Clinical recession: Economic slowdown takes toll on DOs’ practices, patients

Jeffrey M. Morgan, DO, couldn’t hold on much longer. From March to May 2009, the Glendale, Ariz., general internist’s patient base dropped 20%.

Already hobbled by insurers reimbursing below Medicare rates, Dr. Morgan saw his financial problems balloon as the recession’s jobless left wide gaps in his appointment book and drained his remaining profits.

At the time, his practice had been on the market for a year and a half. Dr. Morgan longed to end his solo career and join a physicians’ group. He figured the exchange of autonomy for security was a bargain. The recession cemented his opinion.

In June 2009, Dr. Morgan succeeded in selling his practice and began working for the buyer, the Phoenix-based John C. Lincoln Health Network. The deal headed off a sorry end that just weeks before seemed inevitable. “Prior to the sale, I went 2½ months without bringing home a paycheck,” he says. “I made sure my staff, lease and other bills were paid, but there was nothing left for me. Before long, I would have had to close my doors.”

Recession’s reach

Like many people, osteopathic physicians have struggled to minimize the recession’s impact. For DOs, the prime challenges have been on two fronts: maintaining the health of their patients and their practices.

Physicians nationwide have implemented varied strategies to counteract these challenges—from sharing office space and incorporating ancillary services to offering patients payment plans and free sample medications. Yet not all physicians have encountered problems. Among those largely unaffected, a San Francisco physician shares why his osteopathic medical skills have given him an edge in the down economy.

Detroit

John W. Sealey, DO, a solo thoracic surgeon in Detroit, first saw signs of trouble three years ago. Many of his patients worked in the auto industry. Battered by the economy, struggling carmakers and their suppliers closed shops and cut employees. As the local jobless rate climbed above 15% in 2009, Detroit assumed the lead among large U.S. cities with residents out of work.

“The number of patients coming to my office started to decrease,” Dr. Sealey recalls. “Things got progressively worse, and now I would say my patients visits are now down 65% compared with 2007.” Ensuring that his absent patients, who typically have chronic heart and vascular diseases, don’t ignore their health has been a challenge, Dr. Sealey admits.

Uninsured patients and those unwilling or unable to pay their insurance co-pay or deductible often wait until their problems are so severe that they end up in the emergency department, he says. “They’ll stay away until they can’t stand the vascular pain any longer, and at that point they usually require very aggressive treatment.” To prevent such scenarios, Dr. Sealey started sending appointment reminders to all patients, encouraging them to be vigilant about their health.

“I also began telling my uninsured patients never to think that my seeing them is contingent on being paid,” says Dr. Sealey. Although he can’t quantify how much free care he’s provided during the past few years, “it’s been a lot,” he says.

Besides trying to help financially strapped patients, Dr. Sealey’s other preoccupation has been his practice. He’s attacked the challenge on several fronts. One day each week, Dr. Sealey telephones or visits local primary care physicians to remind them of his availability for referrals. He’s also added to his clinical skills by learning new, minimally invasive surgical techniques such as endovascular surgery. He started a Facebook page and is working on a website for his practice. And because he’s in his practice only two days a week now, he sublets his office the rest of the week. In addition, he’s reduced staff from four full-timers to 1½.

The result? He’s staunched some financial losses by cutting expenses and subleasing space. But his efforts to attract patients have had little effect. Nevertheless, this year he’s found cause for hope. “We’ve had good news from the Big Three automakers,” says Dr. Sealey. “They’ve posted gains. And although it’s just my perception, it does seem like people are starting to venture out again. Things might be turning around.”

Williamstown, N.J.

But 450 miles east of Detroit, in Williamstown, N.J., Lee A. Van Houten-Sauter, DO, hasn’t seen any signs that the economy is on the mend.

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“Each month during our county osteopathic society meeting, we discuss the problems with decreasing patient volume, and how companies are raising their employees’ insurance co-pays to the point where it’s becoming cost prohibitive for workers to use their policies,” says Dr. Van Houten-Sauter, a family physician who shares a group practice with two other physicians.

Dr. Van Houten-Sauter says that about 1½ years ago, she noticed an increasing number of no-shows in her practice. Within a few months, 20 to 30 patients cancelled appointments each week. “People were also spreading out their visits,” Dr. Van Houten-Sauter says. “For example, if I normally would recommend they return every 12 weeks for a blood pressure check, they’d postpone the visit until 16 or 20 weeks later.” In addition, she learned that patients neglected prescriptions. “Or they would take their medications every other day to make them last longer,” she says.

To help ensure that jobless patients have their prescriptions, Dr. Van Houten-Sauter supplies them with free samples when possible. She has been spending extra time on patient education, reinforcing good health habits and the importance of taking medications as prescribed.

“As far as trying to generate more revenue, we’re going to begin conducting sleep testing and we’re looking into allergy testing,” Dr. Van Houten-Sauter says. “These are two services we currently refer to specialists.”

To boost patient visits, Dr. Van Houten-Sauter’s staff last year began mailing “Welcome Back” letters to absentee patients, asking them to make an appointment for a checkup. “We’re also sending thank-you letters to patients who refer us to friends and co-workers,” she says. “Those are two new marketing strategies, and they have helped bring in people. But I get the majority of new patients by word of mouth, which has always been my best sales pitch.” Dr. Van Houten-Sauter reports that the combined efforts have paid off. During the past several months patient visits have started climbing again.

