Like other small business people, physicians
were hit again last year with health insurance increases ranging from 15 to 35
percent or more. And rates won't be leveling off anytime soon, warns Donald
C. Brain, president of Corporate Benefits Consulting, an insurance agency in Overland
Park, KS.
Some doctors are pulling their hair out. Others
are finding ways to counter the rate hikes without losing employees or hurting
the practice economically. Many businesses, notes Brain, are trying to deal with
rising costs by having employees pay a bigger share of premiums or by raising
deductibles and copays. Kenneth Bowden, a practice management consultant in Pittsfield,
MA, says many doctors have reduced the portion of premium they pay to 50 percent.
Some physicians are hiring more part-time employees who don't get fringe
benefits, observes David K. Sebastian, president of The Physicians Wealth Management
Group in Parsippany, NJ.
Jeffrey J. Denning, a practice
management consultant in La Jolla, CA, advises doctors to shop around every couple
of years to find more affordable insurance. "There's always somebody
trying to get the business. Your first-year premium is often a better buy, and
then the carrier tries to get it back by raising its rates."
If a practice is large enough, this strategy can be effective. For
instance, the 30-doctor Family Medical Centers group in Jacksonville, FL, received
a rate increase of 20 percent this year from a local health plan named Health
Options. After shopping around, the group got a lower bid from Aetna, which Health
Options countered. Ultimately, Family Medical Centers switched to Aetna and their
rates decreased 3 percent. While copays rose significantly under
the new plan, playing the insurers off against each other accounted for most of
the drop in cost, says Jeff Burkhart, the group's business manager and executive
director of PCP Financial Services. Burkhart admits, however,
that a small practice wouldn't have been able to achieve this outcome. Also,
notes Brain, a small firm can get socked with a 20 percent surcharge if it changes
plans too often.
Some physicians are trying more-creative
approaches. Paying healthcare expenses up to the deductible of major medical plans
is one widely used method. Others include cafeteria plans, health savings accounts,
and health reimbursement arrangements. We'll look at each of these options.
As we do, bear in mind that there's no magic potion to ease health insurance
costs, and the situation is likely to get worse before it gets better.
Self-insuring the staff's deductibles High-deductible plans have been increasingly popular among sticker-shocked
doctors for several years. Pain-management specialist and FP Randall L. Oliver
of Evansville, IN, recently raised the deductible in his plan from $1,000 to $1,500,
the going rate in his area. But while other doctors are paying only half of their
employees' premiums, Oliver says, he's paying 100 percent of his 20
staffers' insurance costs.
Of course, for a receptionist
making $25,000 a year, a plan with a $1,500 deductible is pretty scary. But Oliver
will pay the deductible for all employees except new hires. "If someone has
her appendix out and it costs $3,000, we'll cover the deductible."
Isn't this too risky for Oliver? Not necessarily, he says. When
the practice increased the deductible from $500 to $1,000, notes Oliver, the per-employee
premium dropped $500. So the practice's net savings was $500 per staffer.
Of course, for each employee who ran up $1,000 in medical bills, the practice
spent that $500 savings and $500 more. "So it's a risk if everybody
gets sick," he acknowledges. "But if everybody doesn't get sick,
we save."
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