WASHINGTON, D.C.—Rheumatologists can do better—not in practicing medicine, but in managing their practices, said Herbert S. B. Baraf, MD, clinical professor of medicine at George Washington University, Washington, D.C., and managing partner at Arthritis and Rheumatism Associates, a 15-physician practice.
Rheumatologists need to recognize when they have poor contracts with payers and take steps to fix them, whether that means withdrawing from a bad arrangement or negotiating a better deal, said Dr. Baraf, who spoke here at the 2012 ACR/ARHP Annual Meeting, held November 9–14.
Dr. Baraf addressed attendees during a session titled, “Deal Breakers in Payer Contract Negotiations,” on how doctors can improve the management of the business end of their practices.
“You can provide great care, but if you don’t have enough [revenue] to keep your doors open, it won’t be for long,” Dr. Baraf said. “Providing effective care has costs, and failure to define the value of one’s services may sink a practice and all the good that it does.”
A Look at the Numbers
He said that it’s clear there’s room for improvement in the financial landscape of rheumatology: There’s a three-month waiting list on average to see a rheumatologist, so rheumatologists are in demand. But that demand isn’t reflected by income—the mean income for rheumatologists is $180,000 a year, Dr. Baraf said, compared to more than $300,000 for radiologists and cardiologists and the upper $200s for dermatologists and ophthalmologists.
Plus, rheumatologists work long hours—36% more than dermatologists, 28% more than endocrinologists and internists, and 13% more than cardiologists.
“Relative to other specialties, rheumatologists’ incomes are low,” he said. A dermatologist makes 50% more but works significantly less, he said.
He said the survival of rheumatology depends on attracting new physicians. Because new physicians have high costs from education loans, they might be less likely to choose rheumatology because of the relatively low income. So, in the context of the big picture, tending to their economic health is critical for rheumatologists.
Make a Better Plan
There are ways to improve the bottom line. Doctors can see more patients, they can reduce overhead, or they can develop ancillary services. But those all have effects on workload or expenses. He suggests that improving your contracts with payers can lead to better reimbursement with no added costs in staff or equipment.
“There’s no investment involved in that—it’s just having an agreement with the payer to give you more, and it’s all money at the margin,” he said. “Negotiation is really the key to our success.”
Dr. Baraf said he frequently hears doctors say that if it weren’t for speaking engagements and other ways of supplementing evaluation and management income, they wouldn’t be earning a living. That kind of outlook doesn’t sit well with him.
“I’ve got to tell you, it’s pathetic, because the most important service we provide is patient care—face-to-face patient care, office visits, decision-making, counseling,” he said. “And if we can’t protect the value of that, what do we have, and what’s the future of the specialty?”
Managed care has brought about a stagnation in fees, carve-outs for ancillary services, inequalities in negotiation, a feeling of powerlessness, patient dissatisfaction and backlash, and a failure of the “resource-based relative-value scale,” which equates office visits with surgery in an attempt to redistribute wealth, Dr. Baraf said.
The Three As
He boils the essentials of managed-care contracting down to the three As: attitude, analysis, and action.
- The right attitude is having the expectation that you’ll be paid fairly, in a way that accounts for staff salaries and benefits and other overhead, and things like being able to pay off your medical education debt, pay for your children’s education, and saving for retirement. “The payer will give you as little as you’re willing to accept,” Dr. Baraf said. “That’s the contract that you signed.”
- An analysis of your business should include evaluating whether your time spent seeing patients who are in a particular plan is in proper portion to the revenue you receive from that plan. The effect of carve-outs for ancillary services you provide, of hassles like automatic downcoding of office visit services (e.g., converting level 4 visits to level 3) and of preauthorizations, and the length of your waiting list should all be part of the equation. “You’ve got to analyze your business,” Dr. Baraf said. “It’s fundamental to practice health. You’ve to do it on a periodic and ongoing basis.” Doctors also have to assess what’s happening in their markets—whether other practices are merging, whether hospitals are buying practices and what they’re offering, and the impact of accountable-care organizations—and what these observations mean for their practices.
- When it comes time to take action and negotiate with a private payer, don’t let it scare you, Dr. Baraf says. You already negotiate all the time with your family, staff, and vendors.
It’s important to be prepared, to stay focused on your goals in a negotiation, to sell yourself realistically but with humility, to understand the other party’s constraints, and to keep up the momentum when negotiations begin, always setting the next meeting at the end of the current meeting. “Everything is negotiable if a plan needs you,” he said.
It may be that the party you are negotiating with is vulnerable, Dr. Baraf said. “What’s happening to their market share? Did they used to be 20% of your business and now they’re only 10% of your business? Are there enough rheumatologists in their network?”
Withdrawing from a contract should be considered if it’s a bad enough contract, he said. “If you’ve got a really terrible contract you should just simply get out of it,” he said. “The threat of withdrawal or a credible threat to withdraw is a very powerful negotiating tool.” But the primary purpose of withdrawal from a contract is not to get a better deal, it’s to get out of a bad contract.
He said withdrawing might prompt a company to come back to you, and if they do, you should have a good idea what you want from them, he said.
He also said it’s important to remember that in a negotiation with an insurer, their representative is a person; it helps to understand their motivations—and the limitations in their authority—and to befriend that person so that you have an ally when they go to their superiors.
He said that rheumatologists might be in demand, but it doesn’t matter much if rheumatologists don’t demand more fair treatment. “The law of supply and demand only works if it’s enforced,” he said.
Thomas Collins is a freelance medical journalist based in Florida.
