Coping with tough markets: Private practice doctors fight for survival

November 16, 2007

In Maine, an oversubscribed, low-paying Medicaid program is rocking physicians. Here's what they're doing to try to stay afloat.

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To illustrate their plight, some private practice physicians in Maine like to tell the poignant story of one of their colleagues.

For years, this FP ran a modestly successful solo practice in a small town in the central part of the state. But in early 2003, the town's biggest employer, a paper mill, filed for bankruptcy protection. That sealed the fate of more than 1,000 local workers, causing them to turn for health insurance to the state's Medicaid program, MaineCare.

"Well, there was no way that this doctor was going to survive on what MaineCare pays," says Lisa Marrache, a family physician who practices with her husband, an internist, in Waterville and is a member of the Maine Senate. "To continue seeing patients, he had to sell his practice to the local hospital."

In the third installment of our series on coping with tough markets, we turn our attention to this phenomenon, with the aim of describing not only what doctors in Maine are doing to cope but what physicians in other transitioning areas can learn from their struggle.

A poor economy saps healthcare

For the thousands of tourists who head to Maine each summer and fall, the state's rugged coastline and stunning interior mountains, streams, and lakes make it a magical place. And yet behind this striking facade lies a relatively poor state, which ranks in the bottom half of the nation in per capita income.

The state's economic difficulties-attributable in large measure to a shift from a manufacturing to a service economy-directly affect healthcare. Roughly one in four Maine residents (23 percent) is enrolled in Medicaid-only 10 states have a higher percentage enrolled-and in rural areas that ratio is much higher. As the young leave the state in search of better job opportunities, economic conditions have also skewed the Medicare rolls. Maine is second only to West Virginia in the percent of its population enrolled in Medicare (18 percent).

These market conditions hit rural physicians especially hard. With MaineCare paying approximately 57 percent of Medicare allowable charges for selected services and procedures-which are themselves below the national average in most parts of the state-doctors simply can't make a go of it if their payer mix drifts too far in that direction.

"In my neck of the woods, almost one-third of the population is on MaineCare," says Jean Antonucci, a family physician in Farmington, an area where per capita income is among the lowest in the state. "I can't afford to work virtually for free one-third of my time."

Faced with lopsided payer mixes, poor reimbursements, and late payments resulting from the state's flawed and still not fully functioning billing system, rural private practice physicians have struggled to stay afloat. Many who've resisted leaving the state-or retiring-have turned to their local hospitals for help. And most hospitals have been eager to oblige, in large measure to preserve access to physician services in their rural areas. "In many communities, but for the local hospital, physicians simply wouldn't be there," says Mary Mayhew, vice president of government affairs and communications of the Maine Hospital Association.