Radiologists still make a better than average living but the reimbursement trends are not reassuring. One can make up for declining reimbursement with an increase in volume but only to a point. My income fell the last few years that I practiced full time despite an increase in volume, pace, and stress.
It is said that imaging is the fastest growing segment of healthcare. In large part due to its availability and the truly impressive quality of the images that can be produced, our technology has advanced faster than our wisdom to use it. Non-radiologist healthcare providers have also found it a good way of supplementing income for their practices. At one time, the fastest growing segment of CT and MRI sales was to non-radiologists.
The need for medical care and imaging seems to be growing exponentially. In our “CYA” world referring physicians seem particularly smitten with — or should I say, addicted to — imaging. What could they possibly expect to learn from a plain film of the abdomen ordered after a CT scan of the abdomen and pelvis has already been done? Maybe the algorithmic approach to medicine is to blame. The payers have certainly learned to ask that question, however, and no reason is too small to deny or delay payment. Something doctor shows like “House” do have right is that medical imaging and procedures seem to be done with reckless abandon, out of balance with the supporting information provided; they just don’t show the right people doing them. Here’s the rub: We can provide more imaging than the country is willing to pay for.
Depressingly, the rates paid to read all those images and perform those procedures have decreased year after year. The logic of paying us less to interpret the studies that may or may not have a reasonable indication ordered around the clock escapes me. Paying us less won’t and hasn’t caused fewer studies to be ordered. Personally, I think we should be paid more for these stress inducers, but I’m not holding my breath.
At times, the reimbursement for procedures seems somewhat inconsistent if not random. My wife’s mother at the end of her life had a number of medical procedures, as do most people in that season of life. It was truly an education to review her insurance Explanation of Benefits (EOB). I remember one EOB that included charges for an MRI interpretation by one of my partners and for a toenail clipping by a podiatrist’s office. Both charges happened to be identical. We received less than 40 percent of our charge; the podiatrist received 100 percent of his charge. I mentioned this to a urologist friend of mine who answered without hesitating, “That’s why I always clip my patient’s toenails when I have them in the office.”
Medicare’s greatest cruelty may be the Sustainable Growth Rate (SGR). According to the Congressional Budget Office, “Most of Medicare’s payment rates are simply adjusted each year for inflation- but not those for physicians’ services. Those rates are governed by a complex formula [italics mine] - the Sustainable Growth Rate (SGR) mechanism- that unless overridden by legislation, will reduce fees by about 4 percent or 5 percent annually for at least the next several years.”
Introduced in 1997, SGR cuts have so far been postponed by acts of Congress agonizingly close to when they are supposed to take effect. The thought of cutting physician Medicare reimbursement significantly and thus alienating a large segment of the voting populace because their doctors have decided to stop seeing Medicare patients evidently does not appeal to our elected representatives.
The cuts have only been postponed, however. They continue to accrue and recently amounted to about 25 percent. In 2016, if Congress does not repeal the SGR, the cut in physician compensation for Medicare will be 40 percent. Imagine going to the local pipefitters’ union and explaining to the rank and file, the annual salary cuts per foot of pipe laid for the last 19 years haven’t been enough. In addition to those cuts you have already experienced, this year your pay will be cut by an additional 40 percent because there are just too many people needing pipe installed. I wouldn’t want to be that shop steward. Too bad Congress doesn’t receive pay cuts because it passes too many laws.
You get the picture. Radiology is a terrible business model but for now, it is still a business. As a radiologist someone else determines the value of your services and if you get paid. Your services must be provided 24/7/365 without any guarantee of payment but with guaranteed liability. Will medicine continue to attract the best and the brightest? A former partner of mine relayed a story told to him by his daughter currently enrolled in a pre-pharmacy program at a large southern university. The pre-pharmacy students are grouped with the pre-medicine students during their undergraduate years. She told her father that after passage of the Affordable Care Act, half of the pre-meds changed majors. Although not a scientific study, the implication seems pretty clear.
