Written by Suzanne Berman MD
Several years ago, when I took my car in for servicing, I noticed this clever message printed on the back of the mechanic’s invoice:
This simple, honest explanation of my bill impressed me so much that I kept the invoice. More recently, I’ve thought about using a similar illustration for patients who ask, “I don’t understand why my pediatrician’s bill is so high – I only saw the doctor for about 10 minutes!”
Using the auto mechanic’s model, I’ve taken our practice’s actual expenses for 2010 and broken them down by category, as well as percent of our total budget, to give you an idea of where the money goes.
So with apologies to the creator of the automobile piece, here’s what goes into the cost of servicing your child:
|Utilities and rent: 10%||We spend a tenth of our budget just keeping the lights on, the telephone ringing, the heat and A/C running, and the rent paid.|
|Supplies: 9%||Nearly another tenth of our expenses go to supplies, both clerical (appointment cards, copy paper, and pens) and medical (gauze pads, diapers, and casting supplies.) The largest single supply expense we have is vaccines; it’s not uncommon for a busy pediatric practice to have many thousands of dollars in vaccine inventory at a time.|
|Clinical staff: 13%||Our nurses and medical assistants are busy from open to close – they weigh and measure our patients, draw blood, give shots, answer medical questions, complete school and camp forms, return phone calls, coordinate referrals, talk to the home health agency, refill prescriptions with the pharmacy. All these astute individuals are friendly and talented; we want to keep them, so we try to pay them well.|
|Receptionists: 5%||Our front office staff answer the phone, verify insurance, check in patients, distribute paperwork, send and receive medical records, mail and fax documents, process co-payments, confirm appointments, order supplies, and more.|
|Insurance jockeys: 4%||We don’t have “car jockeys,” but we do employ three full-time staff who could be described as “insurance jockeys.” These longsuffering individuals send claims to insurance companies (a big task) and argue with insurance companies when payments aren’t made properly (an enormous task, as it’s estimated that 20% of insurance payments are wrong.) They try to keep up with policy changes in the 200+ insurance plans our office sees in a year. They also work with families who need to establish payment plans, need to get insurance, or who are having trouble navigating their insurance plan.|
|Supervisory staff: 8%||All our other staff have to be trained and supervised. Someone has to approve their mileage forms, overtime requests, time clock totals, and benefits changes. Someone has to negotiate scheduling squabbles, process payroll, conduct staff meetings, plan the office’s Christmas party, write policies (then rewrite them when they’re unclear), meet with vendors, fix the computers when they’re acting up, call a plumber when a toddler accidentally flushes a toy down the toilet, and about 384 other major and minor things to keep our office running. These staff also have associated professional costs, like dues and subscriptions.|
|Building maintenance: 4%||Keeping our office clean and well-maintained is hard work for the husband-and-wife team who spend several hours 5 evenings a week cleaning, disinfecting, dusting, vacuuming, waxing, touching up the paint, wiping fingerprints from walls, emptying the trash, getting bugs out of the light fixtures, and more. Seasonally, we also pay a landscaping service (to maintain our grass and plantings) and a guy with a big truck (to salt and de-ice our parking lot). This also includes budgeting for major repairs, like resealing and restriping our parking lot every couple of years, fixing leaks in the ceiling, and cleaning up fallen debris after a bad storm.|
|Specialized physician training: 22%.||This represents the salaries for the pediatricians in our practice and, yes, paying the doctor is the largest single expense in a practice. Much of this goes to the doctor’s personal overhead: Physicians now graduate med school with an average of $150,000 in educational debt.|
|Capital investment: 6%||We use electronic medical records at our office, so all of our staff have their own computers, and there are computers in each of our exam rooms. Computers have to be replaced every few years, as do other electronics, furniture, appliances, and tools.|
|Taxes: 6%||The largest part is payroll taxes for our employees and self-employment taxes for our physicians – but also unemployment tax (federal and state), property tax, professional privilege (license) tax, and sales tax.|
|Insurance: 7%||We pay malpractice insurance for our professional employees, of course, but also insurance on our building and equipment, health/dental/life/disability for our employees, worker’s comp insurance, and some other odds-and-ends premiums.|
|Fringe pay: 5%||This includes vacation/sick pay, holiday pay, and our company’s contributions to our staff retirement plan.|
|Wage and hour regulations: 1%||Overtime wages for our employee constitute nearly 1% of our total annual expenses.|
When you pay your pediatrician’s bill, your pediatrician certainly takes home a portion of that, but most of it goes to other things to keep the office ready and running. While our practice isn’t necessarily representative of all pediatric practices – and I know from published benchmarks that our practice is atypical in at least a few ways — this hopefully gives a rough idea of where the pediatric healthcare dollar goes.
Suzanne Berman is a practicing general pediatrician in rural Tennessee.