Clinical Geriatrics

It’s never been more taxing to be a geriatric healthcare provider than now, what with the aging of the baby boomers demanding more services. At the same time, a greater number of innovative products are becoming available—all in the face of limited available funding.

Not surprisingly, the American College of Physicians Executives’ Physician Morale Survey found physicians suffering from low reimbursement, loss of autonomy, bureaucratic red tape, patient overload, and diminished respect.¹ Even more telling was the fact that nearly 60% of physicians who participated in the survey stated that they considered leaving the practice of medicine prematurely. This is especially of concern for geriatric care providers who are experiencing an increase in patient demand at the same time that the number of available practitioners decreases, and in the face of continued decreasing reimbursement. Realizing this issue, MedPac has already stated that for 2008 Medicare needs to increase physician reimbursement instead of implementing a planned 10% reduction. Their fear is that further cuts in reimbursement will lead to physicians moving beyond not only not accepting new Medicare patients, but also to opting out of the Medicare system completely because of low reimbursement.

Growing State and Federal Taxes
Despite these environmental factors that require greater amounts of resources being put into the healthcare system to improve access and quality, state and federal governments are increasingly taxing providers. The list of state and federal taxing measures is extensive, and the following are just a few examples.

Several years ago, the State of New Jersey came up with the idea of charging a skilled nursing facility (SNF) bed tax. The idea was that the SNF would count this against its cost report, which Medicaid covers on a shared arrangement between the state and federal government. For most states, this is a 50/50 split, meaning that while the state would get a dollar from the tax it would only cost them fifty cents, giving them a 50% return from imposing this tax. The problem is that it imposes a cash flow problem and other issues for a SNF for no reason other than to allow the state to take advantage of a financing arrangement.

Another proposed funding scheme, to tax healthcare providers but pay them back through moving the uninsured to insurance coverage for healthcare services, is being proposed in California. This would supposedly increase the revenue of healthcare providers. Governor Schwarzenegger has proposed a $12 billion plan mandating health insurance for all 36 million residents of California. This plan is to be funded through a tax of 2% on physician gross earnings and 4% on hospitals. It is argued that this tax, or “dividend” as the governor likes to refer to it, would be more than offset by higher gross earnings from treating previously uninsured individuals. The problem is that for geriatricians caring for Medicare beneficiaries, this will translate into a 5% reduction in their earnings. This reduction will be due to the fact that office-based geriatric care providers operate at over a 50% overhead and currently see very few patients without insurance. In addition, the governor’s plan taxes physicians but not nurse practitioners (NPs), thus providing another incentive in the shift away from geriatric care physicians toward non-physician providers. This comes at a time when the need for geriatricians is growing as baby boomers age and the number of physicians available to care for them continues to decline. This plan from the governor will likely have the unintended consequence of further decreasing the number of geriatricians, as well as other healthcare professionals committed to care for older adults.

Of course, states are not the only ones imposing taxes on healthcare providers. The House passed legislation that requires the government to negotiate prescription drug prices.