Tuesday, February 17, 2004

The Price We Pay?

Huzzah! Today was my first official day as a solo family physician, and I saw a grand total of . . . zero patients. But I expected this.

The only people who know I am open for business are the family, friends and neighbors I invited to my Open House 3 days ago, and all of them looked healthy. Plus, I have the handicap of not being able to accept any third party insurance reimbursement yet. Which I point out to everyone who even hints that they might come see me someday. Perhaps I should stop discouraging them and just ask, "So when shall we schedule your appointment?"

After working at Kaiser for 13 years, I think I don't know the value of my own services, since we always got paid the same no matter how many patients we saw. This is something I will have to overcome, that is, asking people to pay me for my services.

And not feeling guilty about it.

Even though I haven't seen any patients yet, I'm already wondering if I set my prices too high. I had come across this practice in Tennesee which accepted only cash, and their prices ranged from $25 for a simple visit to $75 for a complex visit. But then again, this practice's target population is the uninsured and underinsured.

Two days ago, I decided to model my fee structure after Dr. Gordon Moore, the father of the "solo-solo" practice model. He charges his cash-paying patients $30 for each 15 minute block of time. I don't know how it compares to other local physicians' prices, but I do know that local psychologists are charging $200 an hour, so $30 seemed kind of low to me. However, $50 per 15 minutes seems kind of pricey. Even if I think my services are worth it, patients might balk at a rate they consider too high.

So I settled on a compromise. I would set my fees at $50/15 minutes, but offer a 20 percent discount for "prompt payment", effectively lowering the price to $40 per 15 minutes. I think that is a fair price for this middle to upper middle class area.

The concept of a "fair price" or "standard fee" seems to be a myth anyways. This 1998 study used 4 standardized patients seeing 62 doctors and saw fees that ranged from $16 to $160 for the same patient!

How does one set a fee? The easy way is to see what the doctor across the street charges and you charge the same (or a little less if you are smart). The complicated way is to use the Resource Based Relative Value System (RBRVS, or RVU - Relative Value Units - for short). It was an attempt to level out the payments made for "cognitive" services like a checkup vs. "procedural" services like a heart bypass operation, by assigning each service a "relative value". The hope was so that medical services would be fairly compensated based on the amount of work put in, mental as well as physical.

As this article points out, it hasn't quite turned out as well as planned, but it's better than before:

In 1991, for instance, an internist would have had to perform 72 mid-level office visits to equal the payment for a single coronary artery bypass graft. In 2002, that internist would have to perform only 38 office visits to equal that payment.

At any rate, I have yet to enter the third party payer system, and have to suffer the ups and downs of the local market economy. I hope to generate more interest next week after my advertisement in the local newspaper comes out. In the meantime, I still have to finalize all the forms that my patients will need to fill out when they come see me. So it's just as well that I don't have any patients yet. (It'll give me time to call around and see what the other local doctors are charging.)