By MILT FREUDENHEIM
Published: August 24, 1996
Dr. Phillip Haeck, a Seattle plastic surgeon, used to spend half his working hours rebuilding the breasts of cancer patients and performing other reconstructive procedures. Then managed-care companies started to cut his fees by 60 percent or more.
So Dr. Haeck switched to cosmetic procedures that insurers do not cover, like breast enlargement. No longer restricted to the $1,980 fee that insurers allowed him for a six- to eight-hour breast restoration, he can now earn $3,800 for inserting saline breast implants, which takes two hours or less.
He was surprised by how many women were willing to pay. His income has already recovered, he said, and his working day now ends an hour earlier because he deals with far fewer insurance forms.
Just as Dr. Haeck has done, thousands of doctors, frustrated by the price controls, red tape and sometimes intrusive oversight of managed care, have begun building lucrative practices in fields like cosmetic surgery, correcting myopia with lasers, and infertility treatment, where patients will pay even when insurers will not.
Insurance companies refuse to pay for many of these elective procedures, arguing that they are not medically necessary or are still experimental. But a growing number of Americans are willing to spring for them — at handsome prices. Indeed, while it used to be assumed that a doctor could charge a higher fee when an insurer was helping to foot the bill, the opposite is now true in many cases. Fees are often far higher than those doctors can charge under managed care for work requiring comparable skill and time.
The doctors increasing their emphasis on such procedures include:
*Physicians doing more cosmetic surgery, including plastic surgeons, dermatologists, ophthalmologists, ear, nose and throat specialists, dentists, gynecologists and general practitioners. Among the most common procedures are breast enlargement; removal of wrinkles, furrows and bags under the eyes; face lifts; nose jobs; hair transplants for men; vein surgery; chemical peels of unsightly skin, and liposuction to remove fatty tissue. The fee for such procedures can range from a few hundred dollars to more than $20,000.
*Ophthalmologists, who typically receive less than half the $2,000 that they used to get for each lens implant for cataract patients, shifting to a new surgery that uses lasers to correct nearsightedness — and charging $1,500 to $2,000 an eye.
*Some ear, nose and throat specialists — whose fees have been cut 40 percent to 60 percent under managed care — now capitalizing on a new technique: using lasers to eliminate snoring by removing tissue from the uvula at the back of the tongue. A typical fee is $2,500.
*Some obstetrician-gynecologists with special training in infertility services now averaging $2,000 and more for in vitro fertilizations.
*Some urologists, whose surgical fees have dropped to $600 from $1,400 for treating enlarged prostate glands, now making a business of penis-enlargement surgery. Those fees range from $4,800 to $7,000.
To be sure, the overwhelming majority of the nation’s 650,000 physicians are still deeply enmeshed in managed care and are not reaching out for more lucrative niches like these. But there is wide agreement in the medical community that as the number of procedures that do not qualify for insurance coverage — and the popularity of such procedures — grow, a rising number of doctors are making the most of this.
One reason that these specialists can find enough takers paying out of their own pockets is the stunning increase in family income of the wealthiest Americans. The average income for the top 20 percent of households grew to $105,945 in 1994 from $73,754 in 1968, a jump of 44 percent after adjusting for inflation, according to the Census Bureau. That has occurred even as the number of uninsured people grows and as many people see their own medical benefits reduced.
Also, some doctors and patients have found imaginative ways to get insurers to pay part of the bill. Nose jobs can get some insurance coverage if the doctor indicates that the patient has had trouble breathing. Some dermatologists who remove spider veins can get insurers to pay by calling them artery-blocking varicose veins.
The physicians’ rush to such procedures is not surprising.
Managed care has been cutting the flow of patients and sharply reducing
fees for many specialists, notably dermatologists, ophthalmologists,
ear, nose and throat specialists, general surgeons, cardiac and vascular
surgeons, cardiologists, anesthesiologists and gastroenterologists,
said Dr. Richard Doyle, a management consultant in St. Louis with the
Milliman & Robertson consulting firm.
