Baking April

 

This is probably the hottest April Singapore has ever felt. And we are not talking about the weather. Although it’s certainly baking this April. We are also not talking about the parliamentary budget debates, which was about as exciting as watching the threads fray more and more on my clinic tourniquet.

We are not even talking about two major earthquakes on opposite sides of the Pacific. We are talking about accusations of dishonor and some very funny monkey business interspersed with relentless reporting of the actress Rui En asking “Do you know who I am?”

Like most hobbits living in shires, I don’t know.

Meanwhile, after years of writing absolute rubbish, this Hobbit is suddenly overcome with pangs of fear that he may have accidentally, unknowingly plagiarized somebody or something (including Wookie-like yawns, Ogre rants and R2D2 beeps).

Since the last column on managed care, many alert readers have asked this Hobbit about the issues of “fee-splitting”, “inducement” and “commission”. To short guys like me, life is simple. When it doesn’t smell right, it usually isn’t. Take dwarves for instance, they don’t smell right. Neither do orcs, they smell even worse.

That is not to say that this Hobbit is super-righteous and adopting a holier-than-thou attitude. Far from it. This Hobbit has its fair share of shadows and skeletons in Storm Giant-sized closets. But that should not prevent anyone from speaking out against something that is poisoning private practice doctors and the private healthcare sector. Especially when it’s early days still and what participating doctors really need is guidance and not condemnation or even criticism.

The issue is that we (and that includes me, This Hobbit) are so enamoured with the money and business of medicine and managed care that we euphemise the sin, make black become grey and increasingly paler and paler shades of grey until it looks a creamy light yellow. But it will NEVER be pure, pristine, 100% white.

We get de-sensitized and refractory to further such stimuli. The originally painful pricks to our conscience have become just what they now are – little pricks. And no more.

Let’s take the example of the 15% fee that managed care and third party administrators demand from participating doctors and clinics. In the normal course of business, a company bills another party for work the company has done. The bill is derived from the work and costs incurred by the company and topped up with a profit margin. There is NOTHING wrong with making a profit. But the point is that the bill is derived from the work and resources employed by the billing company (where work was done and costs incurred).

In this case, the billed amount is derived from the work done NOT by the billing company  BUT by the clinic and the doctor. In business terminology, that is usually called “a commission”. Calling this an “administrative fee” is just a euphemism or circumvention for “commission”. It is a commission dressed up as an administrative fee. When you dress an orang-utan in human clothes, it is still an orang-utan. The Uniqlo, Marks and Spencer or even Christian Dior apparel doesn’t make the orang-utan human.

When you buy or sell or house and use a property agent, you pay him a commission derived from the value of the property transaction, not from the effort the property agent has put in. That’s the way the property sector works. But this is not how the medical profession works (or at least worked in the past and is supposed to work).

Why is this so? Because the medical profession has its own set of ethics and professionalism. The fundamental basis for a patient referral is that we refer a patient to the doctor we think is best for the patient. In other words, a referral must be made based on the patient’s best interests. It cannot be based on whether the doctor gets the referral because he is willing to part with 15% of his fee or not. This giving of a percentage of his fee to the referring party is called “fee-splitting”. A long time ago SMC actually suspended a doctor for fee-splitting (in the eighties) with another doctor. And if you ask this hobbit, it doesn’t matter if the referring party is a doctor or otherwise. The referred doctor is guilty of fee-splitting as long as he gives a percentage of his professional fee to generate a referral (i.e. business). This is inducement to another party to either refer when there may be no reason to, or to refer to the inducer when another doctor is better suited to handle the patient’s medical problems – either scenario is not in the patient’s best interests.

Why is this so difficult to understand? It amazes this Hobbit that very senior members of the profession are finding it so difficult to grapple with such simple ethical principles. Either they have been clouded by money or they are just not getting back to the basics of ethics when they think.

Or let this hobbit put it another way. How will the public react when they find out that doctors give up 15% of their professional fee to another party just to get referrals? Do you think patients will consider it an “administrative fee” or a “commission” or worse, a “kickback”?

I guess to the layman, it depends on the amount. If it is 15% of say, a $60 bill from a GP- that comes up to $9. We can explain that the managed care company needs to deploy resources to administer the managed care or third party administration program and to make a reasonable profit. Most members of the public will say, “Yeah, it’s OK to pay them $9 a case”.

But let’s say it now involves major surgery and the surgeon’s fees is $12,000, the anaesthetist fee is $3000 so total professional fees come up to $15,000. 15% of $15,000 is $2,250. That’s a lot of money to pay a managed care company for one referral and subsequent administrative work. How can you justify that? To the public, this is most likely a “commission” to induce a referral. That’s because $2,250 bears no semblance to what resources that managed care company has used up to link up the patient with the doctors concerned and the consequent administrative work e.g. billing and payment etc. It is a cut (i.e. a percentage) of the professional fees given out as commission to the managed care company. Pure and simple.

