When little “Sarah” gets sick and her mom brings her in to the clinic, Dr. Evan Buxbaum knows he will probably lose money on her visit.
But he would never turn her away.
Many island doctors are finding it tough to make ends meet, squeezed between rising costs and low Medicare and Medicaid reimbursements.
Treehouse Pediatrics
“On this island, of course we’re not going to (turn away patients),” said Buxbaum, who owns Treehouse Pediatrics. “We see ourselves as physicians for all of the islands’ children and we would never turn anyone away.”
Buxbaum said that most pediatric practices need to limit their number of Medicaid patients to 30 percent to stay in business, but 70 percent of his young patients are on Medicaid, and 10 percent are uninsured.
“The bottom line is that while there is wealth on the island, our young working families with children are not wealthy; most are dependent on state support to get quality medical care. If politicians continue to push for cuts in Medicare and Medicaid reimbursement, then practices that serve these populations won’t make it, and ultimately that affects the availability of quality care for children,” he said.
Buxbaum expressed frustration that physicians are not able to set their own prices with state and private insurance to reflect actual costs.
How do Medicare rates affect income?
Most island doctors say they won’t stop seeing Medicare patients, even though the federal program already fails to cover the cost of primary health care.
A 21 percent Medicare reimbursement reduction is looming, but on June 24 the House of Representatives passed a six-month reprieve, temporarily restoring reimbursement rates to previous levels.
According the American Medical Association, 17 percent of primary care physicians already limit the number of Medicare patients because rates are so low. Current Medicare payment rates are at 2001 levels, while medical practice costs have increased 20 percent. Doctors say Medicaid rates are even lower.
Many private insurance companies, HMOs and network management companies base their fees on Medicare rates, so cuts could affect a wide spectrum of payers, according to Ethical Health Partnerships.
Island doctors have conflicting opinions on whether or how Medicare rates affect their income.
“There may be some effect of Medicare rates on Medicaid,” said Dr. David Shinstrom of Orcas Family Health Center.
He said the real problem is not reimbursement rates, but patient-to-primary physician ratios. He said 1,800 – 2,000 patients per doctor is ideal for financial viability, but Orcas currently has five doctors for a population of roughly 5,000.
Orcas Medical Center
“Most practitioners struggle to make ends meet, so cutting Medicare … makes staying in business as a small island practitioner even more difficult,” said Orcas Medical Foundation board member Dr. Greg Ayers. “Medicare payments are already much smaller payments than private insurance.”
Under the new health care bill, the number of patients paying with Medicare or Medicaid could grow exponentially.
Ayers said the foundation’s research suggests island practices lose somewhere between $650k to $750k per year, and that the loss is growing at roughly 10 to 15 percent per year.
In the past, private philanthropy has put island medical foundations back in the black, but Ayers said this tradition may not be sustainable for much longer.
“We’re kind of on the edge of being able to make up that shortfall,” he said. “We need to do something different.”
In an effort to improve efficiency for island practices, the board formed Orcas Medical Center Services, expected to become operational in a few weeks. The organization hopes to acquire volume discounts from medical suppliers and bring under one roof expenses duplicated at each practice, like billing.
“The financial viability of all clinics on the island is not good, so (a possible Medicare reduction) doesn’t help matters,” said Orcas Medical Center administrator Alison Shaw. She said the center would “definitely” be affected by potential cuts, and estimated that 25-30% of the center’s patients are on some form of Medicare or Medicaid health plan.
Shaw said the clinic would not turn away Medicare patients even if cuts are effected.
Orcas Family Health Center
At Orcas Family Health Center, office manager Aaimee Johnson said, “(Medicare) reimbursement is bad for almost anything, compared to the charges … There’s going to be a real shortage of primary care physicians for years.”
Johnson said Orcas Family Health Center won’t be affected at all by Medicare cuts because of its 501(c)(3) charitable non-profit rural health center status. Dr. Shinstrom said the clinic will not participate in Orcas Medical Services.
The clinic accepts all patients, the majority of whom are uninsured, receiving grants and private donations to help defray costs.
Orcas Family Medicine
Dr. David Russell said his rural health clinic, Orcas Family Medicine, will also not be directly affected by potential cuts.
“What is more challenging is navigating the state-backed health plans for lower-income patients; we actually lose money each time we see a patient with certain of these state-backed health insurance plans,” said office manager Shelly Russell. “We are not currently limiting the number of patients we see on these health plans, but if the number of patients on these plans increases with the new health-insurance reform, we may have to make a hard business decision in regard to these particular plans. All practices’ cost of doing business is higher here than on the mainland, and yet we cannot charge more, so that directly affects our bottom line. As a private office which does not accept outside money, we have worked hard to continue to provide good quality care but within the confines of what is effectively lower reimbursement.”
She says they have been “extremely grateful” for Dr. Shinstrom’s office, which as a 501c-3 can accept donations, and has offered the use of their x-ray machine and other services to island practices.
“It is definitely a challenge to maintain a financially viable medical practice here, but if realistic expectations are maintained it is a doable situation, even in this time of change and uncertainty,” Shelly said.
Dr. Russell also does not plan to participate in Orcas Medical Services.
