During lunch today, I overheard a conversation from some people seated near me. The Chinese Buffet, in Smithtown NY, was nearly empty at 3PM, when I finally had a break for lunch and a bank-run. 3 college students, seated 2 tables from me, were involved in what seemed like a nice discussion. As I gazed in their direction and stared intently at their moving lips, I really could not help but listen in on their conversation.
One of the students, I'll call him Alex P Keaten, was telling the others of his career plans. He wanted to be a doctor and he seemed to have a pretty good business sense. His plan was to do something in the primary care field, but with a complementary and alternative medicine bent. In addition, he wanted to incorporate chiropractic into his practice as well. His business plan was to start patient treatments using an alternative medicine and/or chiropractic model, but then switch to an allopathic approach should the patient not respond as desired. He would then prescribe medication, which he would sell from his office, via his staff pharmacist.
Really not a bad plan. I was impressed. But let's dissect it a bit, for fun, to see if we can find some wholes in it. First, in NY at least, physicians can't sell drugs, only pharmacists can. Alex gets around this by employing a pharmacist. While I can see a conflict of interest that I find bothersome, it may be legal, depending on how he structures it from a corporate perspective. Perhaps he'll make his practice a PC, with him and the pharmacists as employees of the corporation. I think this may work, legally. I know of some big groups that do this, though certainly no smaller groups do it. I suppose that having to stock such high volumes of drugs requires a huge capital outlay and could impact cash flow negatively. In addition, unsold drugs that expire would become financial losses. Plus, pharmacies have very low profit margins and rely on volume. Thus smaller groups can't support the pharmacy. I don't know if Alex has considered these problems.
Now lets discuss drug stocking issues as they relate to the insurers. Most insurers have 3 tiers of drug coverage; generics, formulary, and non-formulary. What this means is that some plans will pay for, let's say Nexium, though others will only authorize prevacid. Of course, like many things in medicine, patients, if given a reasonable alternative, only choose the least costly option. I guess Alex's pharmacy will just have to stock all the drugs, but that would be very expensive. In addition, is he going to stock herbal remedies that are so popular in eastern medicine. These are expensive for Alex as well as for his patients and they are never covered by insurance. This is good for Alex, unless he has a predominantly insurance-only allopathic clientele, because this population doesn't go out-of network. I'd be surprised if Alex considered these problems as he slurped on his chicken corn soup.
Finally, Alex planned to incorporate western medicine with alternative medicine and even chiropractic. I think this is a great idea, as do many other practitioners. In theory at least, the allopathic practice can complement and build the eastern medicine and chiropractic practice, and vice versa. But here's the rub. Insurance does not really pay for eastern medicine and people don't really pay for allopathic medicine, other than via there insurance policies. So does Alex plan to participate with insurance or not? Participation is the fastest way to build a practice, but you pay the price of filling your practice with patients that only value YOU if you accept their insurance. Moreover, these types of patients don't do anything that insurance does not cover. I mean they don't do anything not covered. These types of patients don't pay out of pocket for alternative medicine. This is certainly how it is in Suffolk County Long Island, where I practice.
In addition, I think the allopathic pharmacy business will suffer in an eastern medicine practice. Eastern medicine devotees don't want big pharma drugs and western medicine types don't trust herbal remedies, unless they are covered by insurance plans, which they never are. So I guess Alex will have to stock both types. But that gets back to expense, not to mention conflict of interest, credentialing, and licensing problems. Oh, brother!
Perhaps Alex will not accept insurance. Excellent! I commend him on his bravery and I hope he can pay his bills in the early years. He will ultimately grow via his alternative medicine practice, but patients who want alternative medicine are often suspicious and un-wanting of western medicine and this aspect of his practice may flail. So how is he going to reconcile this dichotomy? I don't have a clue, but I know there are practices that successfully do it. I recommend that he put down the egg roll and visit one of these successful practices.
I certainly don't mean to pick on Alex and belittle him. To the contrary! I was extremely impressed by his savvy. When I was his age, I wanted to be doctor. Why? To help people. How was I going to make money as a doctor? I was going to get paid. Naivety. Or schmuck. You decide.
I think medical school does a great disservice to its students--you know, the ones that pay the school's tuition--by not teaching some of the business side of medicine. Actually, I think in today's environment, medical practice management ought to be required teaching and students should select schools that offer these types of courses. Maybe times are changing in this regard. But I don't think so.
Alex, I hope you apply to med school, and if you do, pick one that offers curriculum in business. And if you want a letter of recommendation, come find me at the Chinese Buffet. I'll be the guy eavesdropping.
Thanks, the IU.