Ultimately, some physicians might not want to join a group, and their final decision won't rest on the money. Because even if they were to see their reimbursements increase, it might not be worth it to them if it meant giving up their autonomy. Bellmer says one of his clients, a doctor with a lucrative practice who was a few years from retirement, turned down an offer from a hospital megagroup. "He didn't want to be suddenly treated like an employee," says Bellmer. "Some of the established doctors who have sold their practices to hospitals find they're being asked to do things they have not had to do for many years, like being on call during all hours of the day and night."
Also, doctors who join megagroups may lose tax deductions on cars and entertainment since they're no longer business owners. They'll also have to change their plans if they thought they were going to get a big payout from the sale of their practice at the end of their career.
"Advisors are going to have to revise many doctors' financial plans to treat them like employees instead of business owners," says Perlson.
While no one can read the tea leaves, there could also be consolidation among the megagroups in the decade ahead: Private equity investors and public companies are likely to invest in megagroup management companies and further consolidate their operations. Currently, Mullahey says, 80% of Americans are covered by three insurance companies. It's not hard to imagine that, in a decade, Americans will choose from just five or ten medical care providers.
How To Help Physicians Heal Themselves
Opportunities for entrepreneurial and business-minded doctors remain plentiful in this time of change; disruption breeds big winners and losers-some lucky, some smart. Take gastroenterologists, for example, who perform colonoscopies but often earn much less than anesthesiologists working on the same procedure. This has prompted some gastroenterologists to hire anesthesiologists to work as employees on salary so that they can collect the anesthesiologist's higher fee.
With medical economics in flux, a financial advisor catering to doctors must help them with the business end of their practices. This niche has a lot of idiosyncrasies. Doctors might be good at surgery, but bad with money, ill-equipped to run a hospital or a budget. They also deal with life and death issues, which means often they feel like they know things they don't, and that requires you to push back if they won't listen.
To help them succeed amid the changing medical economics, you might need to encourage them to be flexible with their goals or business models. Or you might need to be flexible with your own.
If a doctor you are advising has seen his income slump, explore ways to boost billings. For instance, a general practitioner who is a cardiologic specialist might be able to conduct echocardiograms-sonograms of the heart-in his office by adding ultrasound equipment. Or stress tests. Such procedures can boost income, and patients appreciate the convenience of not having to see a cardiologist annually.
Despite the parlous economic conditions for physicians, many of them-especially specialists in plastic surgery, radiology, anesthesiology and other medical niches-are complacent about their financial affairs. No one knows for sure that these specialists will continue to be immune to the fate of their colleagues whose incomes have declined sharply. Many doctors in their 60s who have lived extravagantly for many years are now facing lean retirement plans because they have not been disciplined about saving in times of plenty. Do not allow them to spend on fancy cars, big homes, etc. unless they are saving adequately to meet their retirement goals.
Utley says the planned cut in Medicare will disproportionately hurt specialists. "You've got to remember that elderly people are the ones who are sick and they're on Medicare," he says. "The specialists sought by older people are disproportionately affected by the Medicare cuts."