Just wanted to add something to my post from the other day about physicians and collusion in bargaining.
1. Nothing in my post was intended as a defense of the status quo. The landscape in negotiating with insurers is so tilted away from physicians it's not even funny. This is even more problematic in states where balance billing has been banned. In those states the insurers have no incentive to negotiate at all with physician groups, since they can simply dictate rates. In states with more open contracting rules, there is still no truly open and fair market for physician services. There are a few causes that contribute to this condition:
- Asymmetry of size. Insurers are huge organizations with enormous market power. The typical physician group is either a solo practitioner or a small group. The insurer can afford to drop a provider or group with little more than inconvenience to their enrollees, but when a doctor or group drops an insurer they run the risk of a large slice of their business evaporating. Larger medical groups can operate on a more even footing with insurers, which is one reason among many that the trend towards large group practices has been accelerating.
- Resources. Insurers have a department that exists solely to maintain their provider networks. They have people who do nothing but negotiate contracts on a daily basis every day of the year. Doctors or their business managers do so maybe once a year or less often. That sort of experience and skill also helps depress the prices physicians can command for their services.
- Asymmetry of knowledge. The insurer has contracts with hundreds if not thousands of doctor groups. They know what they pay every doc in the state, and they know the high-end and the low-end and their profit point. Doctors know only what their contracts are. Not only that, we are prohibited from knowing what other groups are contracted at, because of collusion rules. This also puts doctors at an incredible disadvantage in negotiating reasonable reimbursement rates.
2. There is a way around this handicap. As one commenter points out, there is a large multi-specialty surgical group called Proliance which does very well (I hear) with their contracts because they are tenacious and skilled negotiators. However, they can do this because although each doc in Proliance is a member of a true group practice. Which means that they all share a common tax ID number and share revenues. How they internally divvy up the money is their business. But since they took the risky and difficult step of truly and legally integrating their practices into a single corporation, they are legally a single entity and thus their acting as a group is legal -- you can't collude with yourself, or there's no such thing as a conspiracy of one.
This is also why the members of the IPA ot smacked down by the FTC in the other case cited by the Mise Blog. They got cute and tried to affiliate without incorporating, and that doesn't pass muster. If you want to have the market clout of size, you need to be willing to take the significant step (and risk) of joining your practices more or less permanently.
3. Government fee schedules are a joke when it comes to competitive marketplaces. They are truly contracts of adhesion -- no negotiating permitted. I'm all for physicians dropping them to make the point that the rates are unrealistically low, and it's a pity that it can be necessary because it really does hurt patients. But you still can't boycott them as a group.
4. Unions -- doctors are not allowed to join/form them. I think it's because we are considered management, but I am not sure. Anyone else know the background on this one?
Thanks for all the thoughtful feedback on this interesting issue.