While it may come as a big surprise, not all doctors are doing well financially. There’s a bit of a TV stereotype about doctors, who frequently get lumped together with lawyers as the type of professional that will always be necessary. If we always need doctors, there will always be money in the profession, right? Well, a new CNN Money article reports that the truth is altogether different. Health care professionals are finding themselves in dire financial straits, just like many small business owners, and many are even on the verge of bankruptcy.
How can this be possible? Well, it turns out that running a private practice is the same as running a small business, and one thing that gets very little coverage in medical school is how to build a small business that is successful. About half of the doctors in the United States run a private practice, and it is those doctors that are struggling. While much of the problem relates to cuts in Medicare payments for certain procedures and medications, beyond the challenges lies a deeper problem: doctors are not business oriented.
Most doctors get into the business thinking they will help people, treat people, and battle disease. But in the United States, you can’t simply be a doctor and make a living, you have also got to know how to manage your finances. Unfortunately, this often means that doctors are pitted against patients, especially those patients who cannot afford to pay their bills and are un- or under-insured to begin with. Because this describes a very large proportion of the population, doctors are being forced to limit their services only to people who have insurance or can pay their medical bills themselves.
Getting a better handle on what makes a practice lucrative could go a long way towards balancing out the finances and the treatments. While doctors always want to use the best or newest treatments, they have to be cautious about what insurance companies will cover. General practitioners have to see patients for multiple appointments if they need to be treated for multiple conditions, otherwise insurance company payments are limited. While this truth is unsavory, the reality is that doctors need to be business minded if they are going to be able to continue to offer their services.
So doctors are taught to recognize diseases, prescribe the proper medication, and help people to heal and become healthy again, but not how to recognize the symptoms of profit leaks in their profession or how to keep their own businesses alive. Anyone considering a profession in the medical industry should be able to diagnose the changes in business profitability and be able to react appropriately. Just like a disease that is allowed to proliferate inside the human body, the longer a business is allowed to suffer from poor management, the harder it will be to fix the problem.
While many small business owners can operate their businesses on their own, doctors rely on a staff to keep things running smoothly. Someone must be around to answer the phones and take new appointments while the doctor is with patients. Increasingly, doctors are forced to pay their staff salaries instead of paying themselves. Understanding how to create a realistic budget is a critical skill for all business owners, and doctors, even though they deal with a different set of challenges, are not immune to the negative effects of a budget that runs at a deficit.
To change the current trend in poorly performing finances, a lot of factors need to be taken into consideration. Naturally there are the tax, insurance, and medicare factors, all relating to how much a doctor will receive in cash, in exchange for services that the patient needs. Proper medical procedure must be followed, but the numbers need to add up so that at the end of the day, everyone is still making a living. Doctors who are practicing without planning their schedules and watching their reimbursement allocations are finding out the hard way that being a doctor is the same as being a business owner. Somebody has to watch the relationship of income to expenses.
The prospect of doctors offices in rural places being forced to close is a dire one. Communities where incomes are low anyway will become even more likely to neglect their health when they have to travel farther to get to the doctor. This translates into needless illness and loss of life, as people wait longer for an illness to progress to a stage that is unbearable, and therefore untreatable, and overall the costs of treatment will skyrocket even further. If the medical community doesn’t get some financial support in the way of business training, we may be looking at very few options when it comes to getting medical care in the near future.