But one large, ongoing problem at the practice has been outstanding accounts receivables. Although Dr. Van Houten-Sauter and her colleagues offer payment plans, unpaid bills have grown since the recession’s onset. “The number of patient accounts we’ve sent to collections is double what it had been, and people still haven’t paid,” she says. “It’s awful.”

Seeing little evidence that the recession is easing, Dr. Van Houten-Sauter says her priority now is to continue to find ways to bring in more patients by seeking out “more useful marketing ideas.”

San Francisco

Osteopathic physicians market themselves best when they highlight their special skills, says medical practice management consultant Judy Capko, the CEO of Capko & Co.

“You always market what makes your practice different,” says Capko. “And osteopathic physicians not only have manipulative training, they also emphasize prevention and integrative care. Those skills and values couldn’t be more timely. Those are just the things you want to push on.”

In his office “smack in the heart of San Francisco,” Quoc L. Vo, DO, an osteopathic manipulative medicine specialist, underscores Capko’s point when he says his distinctive skills have helped him avoid economic troubles.

“I haven’t seen a slowdown,” says Dr. Vo, who runs a solo practice. “Most of my colleagues who are doing hands-on osteopathic medicine haven’t seen a significant drop in their patient pools, either. The reason I think we haven’t been affected by the recession is because there are so few OMM specialists in this city, and in the country. Patients seek what we offer.”

Dr. Vo explains that many of his new and longtime patients are well-educated professionals who place a high value on preventive medicine and OMM. “They come to see me regularly to help prevent problems rather than waiting for urgent care.”

While some unemployed patients have decided to wait longer between visits, few have left Dr. Vo’s practice. And he continues to attract new patients to fill holes in his schedule.

Another change Dr. Vo has seen since the recession began is an increase in the number of people who seek OMM to alleviate stress and anxiety.

While Dr. Vo can’t gauge whether the recession is easing based on his appointment book, he can depend on his patients for regular updates. “There is a sense that things might be starting to get better, but it’s just on the horizon,” he says. “CEOs who are patients of mine are saying, ‘Yes, there seems to be some improvement. But I’m not quite ready to hire. Maybe six months or a year down the road.’ ”

Tallahassee, Fla.

With single-digit unemployment in a state widespread with double-digit figures, Tallahassee has been one of Florida’s more recession-proof cities.

Nevertheless, says family physician Janet M. Gibson, DO, “it’s been bad enough.” Since 2009, patient declines have cut income at her solo practice by approximately 11%, reports Dr. Gibson. And, like other physicians, Dr. Gibson knows the frustration of patients neglecting follow-up care. She also knows money problems can blind patients to their needs. She cites the case of a woman who refused an urgently needed test rather than pay a $500 deductible or sign on with a payment plan.

“She was 50 years old and had rectal bleeding,” Dr. Gibson says. “I scheduled her for a gastrointestinal exam twice, and she canceled. She said she was a single parent making $12 an hour and didn’t have the $500. I told her she needed to get checked. I told her I was afraid of cancer. But she wouldn’t listen. She was in denial. She said, ‘Oh, it’s just hemorrhoids.’ That’s why I hate high-deductible plans.”

Dr. Gibson bought her 3,300 square-foot office in Tallahassee three years ago. At the time, she thought she’d rent out a portion to another physician. But there haven’t been any buyers. When the recession hit, she decided to take advantage of the empty space for ancillary services.

“I opened a weight-loss clinic on the other side of the building,” she says. “I do that Wednesday afternoons and Saturday mornings, and I’m starting to build up a clientele.”

She’s also installed an electrical muscle stimulator to help patients with back pain and diabetic neuropathy. “It does improve patients’ strength and balance, and it can decrease swelling in their lower extremities,” says Dr. Gibson. “Insurers are giving me a decent reimbursement for it, and word-of-mouth is helping to bring in more patients.”

“Right now I’m just breaking even,” she says. “But are things improving? No, we’re still going down. Revenue in January was 6% less than in January of 2010, which was 5% less than in January of 2009. I wish I could give you a rosy picture, but it wouldn’t be accurate for my practice.”

Glendale, Ariz.

Neither was everything rosy for the physician network Dr. Morgan joined after selling his Glendale, Ariz., practice. Dr. Morgan estimates the recession sliced his patient volume about 25%.

Minimizing losses became a network priority. “There was a tightening of belts across the board,” Dr. Morgan says. When necessary, physicians shared staff rather than hire new workers. The group also successfully renegotiated its contracts with insurers to increase reimbursement rates.

To reverse the patient falloff, physicians expanded their office hours to enhance convenience. The network also initiated a mail campaign to notify patients of the new physicians on staff.

In addition, Dr. Morgan says that during the past year insurers in the area have introduced less expensive policies.

The combined network and third-party payer offerings have helped practices post about a 10% gain in patient volume. But with no-shows still in the double-digits, the physician group continues efforts to boost appointments. “We’re doing another mailing,” Dr. Morgan reports. “And instead of sending it only to established patients, it’s going to all consumers in the area.”

With its ever-expanding efforts to rebound from the economic downturn, Dr. Morgan’s physician network mirrors the actions of practices across the country. Be they specialists or family physicians in solo or group practices, physicians’ struggle to emerge from this recession is proving a long slog.

“I’ve been in practice for 30 years,” says Dr. Sealey in Detroit. “And this is the worst economic challenge I’ve ever faced.”