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Costs, economy pummel doctors

August 25, 2008 |

A one-two punch.

That’s how some doctors might describe the effect of the slumping economy and the already tough business of running a medical practice in Las Vegas.

Employers, feeling the effects of the economic crunch, are reducing and eliminating health insurance plans from their benefits packages.

As the economy struggles, and businesses look for ways to reduce overhead costs, more – especially small businesses – elect to drop or reduce health insurance offerings. Included in the mix are workers who have been laid off, thus likely losing health coverage. Because of this, more people are joining the ranks of the 47 million uninsured as calculated by the U.S. Census Bureau in January.

This in turn leads to more unpaid medical care.

“It’s a vicious cycle,” said Dr. David Ginsburg, a neurologist and associate professor of neurology at the University of Nevada School of Medicine. “(The economy) is a part of the problem. I think the downturn in the economy adds to the problems that were occurring before with the continuous drop in reimbursement rates.”

By law, individual doctors are prohibited from collectively negotiating reimbursement rates with health insurers.

As a response, medical groups will band together to increase their negotiating leverage, said Dr. Ron Kline, a pediatric hematologist and oncologist with the Comprehensive Cancer Centers of Nevada.

Kline is also past president of the Nevada State Medical Association.

Many doctors are having problems because their costs are up, they can’t recover payments from the uninsured and insurance and government funding sources are decreasing.

“We’re hearing about layoffs in physician practices, a number of practices having to borrow money to get through the period, doctors working in other settings,” said Larry Matheis, executive director of Nevada State Medical Association. Some doctors are going out of state to do some work, he said.

“(The economy) has hit the physician practices pretty hard,” Matheis said. “Their costs have gone up and the ability to recoup those costs have tightened.”

Some ways to recoup costs are to offer medical spa treatments, such as Botox, and to sell wellness products, he said.

The long-term issue doctors face, Kline said, are rising costs because of overhead and drug costs, while payments are flat or declining.

“Everyone is looking for ways to cut costs,” at a time when costs are increasing, he said. “Doctors are caught in a squeeze between two opposing forces.”

Toss into the mix the high percentage of uninsured in Las Vegas: In 2007, 17.1 percent, or 450,000 people, had no health insurance, according to a study by the Great Basin Primary Care Association.

“That (number) is only going to get worse,” Kline said.

Physicians are being hit on the business side, Matheis, said.

“Their overhead costs are higher (and) the insurance plans, the government plans, because of the economic downturn, are all paying less,” he said.

Even though a 10.6 percent planned cut to Medicare reimbursements was actually increased by 1.1 percent this summer, doctors reimbursements have “virtually flatlined,” Matheis said.

Before the economy started to slump, doctors in the valley were already dealing with a decline in reimbursements from insurers, Ginsburg said.

“For physicians, the economy is just one factor affecting doctors’ bottom lines,” he said.

“I’ve just seen a slow decline in medicine throughout the years, in terms of quality of care,” Ginsburg said. Insurers are “constantly cutting reimbursements” and fewer people are covered by health insurance, he said.

Nevada’s jobless rate rose to 6.4 percent in July, the highest it’s been in 14 years.

“This just adds one more insult to the problem,” Ginsburg said.

Increasingly, Ginsburg said he finds himself referring patients to a Nevada Neuroscience Foundation social worker to help patients with poor or no health coverage. He serves as a medical adviser to the group, he said.

“They either have no insurance or not enough insurance, or they’re just not able to pay the (co-payments) to get their basic care,” he said.

If Ginsburg wants to order a specific test or a patient needs a specific treatment and can’t afford it, that affects his ability to properly care for the patient, he said.

“If somebody comes in with headaches and I want to order an MRI, and the MRI is too expensive, we have to settle for a CAT scan,” he said. Patients may also choose to defer testing until they can afford it, he said.

“That obviously causes problems both for the patient and (doctors) liabilitywise,” he said.

Doctors in general are having to see more patients to make ends meet, he said.

Doctors could be forced to reorganize and merge their practices, he added.

In California, when its economy soured following the dot-com bust in the 1990s, as many as 15 percent of physician practices were in bankruptcy, Matheis said.

The small practices get hit the hardest, Matheis said. “Even though the large practices will have higher overhead, the small practices have such a small margin to work with.”

“It’s a squeeze and it really starts with the squeeze that’s on their patients,” Matheis said.

Nicole Lucht covers health care, workplace and banking issues for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at 259-8832 or at


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