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Ophthalmologists need to be realistic about economic environment
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Ophthalmology is facing a “fiscal cliff” of its own as we enter 2013. I would like to share a few personal thoughts that I hope will help my colleagues deal with the changes that will — not might, but will — occur in 2013.
First, it is important for each of us to put our current situation into perspective vs. our fellow Americans and perhaps the 5 billion-plus with whom we share this planet. The median income of an American worker has been declining each year for 5 years and now stands at about $44,000 per year for a 40-hour work week with 2 weeks’ paid vacation. On a global standard, this is very good compensation, and in many countries in the emerging world, the number is closer to $400 per year. I do not expect the average American worker to feel sorry for the typical American ophthalmologist.
About a decade ago, a Gallup poll revealed that the American public thought a reasonable annual pay for a physician would be $100,000 per year, or about three times the then median income of an American worker. At that time, the government apparently agreed, as the military, Veterans Administration and Public Health Service paid a full-time physician about $100,000 per year. Adjusted to today, that would project to an annual income of about $132,000 as being something both our fellow citizens and government officials might be likely to support. I do not expect any sympathy from the public until our compensation falls below this level.
What about our congressional representatives? Members of the House and Senate are currently paid equally at $174,000 per year and have not had a raise since 2009. They believe they have a demanding and important job that is at least as important as ours, so I do not expect any sympathy from them either as long as our compensation is greater than theirs.
In general, polls show that both the public and government officials are unhappy with access, quality, timeliness and cost of health care provided in our country. Bottom line for me: I do not expect much sympathy from either the American public or my congressional representatives if my pay is reduced.
We now have a pretty good insight into who is considered “the rich” in America. It is the top 2% of earners, or for a married couple, those earning $250,000 or more per year. Most ophthalmologists consider themselves upper middle class, not rich, but again, the public and those that represent the public in government categorize you as among “the rich” if you are earning more than $250,000 per year.
Statistics suggest that the majority of ophthalmologists reach this income level while working 36 hours per week with closer to 8 weeks’ vacation and meeting leave per year. Perhaps we can find safe harbor among our fellow physicians, but this is unlikely as well. The harried primary care physician is in his opinion — and on thoughtful, honest evaluation, I must agree — working much harder for significantly less pay than his ophthalmologist colleague. So, the facts to me suggest that we are not likely to see much relief or generate much sympathy.
The 13.5% cuts in cataract surgery are a done deal. They did not occur because the American Academy of Ophthalmology and American Society of Cataract and Refractive Surgery were not vigilantly representing us; they occurred because a major factor in the resource-based relative value scale is the time spent to deliver a unit of care. Based on surveys of our fellow cataract surgeons, the average time to complete a cataract operation was reduced from 35 minutes when last surveyed to 21 minutes today.
In addition, the classical four postop visits with a 90-day global care period have been reduced to two or three in a 30-day global care period for many surgeons. These are the facts. I personally believe the AAO and ASCRS did an amazing job limiting the cut to only 13.5%.
In addition, we will see cuts in reimbursement for our office-based care, and when adding in the possible impact of sequestration, I am planning on a 15% cut in the surgeon fee for cataract, reducing it about $100 per eye, and a 5% cut for the other care I provide. These are the facts, and in my opinion, no one is going to bail us out. I do not believe the 27% sustainable growth rate cut will occur, as such a cut would put our primary care colleagues out of business. So, I expect another temporary reprieve regarding the SGR.
What are some options to adapt? One could retire, and some will choose this course. One could change careers or diversify into other fields of work. Many already do this, and a side business or consulting is worth a look. We could just accept a lower level of income, but that is certainly not ideal. For most, the solution will be to work harder or smarter, or both, and perhaps to consider a downsizing of one’s lifestyle.
For many ophthalmologists, all three would be a wise response to the likely financial realities through 2020. The good news: There is no shortage of patients, so it is possible for most ophthalmologists to lengthen their workday slightly or reduce their 8 to 12 weeks per year of vacation or meetings. This makes sense for most of us if we are unwilling to accept a reduction in income.
In addition, I recommend careful analysis of the net revenue generated per hour when working in office vs. surgery. For the first time, the ophthalmologist without ownership in an ASC may find that compensation as an office-based medical ophthalmologist is as lucrative as doing surgery. The one-cataract-an-hour surgeon will likely find office practice more lucrative and less stressful, and the two-cataract-an-hour surgeon will likely find office vs. surgery a tie. If one does more than two cases an hour or owns an ASC, surgery will still win hands down, but more than 50% of ophthalmologists do not have ownership in an ASC. Reducing overhead wisely and closing less productive satellite offices will make sense for many. For well-positioned practices, ownership in an ASC will buffer the cuts significantly.
Increasing opportunity in the patient-pay lifestyle-enhancing sectors such as refractive cataract surgery, refractive corneal surgery, oculoplastics, optical, and even nutraceutical and pharmaceutical dispensing is a possible consideration. Large integrated practices can in some cases leverage employment of medical ophthalmologists and optometrists. New procedures such as microinvasive glaucoma surgery and treatments for dry eye and meibomian gland dysfunction, new office-based diagnostics, and, for some, retraining to add medical retina to one’s offering are options. We ophthalmologists are more fortunate than most of our colleagues, as patients highly value good vision, and we have many opportunities in the direct patient-pay category of care.
Finally, now is not the time to spend extravagantly if it requires assumption of significant debt with the expectation that incomes will rise in the future. Some thoughtful discussion with family and a rightsizing of lifestyle will likely save many much pain and anguish in future years.
The opportunity for the well-positioned ophthalmology practice remains bright, but it will be up to each ophthalmologist to take the time and make a practice and personal plan that will allow him to adapt to the current economic environment. I encourage everyone to make a 5-year plan and review and update it annually. I am just embarking on the ninth 5-year plan of my ophthalmic career and expect to need a 10th as well.
For 40 years now, I have found an optimistic outlook tempered by a realistic analysis of the external environment has served me well. Fortune favors the prepared mind. No amount of complaining will help, and there are few, if any, sympathetic to our situation, so I recommend that most are best served by facing the facts and getting to work.