What Everyone Gets Wrong
The Hidden Truth About Doctor's Fees:
"Just raise your fees if you need to make more money," the economist confidently told me during our discussion about physician compensation. I had to smile - this common misconception about how medical practices work reveals a fascinating gap between public perception and reality in American healthcare.
As a physician who began practicing in 1980, I've witnessed firsthand how dramatically the economics of medical practice have changed. Many people - including healthcare policy experts, economists, and even medical educators - don't realize that doctors today cannot simply set their own fees like other professionals.
Back in 1980, medical practice operated in a genuine market environment. Physicians could set their fees based on their expertise, costs, and local market conditions. Patients paid directly and then collected reimbursement from Medicare themselves. The doctor-patient relationship, including its financial aspects, was straightforward and direct.
Today's reality is startlingly different. A landmark 1989 federal law fundamentally changed how physician payments work - not through administrative rules or agency interpretation, but through specific legislative requirements. This law created a complex system that effectively prevents physicians from setting their own fees, unlike lawyers, accountants, or other professionals.
The results? We're seeing independent medical practices increasingly disappear as physicians move into employed positions with large health systems. The combination of controlled fees and rising inflation has made private practice increasingly unsustainable for many doctors.
Some economists suggest physicians should simply "opt out" of Medicare if they're unhappy with the payment rates. But this seemingly simple solution ignores the practical realities of modern medical practice - realities that I'll explore in depth in future posts.
In this series, I'll take you behind the scenes of medical economics to understand:
- How the 1989 law fundamentally changed physician payments
- Why "just raise your fees" isn't possible for most doctors
- How Medicare's fee schedule influences the entire healthcare market
- What this means for the future of independent medical practice
- Why many experts misunderstand these basic facts
Join me as we explore these crucial but often misunderstood aspects of healthcare economics. Whether you're a patient, policy maker, or fellow healthcare professional, understanding these realities is essential for meaningful discussions about healthcare reform.
I bring four decades of direct experience with these changes, and I'm here to share what I've learned. Subscribe to follow this exploration of how we got here, what it means for healthcare delivery, and what we might do about it.
[Coming next: A deeper dive into the 1989 law that changed everything...]
Your well written blog struck a chord here. 4 years ago I hired a pricey firm to try to sell my solo practice. We didn’t get a single response. No one wants to do what we did anymore. It’s a lot easier to just take a check from "the man” and avoid the entrepreneurial headaches.
Thank you for helping raise awareness about this poorly understood issue! For all the handwringing I hear lately about Medicare "negotiations" with drug companies few seem aware that for decades. Medicare has been unilaterally setting the fees physicians can charge.