Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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Through the Council of Medical Economics the Society organize a for-profit subsidiary to perform billing services for members.


That by utilizing automation volume purchasing of supplies, and superior information about how the third party system works, the Society could act as a billing agent for its members more cost effectively than any member could act for themselves, and hence a profitable subsidiary could be created.


That even if the cost to the member utilizing the service should be as large as the cost of doing the work for himself, intangible advantages to the member would make it worth his while to support the service.


That even if the Society should fail to make a profit on the service, the advantages to the Society of being actively involved in the process would justify continuing it.


That if the venture should prove to be successful, even if only in part, it should then be possible to franchise software and successful portions of the process to other state and specialty societies.


So long as control of certain policies can be maintained by the Society, the most promising way to reach a rapid break-even point in this business is by entering into a joint venture with one or more already established firms, and one or more banks.

PREMISE I: (Cost advantages)

The operative word here is "cost-effectiveness." While stationery could be bought cheaper in volume, stamp costs could b reduced by tape-to-tape or courier delivery of invoices in bulk, and labor costs reduced by mass-production methods, the major savings to physician customer are most likely obtainable by:

1. reducing key-entry errors in the provider number.

2. reducing in the interest cost of float.

3. speeding up the third party response time

4. reducing the cost of responding to patient complaints and inquiries

5. paperless bank deposits which result in negotiated concessions from both the depositing and issuing banks.

Somewhat later down the line, additional savings can be contemplated from systemic comparison of delinquent accounts with notices of estate probate, from early notification to subscribers that a patient's deductibles had been satisfied by payments to other subscribers, and from notification to subscribing physicians that a new account already had delinquent debts to other subscriber physicians.

PREMISE II: (Intangible member advantages).

The main advantages to the subscribing physicians are two:

Simplification of the payment system for himself and his patients, and heightened awareness of advantageous intricacies of the payment system. Simplification of a very complicated and confusing process would tend to make the third party system more comparable in the public mind to HMO and PPO systems, which admittedly do represent some simplification of the payment process. Any simplification of the third party system tends to improve its competitiveness in the prepayment environment.

Improved awareness of the intricacies of the third party system usually leads to recognition by the doctor of ways he could improve his position. Most members of the Council of Medical Economics find this to be true for themselves, as do members of the Council of PSIM>. My involving the Council of Medical Economics in the actual mechanics of collection on behalf of members, incentives and mechanism are created to recognize and point out inequities and inefficiencies (in a tactful way, we presume) which are caused by ignorance of how the system works. The time lag, now visible between the introduction of a favorable change in the system and member' appropriate reaction to it, should be appreciably shortened.

PREMISE III: (Intangible Advantages to the Society).

Through the Council on Medical Economics, the Society now spends roughly $100,000.00 a year ($6.00 per member) to "assure appropriate reimbursement to physicians for their services, in a timely efficient manner". There is little doubt that the Council would do a better job with that objective if it had ten times as much money and staff to work with. Even without more money and staff, there would be a very appreciable advantage if the staff was closely linked to reports of the day to day problems, and indirectly had a financial incentive to fix them. Where administrative remedies failed, the frustrated council would surely do what no purely commercial billing service could do: seek remedies through the political process. Recourse to the political process would, in turn, be far more effective if based on statistics and aggregate numbers, rather than on scattered anecdotal complaints as at present is the case. Such political activities would, of course, benefit non-members as well as members, but a heightened image of the Society would surely assist membership recruitment.

Even at a pure break-even point, the Society would have an enlarged staff with extra talents available for consultation. Within the Society's staff expanded career opportunities would enhance the attractiveness of staff employment. With an enlarged staff containing more varied talents in the third-party reimbursement area, planning could more confidently go forward on projects such as telecommunication banks and physician office computer systems, and perhaps proposals for a major restructuring of the reimbursement of the payment system.

Originally published: Tuesday, December 11, 2018; most-recently modified: Friday, May 10, 2019