You may have heard that the Social Security Administration officially announced that Social Security recipients will receive a 1.6% cost-of-living (COLA) adjustment for 2020. Those increased payments will start in January 2020. The purpose of the COLA is to help the purchasing power of Social Security benefits keep pace with inflation. Congress first enacted the COLA provision as part of the 1972 Social Security Amendments, with automatic annual COLAs began in 1975. Before that, benefits were increased only when Congress enacted special legislation.
Atlanta Financial Blog
What’s Ruining Medicine for Physicians?
Each year, Medical Economics asks physicians about their top challenges for the new year. During the 2018 end-of-the-year polling, this leading healthcare publication posed a more provocative question: “What is ruining medicine for physicians?” An overarching theme that emerged from the 2018 poll centered on how the business side of healthcare is demanding more of physicians’ attention than any other issue – even patient care. From continuing education requirements to continued declines in reimbursement rates to hard-to-use EHR systems and payer relations, there seems to be fewer hours left in physicians’ days to do what they do best and were trained to do – diagnose illnesses and treat patients. As a Wealth Manager and the spouse of a physician, I’ve called out four of the nine “pain points” that I found most relevant to a physician’s finances:
Compensation: On average, primary care physicians have seen their pay rise by more than 10% in the past five years, which is only slightly more than inflation over that same time period but close to double that of specialist compensation. However, even with these gains, compensation of primary care physicians continued to trail that of specialists. While median income for primary care physicians was $257,726 in 2017, that’s significantly less than the $425,136 reported by specialists for the same time period. Compensation becomes increasingly critical to physicians as they continue to face increasing overhead, climbing staff pay, lower reimbursement rates and longer hours.
Administrative burden: Paperwork and administrative tasks topped the list when physicians were asked, “What is ruining medicine?” In fact, the majority of the physicians surveyed (79%) were united in making this claim. That is probably no surprise to anyone, provider or patient, who has been watching the healthcare industry struggle to balance patients’ best interests with what insurers will cover and navigate the myriad of new documentation required to satisfy prior authorizations.
Operating expenses: Primary care physicians found their practices’ median operating expenses up 13% since 2013, which is nearly double the inflation rate. Nationally, nurses’ compensation has risen even faster and is up 19% since 2015. Clinical staff members’ larger paychecks prompt physician employers to expect licensed clinical staff, such as physician assistants and nurse practitioners, to provide the highest level of care their licensure allows. However, these “physician extenders” are limited by their licensure to a specific set of tasks and responsibilities hindering what can be delegated by physicians. Finally, compensation for non-clinical staff, which remains in short supply, was up for 11 of the 12 positions surveyed.
Payer negotiations: Value-based care and ongoing payer consolidation complicate what physicians view to be one of their most burdensome responsibilities: negotiating contracts with payers – the third-party insurers who actually reimburse physicians for patient care. As budgets tighten and the demand for profit escalates, payers are ratcheting up their requirements to justify reimbursement increases – even small ones. In some cases, payers are restricting their networks to only those providers who deliver optimal outcomes at the lowest cost. Attempting to exert leverage into the negotiations is almost a moot point for smaller practices, which typically encounter a “take it or leave it” response from payers. As the healthcare system moves toward a value-based approach, the need to justify requested increases with documentation can be expected to continue resulting in yet more paperwork for medical practices.
All of these pain points impact a physician’s financial picture. In my work with doctors, we consider all of these factors when creating a financial game plan for a physician and his or her family. To be successful in “Making Life’s Journey Richer” for our clients, we must pay very close attention to bumps in the road, both expected and unexpected, particularly for physicians whose financial futures are so uncertain.
To read the other five items physicians say are ruining medicine for them, go to “Top Nine Issues Ruining Medicine for Physicians.”
The holidays are the perfect time to express our thanks for your business and to think about those less fortunate. Please join us for our 11th Annual Holiday Open House and Toys for Tots Collection on Thursday, December 12, 2019, 11:30 am – 1:30 pm at our office – 5901-B Peachtree Dunwoody Road, Suite 275, Atlanta, GA 30328. Lunch will be served.
All of us at Atlanta Financial want to congratulate Harrison Fant on recently passing his five year anniversary at Atlanta Financial in September. Since joining AFA in 2014, Harrison has rapidly ascended through the different positions to his current position as Wealth Manager. Harrison has a unique combination of technical financial planning skills and the ability to present those complex concepts in easily understandable ways to all of his clients.
In working with my retired or soon-to-be retired clients, perhaps the most frequent question I am asked is “What is the best way to withdraw from my investment and retirement accounts in retirement in order to provide me my desired retirement income?” I believe they ask me this question because many of them have investments in a mix of different accounts with varying tax characteristics such as taxable investment accounts, IRAs, 401k or retirement plan accounts, Roth IRAs, and possibly real estate investments such as rental property. In addition to that, they may also have retirement income coming in from multiple sources and at different times such as Social Security income, pension income, and deferred compensation. If you are interested in increasing what you can spend in retirement and reducing the impact taxes have on your retirement nest egg, it is important to have a multi-year retirement income plan that takes into account the impact taxes will have on both your retirement income sources, and the withdrawals you take from your different investment and retirement accounts.