PHYSICIAN INCOME: Rebounding Despite Fears Of HMOs
Nationwide physician sentiment that managed care has victimized their salaries is "proving overdrawn," largely due to "a big change in the relationships among the institutions that compete and collaborate in providing care." The New York Times reports that, while the days of double-digit gains from fee-for-service medicine are gone, the American Medical Association has reported a four percent rebound in doctors' salaries since 1994, a definitive shift from four years ago, when physician income declined for the first time since tracking began. AMA House of Delegates Speaker Dr. Richard Corlin said that while doctors were working very hard to "maintain their incomes and that the marketplace remains 'extremely volatile' ... it is short-sighted for physicians to look at themselves as victims." The Times notes that fears of "an oversupply of physicians" are unfounded and that young specialists "all find work" outside of the saturated areas of New York, Boston and San Diego.
New Sheriff In Town
In the past decade, physicians have lost out as HMOs and insurance companies were "cutting the fees they paid physicians to treat their enrollees." More recently, however, doctors are "banding together into big, multispecialty groups" to turn financial oversight away from managed care and into their hands. In California, Minnesota and Massachusetts, doctors' groups are providing their "new provider-sponsored organizations with testing laboratories and operating rooms for same-day surgery" while "strik[ing] alliances with hospitals for longer term care." Such practices allow them to manage their own expenses "by paying group members bonuses or other incentives for keeping patients healthy and satisfied." Doctors are also beginning to bid against HMOs "for contracts to cover workers." Other groups are "delegating all patient-care responsibilities to the groups and using HMOs only to handle bookkeeping, marketing and other administrative tasks for health care programs." Towers Perrin health practices specialist Daniel Zismer noted, "Physicians are getting smarter. When they aggregate in large group practices, their business opportunities expand exponentially."
Shape Up Or Lose Out!
"Such a shift in power poses a special threat" to managed care systems that must answer to their stockholders while "charg[ing] enough for their services to cover the cost of care." The HMO industry produced considerable losses last year in the midst of rebounding physician salaries, which is "[o]ne sign of the shift." Karen Ignagni, president of the American Association of Health Plans, noted that the era of cost-controls for managed care is over, citing "new efficiencies arising from collaboration among physicians and the plans to improve the quality of care" (Kilborn, 4/22).