Dennis Jenders

Dr. William Schreiber, a primary care physician based in North Syracuse, N.Y., claims that the 21% reduction in Medicare payments will affect his business. Dr. Schreiber suggests that cut, slated to take affect later this month, may make treating Medicare patients a “losing proposition.”

While reading this story on CNN I felt compelled to figure the math. Dr. Schreiber notes that his business has an annual revenue of $800,000. He also notes that he sees 120 patients a week. If I assume an average work day, that means he sees each patient for 20 minutes on average.

Of those 120 patients, 30% of them are Medicare patients according to the article.
30% x $800,000 = $240,000

So the 21% adjustment will affect $240,000 of his revenue.
21% x $240,000 = $50,400

By my math, Dr. Schreiber stands to loose $50,400, or 6%, of his yearly revenue. If he does average a patient every 20 minutes, that means he needs to see 2-3 additional Mediacare patients a day to overcome the loss. He would need to see even less if they are average paying patients.

An extra 2-3 Medicare patients a day will increase revenue, by $12,000.
780 patients (3 / day) x $80 = $62,400

I know doctors likely work more than 40 hours a week, likely spend more than 20 minutes with a patient, and that many other cogs in the system are making money instead of them.

However, a 6% decrease in revenue doesn’t seem overly threatening. In fact, many businesses have seen similar losses in this economic climate.

And it’s not just businesses, it’s every average American. So tell me, why should this profession be the exception?

Trackback URL for this post: http://blog.jenders.com/2010/03/04/medicare-reductions-affecting-physician-revenue/trackback/