San Francisco Medicine 2009

Jordan Shlain, MD

"The only way to predict the future is to invent it."(need attribution)

In the '60s, '70s and early '80s, the profession of medicine in San Francisco prospered. Doctors still "owned" the relationship with their patients, hospitals had plentiful nursing staffs and patients were generally satisfied with the quality of care. Hanging a shingle was encouraged and private practices thrived. San Francisco was one of the most desirable cities in America for young physicians to practice in, with a premier research center at UCSF and multiple top-tier, competitive residency programs producing world-class specialists in record numbers. The AMA was well attended and respected. Physician morale was at its highest.

The San Francisco Medical Society was an established institution that physicians and other community leaders looked to for medical direction. The net effect of these developments made the medical community in San Francisco one of the most vital and vibrant in the nation in which to practice medicine. These factors led to an oversupply of physicians.

An analysis of demographics, microeconomics and macroeconomics over time will enable us to understand why San Francisco medicine is approaching a significant inflection point. A market approach may enable us to understand future trends.

In the "golden age" of medicine 20 years ago, young physicians flocked to the Bay Area in record numbers and began practices. Housing and the cost of living were reasonable. As a result, the market for physicians rapidly saturated. This led to fewer new solo practices and more partnerships. In addition, the cost of living in the Bay Area has skyrocketed for the past 20 years. This has led to a paucity of new, young physicians and a top-heavy current establishment: 80 percent of San Francisco physicians are in the upper twentieth percentile age bracket. Furthermore, many of them are entertaining retirement as the economic landscape becomes more dismal as outlined below.

The evolution of modern healthcare (or some would argue devolution or even convolution) has shifted its focus away from care toward an increasing emphasis on the dollar. The market has voted that these two principals-care and dollars-cannot be uncoupled without significant repercussions. Clearly, as a nation and as responsible physicians, we have a moral responsibility to provide evidence-based, smart medicine. However, if we do not recognize the financial impact of each decision we make in our highly critical financial landscape, we will succumb again and again to crafty businessmen who lead us to contaminated water.

The greater forces: capital markets and fear of strict government regulations have shifted the reigns away from practicing physicians to third parties. The presumption among big business and government was that medicine, as a self-regulated cottage-industry, could not efficiently self-manage rising costs. This made it easy for big business to justify their presence. They divided the physician community easily and boldly wedged themselves directly into the heart of medicine: the doctor-patient relationship.

The macroeconomic driver of medicine is simple: cost-management. The prevailing concern is that we, as physicians, cannot manage our costs and that someone else must do it for us. The only way for modern medicine to lever itself back into a position of control is twofold: understanding economics and having strong leadership. Without leadership and cohesion among ourselves, we will be divided and conquered again and again.

The nuances of managed care can be heard daily in doctor's lounges. The precipitate of this banter centers on decreasing reimbursement, increasing workloads and lack of control. Furthermore, the current establishment has not been able to keep pace with the rapid change in business models. For example, the medical community still adheres to a practice model in which physicians take call for free. This legacy characteristic is should have evolved into a paid service at the same time as decreasing reimbursements. There is a movement afoot to address this at CPMC.

The basic issue that seems to be lost on many is that the practice of medicine-although remaining a noble and highly respected profession-is quintessentially a service business. Business by definition is not compassionate. Compassionate businesses are non-profits. Herein lies the fundamental conflict. Every office, every hospital and every clinic must be fiscally responsible and accountable. As inflation and the cost of living rise, the fixed cost of doing business (practicing medicine) goes up. This, in the context of decreasing reimbursement and extended workloads, will inevitably lead to less net profit for physicians. There is no way around these simple micro-economic tenets. Physicians are trained in physiology not economics. This has never been a problem until now because there was excess. Now there is not and we must become savvier.

So, what do we have to look forward to in the next five to 10 years? There are a large segment of physicians, which represent the top age demographic which are not comfortable in the current tighten-the-belt, business of medicine climate. A recent California Medical Association report on medical bankruptcies stated that 99 of 300 physician groups had closed or filed for bankruptcy between 1996 and 1998 and predicted that at least 34 more would close in 1999. We need to wake up. Business which spend more than it makes do not survive.

A wave of discontent has been moving through our community and will result in an acceleration of retiring physicians. This will represent a tectonic shift in the demographic and create a void of young physicians. This is a significant! Who will fill this void? Will the current establishment, who has been working diligently on addressing the issues of the underrepresented physician community, pull through? In the next 10 years, we must develop a stronger sense of community and cohesion. Our independence is eroding. This community must develop a single, unified voice. The more we differ and fight among ourselves, the more vulnerable we are to third-party control. The mandate seems clear and simple: more control over our destiny.

If big business has its way, the next generation of physicians in San Francisco will be employees. Medicine as we once knew it will be dead. We will become medical guinea pigs for big business to use in its financial lab to test new business models in the spirit of cost containment. We are at a point where the younger, computer savvy medical community must make the commitment to take a leading role in reshaping our future here in the Bay Area. It is our future, not the future of anyone over 60. We must not forget that physicians represent the cornerstone to any big business success. We are the working asset and can put our foot down and take control of our destiny. Unfortunately there is a feeling among physicians that medicine is not a business. So, why then do we all look at how much we get reimbursed for a given procedure? We, too, must make more than we spend.

The current establishment must continue to actively recruit younger physicians to become part of the process. It is the younger generation who has the optimism and who holds the hope that our future will be a better place. We must develop programs which foster a better understanding of economics and business sense. This will enable our community to keep up with the shifting financial forces. We must do it now or face the reality of large business units forcing a physician-as-employee landscape citywide. The clock is ticking.

Dr. Shlain is a native of San Francisco and a board certified internist specializing in preventive medicine, travel medicine and Internet medicine. He is a member of SFMS and currently serves on the Editorial Board for SFM.