Doctors have been subject to wrenching economic changes. Over the last 15 years, they have faced cutbacks in insurance and Medicare reimbursements by as much as 25% for consultations and office visits, says Mark Perlson, whose CPA practice Perlson, Touhy & Company in Massapequa, N.Y., focuses on physicians.

Across-the-board fee cuts are common for many outpatient and in-hospital surgical procedures. Perlson says an eye doctor who 15 years ago was paid $3,000 for cataract surgery is now paid just $900 for the procedure. Obstetricians paid $6,000 for delivering a baby 15 years ago now get paid only about $3,000.

Meanwhile, over the same period, the cost for nurses, administrative staff, malpractice insurance, recordkeeping systems, physician supplies and all other things medical have risen steadily. Malpractice insurance for obstetricians in New York has skyrocketed to $200,000 a year, and an orthopedist in New York often pays $130,000 a year for malpractice insurance. If that weren't enough, the cost of collecting reimbursements from insurers has increased substantially because carriers routinely deny payments if they don't have extensive paperwork from the doctors.

The passage of President Barack Obama's health-care reform legislation makes the prognosis for the nation's physicians even grimmer. The mood in Congress is certainly not in favor of increasing expenditures. And now doctors are facing a 21% cut in Medicare reimbursements in October, says Perlson. Of course, cuts are scheduled every year, only to be rescinded at the last minute. But the Obama legislation, now signed into law, may really bring them to pass.

All of these problems make practicing medicine less attractive, at least as a business. And these problems are crucial to financial planners: Doctors are prime financial advice candidates, yet they have become unable to hire financial help because they cannot meet their minimums, say several independent advisors.

Banding Together
Trying to stare down these challenges, some doctors have banded together into large groups or cooperatives-known as "megagroups." Such collectives allow doctors to squeeze an additional 15% to 25% in reimbursements from insurance companies, says Perlson. The movement isn't new, but it has accelerated in some parts of the country, and will likely change the way financial professionals approach and advise doctors.

"Doctors who leave the autonomy of private practice and join these megagroups make more money," Perlson says. "They're not doing great, but because of the ability of these organizations to get higher reimbursements, the doctors do not get squeezed as much. Megagroups stop the bleeding."

Wendy Stimpfl, a health-care attorney at Rivkin Radler in Uniondale, N.Y., says these organizations also allow doctors to join together under one tax ID number, which gives them not only collective bargaining power but collective purchasing power for supplies, malpractice insurance and other expenses.

"Just having a bunch of doctors is not enough to get the ear of the insurers," she says. "Megagroups are able to offer insurers real savings in the long run by combining their technology systems, staffs, billing systems and administrative costs."

Allied Pediatrics of New York, a collective of 75 pediatricians in 18 offices on Long Island, started an after-hours center so their patients could avoid more expensive visits to emergency rooms. Those savings have become attractive even to the insurers, and could snag the group higher reimbursements.

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