HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
The other day at Rotary I was talking with a friend who has been in health care administration for more than 20 years. We were discussing the electronic medical record. I said “Your company will benefit from Obama care, won’t they?”
He said “You bet, we are going gangbusters”. Then he said “Bob, I can’t think of a one positive secular trend in medicine”. Unfortunately, this has been my impression for several years, and it is only re-enforced by everything I see and read.
In the US, we want our physicians to be smart, hard-working, capable and honest. We want them to be the best our society has to offer. We reward this with respect and with remuneration that since the Civil War has been about five times what the average worker makes. It is my concern that because of all the factors described below the best and the brightest will no longer be attracted to the field of medicine.
Several years ago, Barton Biggs (author of Wealth, War and Wisdom, reviewed in Issue #41, June 2, 2008) was interviewed on CNBC. He said that when he came to Wall Street in the early 1960s; doctors, the best lawyers and investment bankers/financiers; made about the same money because they had similar intellectual abilities. Now physicians are third.
Three weeks ago I was at a conference and mentioned this to a physician who graduated Harvard Med School in the 1960s and is now a Professor at a large business school. He agreed, and said the kids with the doctor-level intellect are now in his MBA program.
Unfortunately, it won’t take much to tip the balance. Consider this; say 2 of the top 10 people in a class of 100 decide to pursue a career in investment banking rather than be a physician. They aren’t replaced by another two who would be in the top 10%, they are replaced by #101 and #102. Two of the best students are replaced by two clearly inferior students.
The average med student graduates with about $150K of student loans (the average DO graduate has almost $200K in student debt). Since this is the average, many are further in hock. This figure also does not include other indebtedness, such as car loan, credit card debt (a sure sign of financial mismanagement no matter where you are in life), a mortgage, etc. Since the average doc finally finishes training in their early to mid-30s, it will take another 10 years (their mid-40s) to just to break even, to get out of debt from their student loans.
In the 80s and 90s, there were strongly positive secular trends in the pharmaceutical and medical instrument industries. We were doing good things for patients; making them live longer and feel better. The stocks of these companies, such as Merck (MRK), Pfizer (PFE), US Surgical (USS), Biomet (BMET), and Medtronic (MDT) were big winners. There were drugs that inhibited enzyme systems, such as statins, ACE Inhibitors and ARBs. There was laparoscopic surgery, artificial joints, ocular lens implants, coronary stents, and sophisticated pacemakers and defibrillators. These trends have all played out. The drug stocks and medical instrument makers have been dead money for more than a decade and will remain dead money until the next wave of progress presents itself (maybe new vaccines or drugs that can directly affect the genome).
Unfortunately, the one growth area in medicine is government interference (see more below about government interference in your life). It is the stated goal of the administration, and the new chief of Medicare/Medicaid, Dr. Donald Berwick (who was elevated to the position by a recess appointment so he did not have to be questioned by the Senate), that medicine will be used as a tool to redistribute wealth!! To blatantly use medicine as an instrument of class warfare is not bullish for patients or physicians. Obama has said he will raise taxes and use medicine to redistribute wealth. Believe him.
Shortly before I retired, our practice implemented HIPPA regulations at a total cost of $50K. With 10 doctors in our group, it cost me $5K cash money, straight out of my pocket. It did nothing to improve patient care and it certainly didn’t do jack for me.
In my opinion, the Electronic Medical Record could be a useful advance. There is no doubt that having access to a patient’s complete medical history and lab studies has advantages.
BUT: in actual implementation, I believe it will be a disaster for physicians and American Medicine.
1) Physicians personally enter much of the information directly into the EMR via computer. A physician’s time (at least right now) is worth $150-200 per hour. Every second doing something that a nurse or secretary or medical transcriptionist can do is a terrible waste of a physician’s time. I have spoken with many physicians who feel that having to enter the data while taking a history hinders their job and makes them look like an uncaring robot rather than a physician.
