Overhead is the Litmus Test for a Sustainable Primary Care Practice
Pharmaceutical companies, insurers, politicians, and administrators will all emerge with healthy bank accounts and bulging pockets
When I entered my first primary-care practice in 2002, I had great doubts that the traditional model was sustainable. So I spent the next 12 years studying. My field research included stints as a hospitalist, Corp Med doc, private practitioner, and concierge physician.
I also became a legal expert, medical director of multiple nursing facilities, took on a job as an assistant medical director of a hospice, started a palliative-care program, and consulted with home-healthcare companies.
And I read every white paper, medical-economics article, and op-ed that I could get my hands on. I learned many details, but my research can be distilled into one overwhelming and primary concept. This “secret sauce” is, I believe, what will separate the men from the boys and the women from the girls.
It is the most basic question that each primary-care practice has to ask itself if it wants to survive the slaughter that is surely coming.
But first, a few principles that the reader may or may not agree with:
- Whether we like it or not, health care's pound of flesh is coming from physicians and patients. That's right — at the end of the day, pharmaceutical companies, insurers, politicians, and administrators will all come out of this catastrophe with healthy bank accounts and bulging pockets. If you don't believe this, I can't help you. The Medicare data dump and Obamacare's large out-of-pocket deductibles are just a few glaring examples. I won't go into depth about this subject because it would require a series of blog posts — at minimum.
- The primary goal of both the government and insurers is to cut costs, not to improve care. Said another way, payers may give extra money for innovative models that reduce healthcare costs and produce more healthy patients in the short term. But eventually, they will stop. They want to have their cake and eat it, too. I don't care if your model creates a 15% future savings, if it costs insurers 15% extra up front, it is a zero-sum game. Don't expect their support in the future.
Will any of this ever change, and will change come from outside or from within? I don't have the answer. That being said, the litmus test for any current practice model has become the overhead.
Let me say this again:
If you want to survive today in primary-care medicine, you must have an extraordinarily low practice overhead.