Doctors Going Broke

According to an article in CNN, some doctors in the U.S. are going broke. Read it here . I feel sorry for anyone who goes broke, but this is not unexpected.

According to the author, some doctors have unsustainable debt and are facing reimbursement reductions by insurers. A good question is why the unsustainable debt?  After all, many of our institutions have become bloated and can’t adapt to the economic downturn.

The article mentions a cardiologist who is going broke. According to a StudentDoc survey, the average cardiologist makes $403,000 per year. The average cardiovascular surgeon makes $558,719 per year. That’s not bad in either case.

My point is a lot of very highly paid people in every walk of life end up in bankruptcy. No matter how much you make, you can always spend more.  I believe the health care industry has been as guilty of over-optimism as the real estate and finance sectors.

People have been saying for years that many clinics and hospitals will face a solvency crisis brought on by excessive borrowing to fund sleek new facilities and excessive purchases of uber-costly medical equipment. Some doctors became wealthy during the good years, and some of them made purchases not easily retracted now that the economy has turned down.

Let’s not blame health insurers.  They represent the voice of their policyholders who are hurting economically.

Hospitals have been buying doctors’ practices on borrowed money for years. The ones that paid exorbitant prices are soon going to be hurt badly. We are seeing the leading edge of that now. In five years large numbers of hospitals will be looking for bailouts.

Thomas G. Emerick is the president of Emerick Consulting, LLC. He has served on a variety of employer coalitions and associations including the board of the National Business Group on Health and the U. S. Chamber of Commerce Benefit Committee. He blogs at Cracking Health Costs.

6 replies »

  1. My husband is a specialist, been in practice for over 30 years, always lived within our means. Our overhead continues to increase yet our reimbursements continue to decline. In non-adjusted dollars we are paid less than we were 10 years ago. We are encouraged to buy more technology, do electronic health records, and spend more of the money we don’t have. My husband is 63 and only knows Ophthalmology. He is a great doctor, well thought of in the community, but that no longer brings patients in the door. Patients go where their insurance is taken and Doctors accept the paltry non-negotiated fee. Insurance premiums rocket higher and reimbursements decline. Guess where the money is, not in the pockets of most health care providers. Oh yeah, we net 150,000.00/year. How much do the top 20 in any insurance company make? Remember no Doctors no health care.

  2. “Let’s not blame health insurers. They represent the voice of their policyholders who are hurting economically.”

    Oh yeah… let’s not blame the health insurers. The CEO of UnitedHealth Group makes about 100 million a year, according to Forbes.com. (http://www.forbes.com/lists/2011/12/ceo-compensation-11_Stephen-J-Hemsley_NBHE.html)

    Forgive the monsoon of sarcasm when I say “oh yeah, that really sounds like representing the voice of policy-holders who are hurting economically”. Come on!!

  3. If docs are going broke, it is largely because of their entrepreneurial endeavors, not from a pure practice of medicine.


  4. “Let’s not blame health insurers. They represent the voice of their policyholders who are hurting economically.”

    So says the consultant who helps design health plans – insurance.

    Why any thinking person can see how concerned the insurers are about their clients, can’t they? I mean the list of insurers who have stated their intent to limit profits by holding premiums in check is how long?

    Yes, the list of industries that have the potential for bankruptcy is inclusive of any industry, health care included, but surely the fact that more physicians are going bankrupt should lead to a reasoned discussion about why. May they deserve it because of poor decisions they have made, but maybe there is something else to be learned. What I don’t need is for some leech to be telling me what to think. “You guys make a lot of money and shouldn’t be going bankrupt” is not a helpful take on the issue.

  5. The physician in the CNN article photograph, Dr. Gorman, is one of my REC clients. I wrote about this in my Jan 8th REC blog post.

    I live in Ground Zero of the latest burst bubble – Las Vegas.

    The larger economic picture going forward is pretty dicey.