Wait till you find out how much it actually costs doctors/providers to render some of these services!
Do you like 90% margins? Doctors sure do! :)
Do you like 90% margins? Doctors sure do! :)
Put another way, the rent, employee pay, supplies, malpractice insurance, etc. etc. etc. add up to about 85% of her gross revenue. That 15% difference is how much she personally makes.
Sometimes there are services that do have 90% margin like you mention, but there are also sometimes services that have a negative (-90%) margin. I want to emphasize I'm talking about specific services/procedures, not the overall margin for the whole practice. A profit margin of 90% is unheard of. Perhaps you're thinking of hospital systems for example which will have certain departments that are operating at a loss and then other departments that are profitable. Then they offset each other.
Back-of-the-napkin calculation based on my wife's experience -- if you are a primary care (generic) doctor in a highly populated area and you see ~40 patients a day and each patient pays $100/visit.
$100 * 40 patients * 22 days per month of work * 12 months = $1056000 (about $1 million USD)
We are using $100/patient/visit and that's being very conservative. Most of these doctors would encourage the staff/volunteers who do the billing to put as many relevant billing codes as possible in the system (e.g., if someone comes in with a cough, they'll try to bill for anything related to cough symptom although they already knew it's just for seasonal allergy). This is necessary also because a lot (not all) of the patients are on medicare/aid and the reimbursement from medicare/aid is not as good as the ones from the private insurance companies. The cost of the labor is mostly just one assistant or at most two for ~$20-$30/hour max. Not sure about the insurance cost (but we assume that it would cost ~$20-$30K/year for malpractice insurance?) and renting the clinic (some docs do own the clinic). All in all, we believe that having your own practice can net you a lot more than what you'd make by working as an attending/hospitalist at a hospital (on average, hospitalists make between $250K-$300K/year, which is still commendable).
But if you live in a rural area, which tend to have smaller population density, then you are probably better off working for a hospital because as a hospitalist, you can make close or a little more than $300K/year as a general doctor. My wife knows a couple of doctors in Palmdale, CA, who work as hospitalists in two hospitals (6 days a week alternating between two hospitals; the days start at around 9am and ends around 3-4pm). They rake in ~$600K/year from salaries (not including bonuses). A friend of mine just completed his residency and got an offer from a hospital near Dyersburg (Tennessee) for $300K/year salary with $40K sign-on bonus. The specialists earn more of course: https://www.whitecoatinvestor.com/how-much-do-doctors-make/. A cardiologist friend of mine told me that he got an offer from a hospital in Montana that pays $800K+/year.
Just wanted to share what I know about how much the doctors can make in the United States.
Malpractice insurance can be way the hell more expensive than that: https://www.nerdwallet.com/article/small-business/how-much-i...
Rent will probably be another $60K per year.
The receptionist will want to be paid, as will the biller. If you're lucky, one of them will have time to be the designated person to call and argue with the insurance companies every time they deny a payment because it was a waning gibbous moon that day, but realistically, if you have providers seeing 40 patients per day, that's another full time person.
The EMR system will be quite a few thousand dollars up front, plus another several thousand per year.
You'll have to provide health insurance for all of your employees, and worker's comp, and an office liability policy.
And finally, great insurance (from the billing physicians POV) will pay about 40% of the allowed amount. Really crappy insurance, like Medicaid, is basically a write-off. BTW, Medicare has decent reimbursement. Not great, but several times more than Medicaid will pay.
In my experience as being the one who's written the checks for medical practices in a couple of different states over the last 2 decades, you are grossly overestimating revenue and underestimating expenses.
Malpractice insurance for internal medicine (general medicine that I'm referring to) is ~$33K-$34K in NY area based on the link you've provided.
Now let's do the math to readjust my estimates.
One full time staff with $30/hr * 2080 hours in a year = $62400 => let's just double that to cover everything like their health insurance and liability insurance so each full time staff costs = $125000/year
2 staff * $125000 = $250000 Rent = $60000 (the doctors sometimes own the practice, but let's just assume it's a rental) Malpractice = $35000 EMR system like eClinicalWorks = $10000 (amortized for upfront and yearly costs; software like eClinicalWorks costs ~$600/month on average)
The total expense of running a primary care (internal medicine) clinic = $250000 + $60000 + $35000 + $10000 = $360000 (let's just say $400K/year)
When I said these clinics on average make $1MM/year (of course, they are all near NYC/NJ metro areas), I truly am underestimating the income these doctors get from each patient visit. As an example, if I visit my physician at NYU Langone for my yearly check-up (at most a 10-mins encounter), the net reimbursement from my insurance they get for my visit (after the insurance company's discount/rate negotiation) is ~$250 without including the lab fees. Out of emergency and convenience, I happened to visit one of these primary care clinic doctors where my wife used to work at, and the doctor charged me $80 (that was back in 2019) in cash for an ear infection check (total of 5-minute encounter) and that's because I paid in cash and because my wife used to work for her. All of these doctors that my wife volunteered at or worked for (she got paid $15/hr max from some of these docs) are making a load of money from these clinics because we know a couple of them personally as well.
Again, I'm not saying you are understating the profit margins. You probably have been working with the clinics in some economically depressed or low-cost-of-living areas. I am only sharing what I know for truth in terms of the income of these primary care clinics in NY/NJ area.
Is there any way to fight back against this? I've personally experienced getting a bill after a routine office visit with tons of charges I didn't recognize and procedures they absolutely did not perform. In some cases, it equates to $0 after my insurance pays, but in others it results in quite a bit of extra expenses (especially since I'm on a HDHP).
There has to be supporting clinical notes for anything that gets billed. There are companies/researchers that try to find large scale fraud and then pursue legal action under the False Claims Act (if they win they get up to 30% of what is recoverable) https://en.wikipedia.org/wiki/Medicare_fraud#Medicare_fraud_...
There are also companies that try to help maximize billing. Really they're just trying to bill for everything that occurred, they aren't doing anything exploitive necessarily.
Physician salaries represent a small fraction of overall healthcare costs. Nursing/allied health salaries make up the bulk of any hospital’s costs and are often bloated due to powerful unions physicians don’t have.
For comparison, Canadian physicians are on average better compensated than American physicians.
I practice radiology, a specialty often considered “overpaid” yet my compensation is only high because of the amount of advanced studies ordered in modern medicine. On a per study basis I get paid less and less every year yet scans are getting more and more complex (many studies on this). In addition the standard to which I am held to keeps rising and I spend a significant amount of time doing unpaid QA, following up on my reports to improve my ROC, and at least a few hours every week reading the latest publications in my sub specialty.
The average diagnostic radiologist in the USA is grossing around 400k (no retirement fund, pension, and commonly no benefits).
What is reasonable compensation in your opinion for someone who has finished 10+ years of post-undergrad training and accepts significant liability for every report (a radiologist at HMS missed a lung nodule on an X-ray and lost 16 million in court)?