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Thursday, October 16, 2008

Joe the Plumber vs Rich the Urologist

I did a vasectomy today on a plumber from Long Island.  Like Joe, the plumber from last night's presidential debate, this plumber is in business for himself.  As I was performing the vasectomy on my patient, I was talking to him about his business.  Here's what I learned from my "Joe the plumber."
  • Plumbers are not licensed by the state but by the town in which they do business. 
  • Each town in which the plumber works requires the plumber who owns the business to be licensed.
  • Each town in which the plumber does work requires the plumber to be insured.
  • Plumbers in Long Island must carry 1 million dollar policies per occurrence.
  • Most towns require the plumbers to carry an additional million dollar policy in order to get a permit for any specific job.  This extra-policy protects the town in case a civil action is brought upon the plumber and threatens the town as well.
  • In Long Island, the plumber's first insurance layer--the initial 1 million--costs $12,000 per year.  The second layer--the one each town needs--can add as much as $7500 per year onto the plumber's yearly overhead.  Thus on Long Island plumbers pay $19,500 per year in liability insurance.  Urologists in Long Island pay as little between $22,000 and $57,000 depending on the policy type and the urologist's loss history.
  • Plumbers must pay workers compensation and unemployment insurance as well.
  • If the plumber has employees, they may wish to carry employer liability insurance as well, which covers for things such as harassment law suites and wrongful termination suits.  This costs ~$2500 per year.
  • Some plumbers are in business for themselves yet contract with larger, national companies, so that they can get more business.  The national companies take hefty commissions from the local plumbers who actually do the jobs.
  • Some plumbers are W-2 employees of these larger companies and are paid salaries, yet they must still carry and pay for their own liability insurance.
  • When a plumber's work results in a person's bodily injury, law enforcement typically investigates the incident and files criminal charges.
  • In Long Island, a plumber who offers health insurance to his employees shells out $12,000 per year for family coverage, $6000 per year for single coverage and is often forced to pass an increasing percentage of this cost onto the employees.
  • On Long Island, the plumber must bring in at least $1000 per day in revenue to survive.
Now Rich the Urologist.  My overhead is similar to Joe's in all respects yet I think I have a higher earning potential.  In addition, my licensing requirements are statewide rather than town by town.  Like Joe and his town permit requirements, each hospital in which I work requires that I carry $1 million of insurance and be credentialed, yet they don't (yet) make me purchase additional insurance per procedure or admission.  Like Joe, I can either be an employee or self employed and can contract with larger corporations for an increase in business.  Like the plumber, contracting with these companies (insurers) comes at a price.

That's it.  Joe's got it rough, even rougher than Rich the Urologist.

Good luck Joe the plumber,

Sincerely,

Rich The Urologist.