Tag: David Mokotoff

How Misplaced Reimbursement Incentives Drive Healthcare Costs Up

For all of those out there anticipating the 2014 official role out of Obamacare, also known as the ACA (Affordable Care Act), here is a cautionary tale.

Many years ago, as I was growing my cardiology practice, it became evident that diagnostic services for my specialty, like stress tests, echocardiograms, etc., were done less efficiently and cost more at the local hospital, then in the office. This stimulated many groups in the 1980s and 90s to install their own “ancillary” diagnostic services. Patients loved not having to deal with the long waits and higher copay prices at the hospitals. And yes, the cardiologists did increase their revenues with these tests. However, lower costs to patients, insurance companies, Medicare, and improved patient satisfaction were just as powerful a stimulus to the explosive growth of these diagnostic tests, and later even cardiac catheterization labs, when integrated into the physicians’ offices.

As the growth in testing spiraled upward, the hospital industry saw their slice of the outpatient revenue pie nosedive. Hospital lobbyists and policy-makers cried foul and complained of greed and self-referral, which they said was spiking the rapid rise in healthcare costs.

Studies laying blame on self-referrals being the major culprit for escalating healthcare costs, have been inconclusive. However, after years of lobbying and the passage of ACA, the hospital industry finally had the weight of the Federal government on their side. It did not take long for Medicare to start dialing back the reimbursements for in-office ancillary tests and procedures, and outpatient cardiac catheterization labs were one of their main targets. Hospitals had lost millions of dollars to the burgeoning growth of these labs inside the cardiologist’s office.

Our twelve-man group had a safe and successful lab for about ten years. Then after the ACA was passed, Medicare began to cut the reimbursements for global and technical fees in this area. The cuts were so Draconian that it became impossible financially to continue the service. Never mind that we could provide the same service as the hospital more efficiently, with better patient satisfaction, and at a third of the cost.

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Building a Medical Practice: Does Government Help or Hinder?

Over 30 years ago, I began a cardiology group practice in St. Petersburg, Florida, Bay Area Heart Center. I invested $30,000––all of my savings at the time, and worked 90-110 hours per week for three years before I hired a partner. Since then the practice has grown to about 50 employees, including twelve physicians. I was taken aback by President Obama’s recent remark, “If you’ve got a business — you didn’t build that.  Somebody else made that happen.”

Did I have help building this business? Yes. I have been graced with fine physician-partners, nurses, physician assistants, secretaries, medical assistants, and a remarkably efficient and dedicated administrative staff. But in all due respect, Mr. President, I must disagree with you.  I did build my business, and nobody else made it happen. , along every step of the way, the federal government has been more of an impediment to the growth of my business than a facilitator.

From Medicare dictating to me how much I can charge a patient for my services, to OSHA requirements against using lip balm in “patient-care” areas; federal rules, regulations, and bureaucracies have heaped increasing administrative costs on my business without one iota of improvement in patient care. Now with the imminent implementation of “Obama Care” dangling over us, the outlook is even direr.

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