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The Worst Business in America

Levine's father-in-law is a businessman who has a hard time understanding many of Valley Center's problems. "He wants to know why we can't just pass our insurance costs along to the patients," Levine says. "I try to explain we have no control over what the health care companies pay us." A minority of established physicians in specialties that serve an older, well-heeled clientele (urology and gerontology for instance) may set fees as they see fit, as do dermatologists in the lucrative cosmetic-surgery field. But the client base for obstetrics is younger and far more likely to be dependent on workplace medical coverage from companies such as Blue Cross and any number of HMOs that "reimburse" doctors for their treatments on a discounted pay schedule in exchange for supplying them with patients. "We're one of the highest-risk specialties in terms of getting sued," Levine points out, "but we get reimbursed by health care insurers as if we're in a low-risk field."

Faust says he remembers billing $5,000 per delivery 15 years ago, back when health care insurers would routinely cover the entire tab. Today, Valley Center nominally charges $4,000 per pregnancy, including prenatal care and the delivery itself, but if a patient has Blue Cross coverage, Valley Center agrees to accept only $2,100. Those reimbursement rates help explain why Valley Center's doctors need to see more and more patients just to maintain their incomes. And that's if they get reimbursed. Health care companies are notoriously slow with payments. Several, including Cigna and Horizon, have been fined by state regulators for deliberately delaying or skipping reimbursements owed to doctors.

Faust remembers billing $5,000 for a delivery 15 years ago. Now, he accepts $2,100.

There are framed displays in the waiting rooms at Valley Center, the likes of which you don't often see in the offices of other medical specialists--pictures of happy patients. In one snapshot after another, women with mile-wide smiles are propped up in hospital beds, looking flushed and exhausted, posing with their newborn infants and with one or another of Valley Center's partners. But along with the rewards, the burdens of obstetrics are also unique within the medical profession. Valley Center averages almost two deliveries per day, so one partner is always required to be on call, ready to run off to the Valley Hospital in Ridgewood to attend to a woman in labor. A second Valley Center doctor needs to be on call at all times too, as a backup should a pregnancy require some emergency surgical procedure. It's a difficult lifestyle in which burnout is common--and doctors-in-training have noticed. One study puts obstetrics at the bottom of specialty preferences among medical school residents.

The need to get to the hospital fast even puts constraints on where Valley Center's partners can buy a home--none of them live more than 15 minutes from Valley Hospital. "We looked at a place near Tuxedo, N.Y., 10 acres on a 200-acre lake," Levine says. "It was spectacular, but it's a 45-minute drive to the hospital. I said to my wife, I can't do this. I can't get a call at 2 in the morning and be 45 minutes away." "Dermatologists live there," says Faust.

It is an overcast Thursday morning in April, and the Valley Center partners are reviewing financial printouts with Karl Johnson from their billing service. Revenue has remained strong since October 2002, their all-time record month. Faust ponders their insurance predicament and mutters, "We've never been healthier, and now we may go out of business."

Years ago, when Valley Center was formed in a merger between the two smaller practices of Faust and Levine, the doctors got rid of their in-house billing department and farmed out the function to Johnson's firm, Millennium Practice Management Associates. Since then, Johnson has also done a good bit of handholding for Valley Center's doctors. "Karl," says Levine, "was the bad guy who told us that most of what we're going to do to preserve our income is work harder." At Johnson's prompting, the doctors now schedule six patients per hour instead of five, and may plan for as many as 25 hours per week dedicated to their "hours"--the actual time they set aside to see patients, distinct from time in the office spent making calls, doing paperwork, or working on call at the hospital.

The partners usually meet on Thursday mornings around a wood veneer table in a small, windowless conference room with bare walls except for the pale butterscotch wallpaper pattern. Though the meetings are scheduled for 8 a.m., there are rarely more than three or four partners present before 9, and all six are almost never in the same room, since at least one is on call at the hospital at any given hour of the day. The meetings themselves tend to be free form, agendaless, and sometimes chaotic. The room can suddenly fill with terse and emotionally charged crosstalk, sounding much like a hospital emergency room.