2) The EMR is the government’s stalking horse that will eventually result in a single payer system=the government. The data will be continually mined to evaluate performance. Your reimbursement will never go up; it can only go down if you don’t meet yardsticks. The screws will be tightened every year.
3) The whole time this is occurring, the mantra will be that the EMR “improves patient care”. Now how can any responsible physician resist “improving patient care”? I know this for a fact because several weeks ago I spoke with a high-level government bureaucrat on this very subject. Every reservation I had about the EMR (and HIPPA, vida supra), was countered, almost robot-like, with “it will improve patient care”.
4) The cost of the EMR will be born directly by health care providers (doctors and hospitals), and indirectly by all of us.
In my opinion, Organized Medicine has failed miserably in protecting the interests of practicing physicians. But what upsets me even more is when they defend their failures by saying “You are lucky we were here, because it would have been worse”. That’s like a football coach who has been 1-9 for 5 straight years saying it could have been worse. It would be tough to do worse than they have done.
I believe there are a whole host of secular trends that will 1) decrease the quality of people pursuing a career in medicine and 2) increasing government interference and control will decrease the quality of medical care and increase costs.
RMD
Cousin Tony in NJ forwarded me a piece written by journalist Charlie Reese entitled “545 People” (435 Congressman, 100 Senators, 1 President and 9 Supreme Court Justices). Reese notes we, the citizens, the voters, were the ones who put these 545 people into office.
With the elections approaching, it is worth your time to read this piece in its entirety at http://www.snopes.com.
Reese lists the following:
1) Accounts Receivable Tax, 2) Building Permit Tax, 3) CDL License Tax, 4) Cigarette Tax, 5) Corporate Income Tax, 6) Dog License Tax, 7) Excise Tax, 8) Federal Income Tax, 9) Federal Unemployment Tax, 10) Fishing License Tax, 11) Food License Tax, !2) Fuel Permit Tax, 13) Gasoline Tax, 14) Gross Receipts Tax, 15) Hunting License Tax, 17) Inheritance Tax, 18) Inventory Tax, 19) IRS Interest Charges and Penalties, 20) Liquor Tax, 21) Luxury Taxes, 22) Marriage License Tax, 23) Medicare Tax, 24) Personal Property Tax, 25) Property Tax, 26) Real Estate Tax, 27) Service Charge Tax, 28) Social Security Tax, 29) Road Usage Tax, 30) Recreational Vehicle Tax, 31) Sales Tax, 32) School Tax, 33) State Income Tax, 34) State Unemployment Tax, 35-41) Various Federal, State and Local Telephone Taxes, 42) Utility Tax, 43) Vehicle License Registration Tax, 44) Vehicle Sales Tax, 45) Watercraft Registration Tax, 46) Well Permit Tax, and 47) Worker’s Compensation Tax.
He notes that “Not one of these taxes existed 100 years ago, and our nation was the most prosperous in the world”. In 1929, when we were by far the richest nation in the world, the Federal Budget was 3% of GDP. Now it is 25%, and we are the greatest debtor nation in the world.
For some time now, a Canadian subscriber, a quite sophisticated investor, has been telling me to look at BORN (China New Borun, ADR, see chart, next page). I do not own it, and this is not a recommendation. Rather, consider it an idea to pursue if you wish.
A general point about relatively thinly traded stocks such as this, where the bid and ask can be wide; use limit orders and avoid market orders. There is no reason to let the sharpies make an extra nickel or dime per share at your expense.
This is from younger son Michael, an MBA student at Case-Western Reserve University in Cleveland.
“Your newsletter referencing “financial dogma” made me think that economics is the one area in which every investor should have a basic understanding….of supply and demand, market structures and macro-economic forces. It can go a long way to understanding the markets. I am constantly shocked at how many executives of publicly-traded companies, investment managers and public officials forget about basic supply and demand in favor of some new technique they promise will maximize profits.
Wall Street Journal, 10/22/10. Propping up Fannie Mae and Freddie Mac will cost taxpayers $154B…But the bill could go much higher if grimmer projections prevail.
RMD comment: Our problems will only end when the government stops interfering.
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