The Bug That's Wiping Out The Family Gp

The reason America has too few family doctors ("Is there a family doctor in the house?," Science & Technology, Nov. 2) is not because of any shift toward specialization at medical schools or any question of academic prestige. It is Economics 101, pure and simple.

The plan referenced in the story is a payment schedule called the Resource Based Relative Value Scale, which was developed under the mandate of Congress by a team of economists headed by William Hsiao of Harvard University. After the Health Care Financing Administration (HCFA) implemented the plan on Jan. 1, 1992, Hsaio asserted that the average office visit takes 12 minutes. The formula says that the overhead cost for that visit should be $12. That amount definitely will not reimburse the physician for the actual practice cost--which is probably twice as much. Your readers undoubtedly know that a business enterprise that spends $24 on overhead expenses in providing a service, but only collects $12 for it, will soon be out of business.

The reason physicians flock to hospital-based specialties is not because of academic prestige, either. The technical overhead of a physician's work at a hospital is completely absorbed by separate charges made by the hospital. Thus, the hospital-based specialist is a beneficiary of a very lucrative profit margin. The only expenses a hospital specialist has to cover are the costs of malpractice insurance and of sending a bill. The overhead of hospital-based specialists can be as low as 15% of income, leaving a profit margin of 85%. The office-based family doctor, on the other hand, has nurses, lease payments, equipment, supplies, and costly government regulations, as well as malpractice and billing expenses. The family doctor has overhead of up to 70%, leaving a profit margin of only one-third of the hospital specialist.

In the implementation of HCFA, many family doctors are making substantially less than previously. The consequence of this misguided policy is a crowd of hospital specialists and a dearth of family doctors.

Everyone wants family doctors, but nobody will pay their legitimate office overhead. HCFA and the American public will get what they will pay for. Basic economics explains the unrelenting demise of the family doctor.

Martin L. Proudfoot, M.D.

Edmonds, Wash.

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