about medical practices that can’t pay enough to keep their employees… — Ask a Manager

After last week’s letter from a medical practice manager struggling to hire staff and unable to pay more because of tightly regimented insurance company payments, I received this letter offering a different view that I wanted to share here.

Hi LW #2,

As a fellow small medical practice owner, I feel your pain. The feedback about PTO and other suggestions is fine, but I think most commenters (possibly even Alison included) aren’t aware of the root issue.

I run a similarly sized practice to yours. We are known for our amazing culture. I always have more people who want to work here than I can hire or have need for. I have had people move across the country to work here, unasked. There is no problem signing people on.

Our challenge? Retaining staff, because we can’t afford to pay them. We have the exact same problem: our pay ceiling is capped because of reimbursement and the fee-for-service nature of health care. Our staff are crestfallen when they have to resign, but it’s necessary for them to do what’s best for their families. I’m constantly consulting with the staff to tweak our employee offerings: more benefits and less pay, more pay and less benefits, etc. etc. But at the end of the day, we can only offer so much pay + benefits combined. More PTO is fine, but more PTO costs money!

We are able to keep as many people as we have because of our culture. Our staff in two-income families are willing and able to take a lower pay for improved work-life balance and employee experience. But not everyone has that financial privilege.

Insurance rates haven’t budged in over a decade, or they’ve gone down. I ran an inflation calculator this past week. Since I first opened the practice nine years ago, there has been an effective 20% cut in reimbursement. Twenty percent loss of revenues, in less than a decade. Cost of living has gone up and up (and skyrocketed during COVID). Health care workers need higher compensation in order to feed their families, but where does that money come from?

The math just. does. not. work. It is mathematically impossible for a health care practice to take year-over-year cuts (that are outside our control) while maintaining employee compensation levels, let alone increasing. Treatment times may be shortened, as you described, but that’s a huge quality and clinical efficacy hit. In some cases, a shortened treatment might as well be no treatment at all. There are qualitative minimums to clinical care.

We made the decision to go private pay only this year, as a result of this. Our specialty is such that this is doable, we offer a service for which enough people can afford to pay out-of-pocket. This isn’t possible for many kinds of medical care, though. Practices with expensive equipment or involved procedures won’t be able to service anyone but the 0.01% as a private pay clinic.

There is a reason small private practices (and hell, small and mid-tier hospital systems) are all selling and being absorbed by massive entities. I don’t know how long the rest of us who operate these kinds of practices will be able to survive. We are probably the ones who make the best damn buggy whips — but it’s still a buggy whip, and there’s no place for that in today’s market.

The advice from readers (and Alison) is fine, but as someone who has been grappling with everything you expressed, this is NOT because you are failing or missing the mark as a business owner. Sure, maybe you can level up some elements of culture or flexibility or something. But that is only going to get you so far, and you will still have the same struggles.

I don’t have an answer, and I’m sorry to sound so grim. You aren’t alone.

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