What are your options? Those depend on many factors, especially your age. About 40 percent of radiologists are 50 or older. If 2008 didn’t totally wipe out your retirement, maybe you can retire. Considering life expectancies, the fact that you can only safely draw 3 percent to 4 percent of your retirement funds per year, and the lifestyle to which you have become accustomed, you probably don’t see how you can retire in the foreseeable future. If you are going to continue to practice can you make any changes that will improve the quality of your working life?
Concierge medicine is an attractive alternative where patients pay a set fee to their physician in advance to guarantee access and care. This allows the physician to cut out the bureaucracy and cost of dealing with insurance companies and the government. This model has limited applicability to radiology, however. The closest approximations include the VIP or executive physical model where diagnostic imaging constitutes part of the annual health check-ups of the affluent or offering total body CT screening studies. I’m guessing that market is pretty small and already locked up.
Outpatient imaging certainly has advantages when it comes to hours of work and call, but these are becoming victims of their own success and lately seem to be targets of government reform. Similarly, teleradiology work has the attraction of being able to work from anywhere but has the disadvantage of working when you should be sleeping unless you live on the other side of the international dateline. Competition among vendors and charging more to issue a preliminary report than the reimbursement for the final report would also seem to be a losing proposition.
A major concern for hospital radiologists revolves around the prospect of outsourcing of all radiology work to the virtual radiologists and keeping only a minimal number of embodied radiologists on site to provide those services requiring a non-virtual radiologist. That would be the ultimate commoditization of radiology. Before that happens, I believe radiology groups will begin to coalesce into mega-groups in an effort to preserve some influence over their fate. By definition, this would significantly erode the sense of autonomy and control of each individual radiologist.
Locum tenens work has its appeal but this involves travel and constantly meeting new people. As one of my former partners observed, most radiologists aren’t normally people people. Most radiologists are hospital-based and will undoubtedly remain so. For them the specter of employment by hospitals looms on the horizon like a dark storm cloud. Currently, over 50 percent of all physicians completing their training choose to become hospital employees. Can radiologists be far behind?
Personally, I had the good fortune to find a financial planner who employed the concepts of life planning in addition to wealth management. She introduced me to Jeri Sedlar and Rick Miner’s “Don’t Retire, REWIRE!” This book helps you identify what drives and motivates you and discover the work with the flexibility, challenges, and rewards that you can do instead of continuing in the same old job or retiring to the rocker on the front porch. In fact, I have “rewired” and now work with that planner (now my wife) in our financial advisory business and work part-time as a contract radiologist for my old group. I make less money but have control over my work schedule and I find that extremely gratifying. Changing careers is an option to consider.
When asked what is important to you about money, most people answer financial independence or security. To achieve these goals, you need a plan. You wouldn’t build a house without a detailed plan; well, you shouldn’t build your financial house without one either. An accurate assessment of one’s assets, liabilities, strengths, weaknesses, opportunities, and threats, as well as a detailed plan establishing one’s goals and objectives are essential for achieving financial independence and security. This will look different depending on your stage in life but is equally important at all stages. Once achieved, financial independence makes work optional and allows you to take control of your life.
As a radiologist, physicians and patients depend on us to guide them through the complexities of medical imaging and therapeutics. We must understand that in financial matters we need the help of a “financial physician.” This advisor should know you well while being aware of the pressures of your profession and the sanctity of your free time.
The feeling of futility and frustration that is all too common in medicine these days is directly related to the lack of clarity about the future of medicine and the suffocating feeling of not being in control. There are indeed many things about the business of medicine that are beyond our control. The key is to concentrate on the areas where you can exert control such as financial planning and use them to leverage the future you want. With the help of a financial advisor who understands your vision, you can make it happen.
Douglas G. Burnette Jr., MD, has been a practicing radiologist for more than 30 years, after receiving his medical degree from the University of Alabama in Birmingham and completing residencies in pediatrics and radiology and a fellowship in pediatric radiology. He now has taken on a second career in wealth management with his wife and partner at Clark & Burnette Wealth Management LLC located in Lake Charles, La. He continues to practice radiology part time as an independent contractor.
Disclaimer: This information is a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. Taxpayers should seek advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances. Investment Advisory Services provided through Clark & Burnette Wealth Management, LLC, a Registered Investment Advisor.