It doesn’t matter what fantastic mental calisthenics we doctors play in our minds to try and justify this commission fee and salve our conscience (i.e. dress the orang-utan). It is a commission fee dressed up as an administrative fee, but at its heart, it is still a commission paid by the doctor to the managed care. That’s how the public will in all likelihood see it. Because everyone understands that without this 15% commission paid out, the managed care will not give this referral to Doctor X.

Or put it another way, Doctor Y who refuses to give the 15% but will really pay an administrative fee (which let’s say, can even be as high as twice the amount of the true cost, i.e. 50% profit margin- good by any standards) will NOT get the referral from the managed care company.

Like I said, if it doesn’t smell right, it usually isn’t.

Maybe this Hobbit is just bloody old-fashioned and out of touch with reality. Some folks have told me, doctors need to eat too. What’s wrong with giving up 15% to see more patients and earn more money?

I certainly hope SMC can do something about this. Because if they don’t stop these practices involving doctors, then what is the point of self-regulation? The SMC cannot regulate the practices of managed care companies, but certainly it can decide whether doctors can participate in such practices? Doctors need clear direction and unequivocal instruction from SMC before the collective conscience of the profession ebbs quietly into the night.

SMC and even MOH just need to ask themselves – will public confidence in the medical profession and the private sector healthcare system be diminished, unchanged or improve if the public finds out that this 15% is paid to the managed care companies? If they think public confidence will be unchanged or even improve, then by all means do nothing. If not, they have to do something and fast.

This is because if SMC or MOH doesn’t exercise leadership and give clear direction, then self-regulation will give way to trial and judgment by public opinion. And it won’t be pretty then.

To be absolutely honest, this old coot of a hobbit is gripped by doubt too lately. I am beginning to think that I am that lone voice in the wilderness, like a crazy and paranoid old man raising unfounded fears and unnecessarily scaring little children…..

Maybe the public will think it’s OK to give thousands of dollars to managed care companies which they understood originally were meant to be professional fees for doctors. I don’t know. Maybe…..

Something is baking this April. And it certainly doesn’t smell right.

Afternote:

Since this posting, an alert reader has said that given the low rates of reimbursement by some managed care companies, a surgeon’s professional fee of $12,000 is not possible and hence the grand total of $15,000 is not possible either. Maybe.

This Hobbit has snooped around a bit. Different companies offer different rates. Even within the same company, different doctors get different deals. Some favoured ones get better deals.

Also, this posting is about ethics, not poor rates of reimbursement. You do NOT have to accept poor rates of reimbursement. You can leave the scheme.

In any case, the 15% applies to ALL fees, including ward attendance and outpatient fees.

Most complicated cases will also require input from multiple specialists other than the surgeon and anaesthetist. Assuming you charge a very low $100 per visit and you make two visits a day for 7 days, that’s still $1400 of inpatient fees for the surgeon. And probably another combined total of $700 to 1400 for the other specialists if they visit once a day (Anaesthetist + one or two other specialists) . So it is not inconceivable that for a patient undergoing major surgery with let’s day 2 days of ICU stay, the total professional fees for one inpatient episode will come up to $15,000. (Surgery fees $9000. Surgeon inpatient attendance fees $1400 (2 visits a day). Anaesthetist fees: $2250. Anaesthetist attendance fees: $600. Cardiologist attendance fees: $900. Endocrinologist attendance fees: $900.

Assumptions: Surgeon visits twice a day. For the 2 days of ICU stay, all doctors visit twice a day. Otherwise its one visit a day for other doctors

Total 9000+1400+2250+600+900+900= $15,050

This figure excludes outpatient charges related to this inpatient episode

Yes, there are some companies that demand you only charge $70 for initial consultation and $45 for each follow-up consultation. That’s lower than restructured hospital charges. But as the previous posting said – no one is forcing you to join this plan. Again, it is worth repeating – this posting is about ethics, not poor rates of reimbursement. You do NOT have to accept poor rates of reimbursement. You can leave the scheme. Schemes that give good rates with poor ethics is far worse than poor rates with good ethics.

 

 

 

 

 

3 thoughts on “Baking April

  1. If they fix the fee to a certain administrative cost like $20 per patient referred, it’s less likely to be considered a referral/commission/kickback rather than a %.

    Opinion from a ex-healthcare worker turn commission generating real estate broker. 😉

    Like

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