Recession, health care, and what they didn’t teach us in kindergarten

Last night I took a beautiful, young, blue-eyed blonde to dinner. Don’t worry, Deb knows this kid. “BabyDoc,” as we nick-named her at the clinic, is a second-year medical student who worked at our clinic last summer. She’s now in Santa Fe studying for a major test whose score will pretty much control her destiny as to which type of doctor the system will allow her to become. No stress kiddo. As a confidence builder I came prepared with a practice test of my own.

What color are red blood cells? I asked her.

She leaned forward, her body tense, I could see the wheels turning in her head: was this a trick question?

Don’t over-think it.

“….red?”

Yep, good. You’re at 100% so far, next question: where are brain cells found?

She laughed and weeks of stress dissolved from her face. The first lesson I taught BabyDoc when she worked with me was how to choose the appropriate diabetes medication for a patient. The answer then, as now, is not the one that will do the job the best; but the one the patient can afford.

I’ve always know that money and medicine do not mix. They are oil and water. But such is the world we live in, that we are always pouring to two elements into beakers together and shaking like the devil in hopes that someday the two will magically blend. I think making a profit on health care is a sin. Note that I said a profit, not a living. People in health care need to make a living; but I’m taking about Wallstreet here. Insurance companies “make” money by denying care. Bluntly, coldly put: they literally kill people to make money.

I am grateful every day that I work for a non-profit. In fact, I was offered a job with a private practice a few weeks ago at nearly double what I make now. It was real tempting. Wow. I could pay my bills with no stress. I could buy gifts for my wife. I could afford a mistress…

But loyal idiot that I am, I turned it down. I belong in rural health. I’m needed and I love my work. To her credit, Deb supported the decision. Encouraged it even. No small thing as her life would have been sweeter had I taken the offer. But she’s been with me for 20 years now (Wednesday was our anniversary), and, well, maybe she does understand me a little bit after all. Most people spend their entire lifetimes searching for where they belong in the universe. I’m blessed to have found my spot.

Of course, life being what it is, right after I turned down the job a new crisis hit; and for the first time I really understood just how bad the economy has become. More on that in a bit. Back to the restaurant.

The normally hopping-on-a-Friday-night Santa Fe Baking Company was nearly deserted. “I come here a lot to study,” BabyDoc told me, “one of the waiters told me that they are cutting hours back. Not enough customers. It’s scary.”

I’ve heard this refrain before. Out of the blue one of my drug reps called me last week and said: “How did our grandparents survive the great depression?”

What?

“Well, you seem to know everything, and I couldn’t think of who else to ask.”

Well, my grandfather worked at Denver University during the great depression. Family lore has it that to avoid laying anyone off the University cut pay 50% from the president down to the janitor and that they were all just damn grateful to have jobs.

But my rep friend wasn’t asking about economics. She wanted to know how people survived emotionally. I didn’t have that answer for her.

Before my dinner I was in Albuquerque at the teaching hospital where I’ve been asked to talk to Residents (docs in training) about what makes us D-folk tick. I do this once per month. This month I noticed shabbily dressed men with cardboard signs on almost every street corner. In one block there wasn’t only a guy on each corner, but one in the middle of the block too. There are always some folks “panhandling” in the down-town areas, but the sheer volume was both un-nerving and depressing.

Morale at the clinic is a bit lower than usual. Two weeks ago our boss called an emergency staff meeting. That hasn’t happened since…. well, ever. She was up front and honest with us. We were “in the black” but out of money. Having a business background, I was probably the only person in the room that understood exactly how that can happen.

Business 101: Cash Flow is King. Businesses, including non-profits, buy stuff, sell stuff, and have overhead. So long as the stuff you sell brings in either the same, or slightly more, than the stuff you buy plus your overhead, you are in the black: either at break-even, or making a profit. If you are spending more than you make you are in the red: sooner or later you will go out of business because you are losing money. Let us assume we are in the black. We have no worries, right? Wrong. If the folks we sell stuff to take three months to pay us and the folks we buy stuff from want to be paid in 30-days we have a cash flow problem. Cash flow has nothing to do with profitability. Cash flow is having the money you need, when you need it, to pay your bills. You can actually be in the red and have “positive” cash flow. Or like our clinic, you can be in the black and not be able to make payroll.

