

Anonymous said...

One of the local papers near us was saying an opthamologist was using lucentis for macular degeneration and it was much more expensive than an equivelent drug called avastatin. However , the paper never mentioned avastatin had this indication only:Avastin is indicated for the first- or second-line treatment of patients with metastatic carcinoma of the colon or rectum in combination with intravenous 5-fluorouracil–based chemotherapy.

Now same active ingredient but if I was an opthamologist I wouldnt risk getting sued by a patient disgruntled with a bad outcome and risk his lawyer telling a room of lay people it was because he was trying to make more money by using the low end drug not approved to treat the condition...

Anonymous said...

Anon 1:22 - I read his post just fine, thanks.

girlvet said...

Most nurses don't make 40 an hour

RehabRN said...

ROFLMAO re: the neurosurgeon comment.

Want to hear a good one? One local level 1 trauma center finally got a telemedicine program going well for stroke because the neurosurgeons finally TRUSTED the neurologists with whom they worked.

Imagine that...if they can achieve that for sustained periods, world peace can't be far behind.

Or there's a lot of donuts (and everything else) in their lounge that no one else gets.

Outre said...

I saw some of those fees and actually was shocked at how little some of the docs I see/have seen got from medicare compared to the amount my insurance pays out.

At the same time I am also baffled how one health system I used to have doctors at negotiated a fee schedule where their surgeons got the 100% of the amount charged for new patient visit, along with charging a facilities fee that insurance also paid out.

I can't fault docs for not taking medicare. People forget a medical office, underneath the doctor that is the 'face' of the medical office (aka, must do everything for free because they are supposed to be CARING) is a business, just like any other business. The office staff, the pens people steal, paper forms you fill out, ect aren't free. Last I checked, there is no 'office manager tree'. If there is such a tree, please hook me up. I'd love my own office manager for work.

Anonymous said...

There is an anon up there saying something about physicians never having to make ends meet.

Well, actually some do, but lets just say we all do make enough to support a middle class lifestyle.

I come from an immigrant family. I am about to graduate from medical school in a month. I will be $250k in debt (not unusual) and have been in school for the last 20 or so years of my life. And for the next 3 years in residency, I will be make next to minimum wage if you account for the 80 hour work weeks (was more for ibee, I'm sure). I'm about to move into an apartment that is 750 sqft, that i can barely afford.

I would say think twice before complaining that a doc seems to be leading a middle class lifestyle of a home in a nice (not extravagant) home with their family (that they never see).

Locations of visitors to this page