Value Beyond Treatment
by Matt Rohr
April 09, 2010 01:39 PM | 0 0 comments | 15 15 recommendations | email to a friend | print
Value Beyond Treatment

It used to be that family doctors made house calls. Maybe they kept a small office off Main Street to house their extra stethoscopes and examining table. But for the most part doctors plied their trade in living rooms, bedrooms — anywhere with a bedside and a stool.

Times have changed. Doctors’ offices have become an accepted and integral part of the health-care process. In addition to being medical centers, those offices have become part of the economic framework of many small communities. We schedule visits to them for anything from an upset stomach to a serious medical disorder.

“What we do for patients is our passion and our main service,” said Dr. Leah McCormack, a Long Island-based cosmetic dermatologist and president-elect of the Medical Society of the State of New York (MSSNY). “But private practices are also small businesses, and we were interested in seeing what kind of economic impact we have.”

To that end, MSSNY commissioned a study last year to determine the economic impact of private-practice physicians in their communities and statewide. Conducted by Specialized Analytics through Kavet, Rockler and Associates, a Connecticut research organization, the study examined how doctors’ offices and their employees impact local economies across the spectrum, including tax revenue generated, personal income, and spending on goods and services. The results, said McCormack, were a far cry from the old-fashioned image of a sawbones and his doctor’s bag.

“We had heard about a similar study being conducted in Georgia for the same reasons,” said McCormack. “Doctors are not looked at for the business aspect of their offices. We wanted to find out how much of an economic factor private physicians’ offices are to demonstrate the importance of fostering private practices.”

Following the money

Using an input-output economic model that culled data from a variety of government financial data bases, the study conducted for the physicians’ organization disaggregated research at the state level to generate findings by county and region.

According to MSSNY data from 2008, physicians’ offices ranked second in the state in total establishments, sixth in total employment; and seventh in total personal income.

“The information from the study didn’t come from information supplied by physicians’ offices, but rather data from public sources,” said McCormack. “It was interesting to me to see how the study was done, and impressive to follow the money through the total economy and see how far-reaching small businesses, and particularly private practices, can be,” she said. The analysis, titled “Economic Impacts of Private Practice Physicians in the State of New York,” can be viewed on the MSSNY’s website,

Study data found that there were 70,000 licensed physicians in the state, over 60 percent of them employed in private practice (42,456). Private physician practices employ 330,594 people and generate revenues of $24 billion.

According to the data, Ulster County ranked slightly above average in terms of economic benefits, with 115 private physician practices with an average of nine employees (compared to the state average of 7.79 per practice). These offices contributed $106 million to the local economy, including tax revenues and employee salary for the 1044 physicians and staff members employed. Each private practice in Ulster generated an average revenue of $922,000.

“Most of these offices across the state are small private practices,” said McCormack. “In the Hudson Valley, many of the rural areas are sparsely populated, and the concentration of physicians’ offices is not as concentrated as it is in population centers. It’s important to have an idea of just how much these offices bring to the local economy.”

Like any other business

McCormack spoke about the need to make the business atmosphere in the state more helpful to doctors — a position echoed by Empire State businesses across the spectrum of employment. McCormack argued that physicians’ offices served a unique role. Their economic contributions needn’t be overlooked.

“It’s important for our legislators and officials to know that if the climate is bad for physicians it’s bad for the health care of the state and the economy as well,” said McCormack, citing business changes over the last two decades that have increased the cost of running a physicians’ office (and many other businesses, most would argue).

“What’s happened is with the high cost of malpractice and liability insurance, a lack of tort reform and increasing rent and utility costs, fewer and fewer doctors are going into private practice,” said McCormack. “Pay is stagnant or declining, expenses are increasing annually, and the quality of care lessens as a result.”

Uncompensated care (largely from patients lacking insurance) represents a growing expenditure for private-practice physicians, said McCormack. Although the recently passed health-care insurance reform bill will help, McCormack said that its changes were still most likely years away. Among the changes McCormack advocated for improving the business environment for physicians’ offices are tort reform to reduce the swelling cost of liability insurance, and the ability to bargain collectively for better tax conditions.

“Physicians’ offices are just like any other business,” she said. “If you constantly tax them or force them to pay ever-increasing insurance premiums and costs, eventually they’ll go under. No business can survive in that situation.”

“Every doctor in the trench out there understands that every time you make a decision, liability is in the back of your mind,” said Dr. George Watson, president of the Association of American Physicians. The high cost of malpractice insurance is not the only thing that troubles doctors, however. “Costs need to be addressed so that private practices can remain economically viable.”

U.S. Department of Commerce data shows that 16 percent of the U.S. gross domestic product is dedicated to health care — all the more reason, said McCormack, to promote a positive business environment for physicians.

“The overall message is that physicians contribute a great deal to the economy in addition to all of the services that are vital and can’t be quantified — health and well-being,” summed up McCormack. “We have to make sure that the climate improves for all businesses. When physicians struggle, it hurts many factors of life.”

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