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Personal Assets Keeping Practices Afloat


Shrinking insurance reimbursements, changing regulations, and rising business and drug costs are some of the reasons why physicians are forgoing salaries or dipping into personal assets to keep their practices afloat.

The changing landscape of health care, including new regulations and shrinking reimbursements, has made it difficult for physicians to remain independent. A surprising article by CNNMoney published on Friday reported on the phenomenon that more and more doctors in the U.S. are going broke.

Early in 2011, the American Medical Association had reported how difficult things were getting for doctors in Texas. Of those doctors who had reported cash flow problems over the previous two years, 51% had dug into their personal funds in order to keep their practices afloat.

The CNNMoney article shared stories from a cardiologist in Philadelphia who tapped into his personal assets to make payroll for employees, an oncologist considering personal bankruptcy and closing his 31-year-old practice and a family physicians who had to take out an SBA loan to pay his five employees and keep his practice running.

“This is a very timely and truthful story for doctors and hospitals in America,” said Jin Zhou, president of, in a statement. “This is also a 911 call for U.S. health care security.”

Zhou called the report by CNNMoney a sign that an earthquake was coming to our health care infrastructure.

“Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat. But some experts counter that doctors' lack of business acumen is also to blame,” according to the article.

The article went on to explain that, on average, there is a 10% to 15% profit leak in private practice. Typically this money is related to what is owned to the practice by either patients or insurers. The article quotes Marc Lion, chief executive officer of Lion & Company CPAs, LLC

, who wrote an article for PMD on this topic in 2010.

To read Lion's original article, go here.

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