No one tracks the number of doctors performing procedures not covered by insurance or how that number has changed, but there are many indications that it is growing. For example, the number of board-certified plastic surgeons rose 75 percent, to 5,200 in 1994, from 2,980 in 1980, according to the latest available surveys by the American Medical Association. And last year 40 percent of plastic surgeons said cosmetic work was now their main business, up from 32 percent in 1991, according to the American Society of Plastic and Reconstructive Surgeons.
The American Academy of Cosmetic Surgery said the number of commonly performed cosmetic procedures doubled, to 1.09 million, between 1990 and 1994, the latest available year.
Dr. Randal Haworth, a Beverly Hills, Calif., plastic surgeon, said that by concentrating on cosmetic surgery, ”We are not held fiscal and emotional hostage by these people in managed care; secondly, by refusing to join their plan, you are not obligated to accept what they pay.”
Dr. Haeck, the Seattle plastic surgeon, said he shifted to 90 percent cosmetic surgery from a practice that was half cosmetic and half reconstructive, after price-cutting insurers threatened to reduce his income by 30 percent. For instance, he said, his share of fees for breast reconstruction after cancer surgery dropped to $1,980 from $3,800.
Dr. Haeck resigned from eight managed-care networks, freeing more time for breast-enlargement procedures that he said bring in around $3,800 each.
He hired a marketing expert to, as he put it, ”ramp up that side of the business.” Dr. Haeck also began giving seminars at a local athletic club and appearing on local television, and he changed his advertisements to feature his cosmetic services.
Dr. Gwendolyn Maxwell Davis, a cosmetic surgeon in Tucson, Ariz., took one look at the field of plastic surgery when she finished her training and decided to devote herself exclusively to cosmetic procedures. She charges $6,000 for a face lift, $4,500 for breast enlargement, and $4,500 for a ”tummy tuck.” All told, she expects to net $450,000 this year, after only two years in practice.
Another fast-growing niche is infertility treatment. The American Society for Reproductive Medicine reported 32,000 cycles of in vitro fertilization were initiated in 1993, the most recent year for which numbers were available, up 76 percent from 1989. And physicians say that the number has grown significantly since then.
”From a purely financial point of view, I’d rather not have managed care involved,” said Dr. Ira Charlip, a San Francisco urologist who specializes in infertility. ”I can charge the patient a reasonable amount and they pay 100 percent of it.”
Advances in laser technology have opened numerous new medical opportunities as well, many not covered by insurance. Some are cosmetic, like burning off tattoos and age spots, zapping wrinkles and removing hair.
Other procedures, which some insurers cover, include removal of disfiguring birthmarks. New laser procedures are growing much faster than older procedures covered by managed care, Irving Arons, managing director of Spectrum Consulting in Peabody, Mass., said.
”Doctors are looking for new ways of generating revenue,” said Larry Haimovitch, a medical technology consultant in San Francisco. ”If they can buy a laser machine and pay it back quickly, they do it.”
Some of the newest lasers are used to treat myopia by changing the shape of the eyeball. Dr. Frank O’Donnell, a St. Louis ophthalmologist, had encountered big reductions in what insurers allowed for cataract surgery. ”It’s pretty hard to scramble to replace a 50 percent reduction in reimbursement,” he said.
Now, Dr. O’Donnell
specializes in laser treatments for myopia at $1,500 to $2,000 an eye.
He is also chairman of Lasersight Inc., a start-up company that he said
was testing a second-generation laser for myopia.
Dr. O’Donnell laments the changes in the medical business brought on by managed care, and says he worries about whether the most talented doctors will flee to other professions.
”Ophthalmology has gone from being an exciting, very valued specialty to something that is not very desirable anymore,” he said. ”It’s painful — we used to be able to attract some of the very best doctors.”
Mr. Arons of Spectrum Consulting said that there were at least 50 laser vision centers in the country, each with several physicians. He projects 200 centers by the end of the year and a million procedures a year by 2000 at $1,000 each as the price of the equipment comes down — a $1 billion market.
Dr. Roy Geronemus, director of the Laser and Skin Center of New York, which does both insured and uninsured procedures, said attendance had increased sharply for his course in new laser techniques at New York University Medical Center. Some of his students, he said, are physicians ”who are looking for ways to circumvent the constraints on medical practice.”