So you are probably asking yourself how this kind of business model applies to a non-profit community health center. So we sell stuff. We sell the services of our health care providers, nurses, and support staff. That is our product. We also sell medications, and bandages, and immunizations, and the like. But, wait, you say. Your clinic is a non-profit. Yes, but we still need to generate enough money to cover the cost of our existence.

We have to pay our staff. And we have to pay payroll taxes on our staff. And we have to pay the power company for our electricity. And we have to buy the medications, and bandages, and immunizations. It is still a business. The only difference is our goal is our mission, not our bottom line.

We do get some grant money, but last time around all the rural health money went to red states. Go figure. We’ll talk about politics and health some other day. We “write off” a great deal of care, as we turn no one away based on ability or willingness to pay.

Back to the staff meeting. Our boss told us something that I hadn’t seen in the news: insurance companies were increasingly delaying paying doctors, clinics, and ambulance companies. Not just us, but everywhere. Even Medicare/Medicaid is stretching, stretching, stretching payment times. We were owed over a quarter of a million dollars for services previously rendered, covered, and properly billed. The bulk of that money had been owed to us for over 120 days.

Remember cash flow? So all of our expenses are up front, and we get paid later. We make that work with cash flow. We pay for your care by using the money we got from caring for the other guy last month. Oops. But now we haven’t been paid for caring for the guy last month. Or the one from the month before that. Or even the one the month before the one the month before that.

What was that loud crash? Oh, just us hitting a brick wall at full speed. The payment delays have exhausted our cash reserves. We have no way to pay our bills, to pay our staff, to buy band aids and stuff.

Other clinics in our state are in the same pickle. Some just laid off the most recently hired staff to trim their payrolls. Our boss knew the value of her human capital: her staff was her most valuable asset. She could have closed the clinic earlier everyday; but that cuts services to our patients and creates new problems down the line by reducing our billable services. Now she could have just cut all of our pay by 15%, which is the amount we were short for the next pay period. Which is in theory fair. Of course someone who makes $8.50 per hour can less afford a 15% pay cut than someone who makes $30 per hour. I think lower paid folks are disproportionally effected by flat cuts. So she could have devised some sort of graduated pay cut to try and level the playing field.

Instead she told us, with some tears, that she understood that everyone’s circumstances were different. She asked each staff member to look into their hearts and pocket books and decide what they could do and we’d see if it was enough.

About half the staff voluntarily cut their hours. About half took a pay cut and kept working the hours they always worked. I was one of those. I went back to my desk and tried to weigh what I could do with what I felt was right. The ethics of same work for less vs. what’s best for your patients. In the end I let my moral compass guide me to do the right thing. As we are 15% short, my share of the problem is 15%. I took a 15% pay cut and kept working my 40 hours. I have no idea how I will pay my bills. It will work out somehow. (So if you haven’t bought my book yet, this would really be a good time.)

Now what happens if you pay the government late? Well if you owe them too much they throw your ass in jail. But otherwise you pay a penalty. And you pay interest on both the penalty and the money that you owe, and all of that piles up alarmingly quickly. The government gives itself 90 days to pay doctors and clinics. OK. I can live with that. But pay on time. And if you are late, pay us interest. What is good for the goose is good for the gander, as my Grandmother used to say.

Now insurance companies, God help you if you are late, especially if you actually use your insurance. They’ll cancel your policy. But every other Wallstreet player loves it when you are even a few hours late. That way they get to load you down with late fees and criminally high interest rates.

Mr. Obama: we need a law that tells payers that if they delay paying money rightfully owed to medical providers for covered work properly done and billed: then they must pay a late fee. 100% comes to mind as a number high enough to be an incentive to pay on time.

The other half of our organization, which does even more work that never gets paid for at all, is our ambulance service—which covers a 1,000 square mile area of rural northern New Mexico. To get though the month they took 35% pay cuts. The service may have to go from a 24-365 professional organization to a volunteer organization if things don’t get better.

My nightmare for the future, a patient picks up the phone and dials 911:

“Hi! You’ve reached the Ambulance Service. Our normal business hours are from 8am to 5pm Monday-through-Friday. If you reach this message during our normal hours of operation it means we’re busy serving another customer by transporting them to the hospital. Leave us a message and we’ll get to you as soon as we get back. Emergences are handled on a first-come-first served basis. If you are calling after business hours apply a tourniquet and call us back after we open on the next business day.”

Sound crazy to you? It is much, much, much closer to reality than you want to believe.