Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

The middleman dilemma in health care

Anonymous
Physician
December 10, 2023
Share
Tweet
Share

Imagine this scenario.

You’re negotiating the sale of your widget. Despite your earnest efforts, you hit a deadlock. The buyer, after consulting an expert on “fair market value” for widget prices, firmly states they won’t purchase your widget for $5.

In a new tactic, you turn away from the customer, shed your white coat, don a pair of Groucho Marx glasses, and pivot back.

“I’m the CEO of WidgetCorp. Ten bucks, take it or leave it.”

“Sold!” exclaims the delighted customer.

Ridiculous, right?

Not in health care, the last stronghold for fat cat middlemen.

Replace “widget” with “physician labor,” the widget salesman with “doctor,” and “Widget Corp” with “Locums Corp” or “Telemedicine Corp.” Here, doctors as individuals are offered one price, significantly lower than when they negotiate through a corporation, forcing them to involve the Fatcat middleman for their cut.

While other industries have seen middleman margins slashed by the internet (think real estate, travel agents), health care’s fat cat middlemen are prospering, especially with the rise of itinerant physicians due to hospital consolidation.

So, why does cutting out the middleman to save money lead to a lower offer? Is there any real benefit to the FatCat’s share of the health care pie?

Is it because a billion or two for cat chow is trivial in an industry that overspends by $2 trillion?

Do health care administrators have a penchant for felines?

Hardly.

Paying the middleman, though indicative of a flawed system, makes sense individually. Here’s why your direct offer might be less than your middleman-included offer:

Misapplication of the Stark Law. Originally meant to prevent kickbacks for inappropriate referrals, this law now inadvertently limits physician salaries. It’s vague and conveniently used to restrict physician pay. Plus, a consulting industry has emerged to define “fair market value,” often leading to regulations benefiting corporations.

Employment law. Hiring employees involves rights and protections, while contractors have fewer. Hospitals avoid potential legal issues by using locums companies, who absorb the risk but at a high cost.

ADVERTISEMENT

Individual doctors can’t offer the full package: Few doctors can commit to a 6-month stint in a remote location, making it challenging for clinics to find suitable candidates without locums companies.

Inertia and agency costs. Hospital administrators might not feel incentivized to put in extra effort or take risks for direct contracting, preferring the convenience of middlemen despite higher costs.

I remain optimistic. The growing popularity of freelance locums doctors and travel nurses has caused hospital labor costs to soar to unsustainable levels. Eventually, the barriers to direct contracting can be overcome.

But until then, the locums industry will continue to enjoy its share of the profits.

The author is an anonymous physician.

Prev

Tips for success as a plastic surgeon [PODCAST]

December 9, 2023 Kevin 0
…
Next

America's pain management nightmare: How the DEA shaped the opioid epidemic

December 10, 2023 Kevin 2
…

Tagged as: Practice Management

Post navigation

< Previous Post
Tips for success as a plastic surgeon [PODCAST]
Next Post >
America's pain management nightmare: How the DEA shaped the opioid epidemic

ADVERTISEMENT

More by Anonymous

  • When the white coats become gatekeepers: How a quiet cartel strangles America’s health

    Anonymous
  • Graduating from medical school without family: a story of strength and survival

    Anonymous
  • Why young doctors in South Korea feel broken before they even begin

    Anonymous

Related Posts

  • How social media can help or hurt your health care career

    Health eCareers
  • The health care system will cause its own physician shortage

    Advait Suvarnakar and Aashka Suvarnakar
  • The triad of health care: patient, nurse, physician

    Michele Luckenbaugh
  • How non-physician practitioners are pawns of large health care organizations

    Anonymous
  • Why the health care industry must prioritize health equity

    George T. Mathew, MD, MBA
  • Improve mental health by improving how we finance health care

    Steven Siegel, MD, PhD

More in Physician

  • How subjective likability practices undermine Canada’s health workforce recruitment and retention

    Olumuyiwa Bamgbade, MD
  • Why judgment is hurting doctors—and how mindfulness can heal

    Jessie Mahoney, MD
  • Why evidence-based management may be an effective strategy for stronger health care leadership and equity

    Olumuyiwa Bamgbade, MD
  • The gift we keep giving: How medicine demands everything—even our holidays

    Tomi Mitchell, MD
  • From burnout to balance: a neurosurgeon’s bold career redesign

    Jessie Mahoney, MD
  • Why working in Hawai’i health care isn’t all paradise

    Clayton Foster, MD
  • Most Popular

  • Past Week

    • The hidden health risks in the One Big Beautiful Bill Act

      Trevor Lyford, MPH | Policy
    • How New Mexico became a malpractice lawsuit hotspot

      Patrick Hudson, MD | Physician
    • Why doctors are reclaiming control from burnout culture

      Maureen Gibbons, MD | Physician
    • Why health care leaders fail at execution—and how to fix it

      Dave Cummings, RN | Policy
    • How digital tools are reshaping the doctor-patient relationship

      Vineet Vishwanath | Tech
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
  • Past 6 Months

    • Why are medical students turning away from primary care? [PODCAST]

      The Podcast by KevinMD | Podcast
    • What the world must learn from the life and death of Hind Rajab

      Saba Qaiser, RN | Conditions
    • Why “do no harm” might be harming modern medicine

      Sabooh S. Mubbashar, MD | Physician
    • Here’s what providers really need in a modern EHR

      Laura Kohlhagen, MD, MBA | Tech
    • The hidden health risks in the One Big Beautiful Bill Act

      Trevor Lyford, MPH | Policy
    • Why Medicaid cuts should alarm every doctor

      Ilan Shapiro, MD | Policy
  • Recent Posts

    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • Decoding your medical bill: What those charges really mean

      Cheryl Spang | Finance
    • The emotional first responders of aesthetic medicine

      Sarah White, APRN | Conditions
    • Why testosterone matters more than you think in women’s health

      Andrea Caamano, MD | Conditions
    • A mind to guide the machine: Why physicians must help shape artificial intelligence in medicine

      Shanice Spence-Miller, MD | Tech
    • How subjective likability practices undermine Canada’s health workforce recruitment and retention

      Olumuyiwa Bamgbade, MD | Physician

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

Leave a Comment

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

  • Most Popular

  • Past Week

    • The hidden health risks in the One Big Beautiful Bill Act

      Trevor Lyford, MPH | Policy
    • How New Mexico became a malpractice lawsuit hotspot

      Patrick Hudson, MD | Physician
    • Why doctors are reclaiming control from burnout culture

      Maureen Gibbons, MD | Physician
    • Why health care leaders fail at execution—and how to fix it

      Dave Cummings, RN | Policy
    • How digital tools are reshaping the doctor-patient relationship

      Vineet Vishwanath | Tech
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
  • Past 6 Months

    • Why are medical students turning away from primary care? [PODCAST]

      The Podcast by KevinMD | Podcast
    • What the world must learn from the life and death of Hind Rajab

      Saba Qaiser, RN | Conditions
    • Why “do no harm” might be harming modern medicine

      Sabooh S. Mubbashar, MD | Physician
    • Here’s what providers really need in a modern EHR

      Laura Kohlhagen, MD, MBA | Tech
    • The hidden health risks in the One Big Beautiful Bill Act

      Trevor Lyford, MPH | Policy
    • Why Medicaid cuts should alarm every doctor

      Ilan Shapiro, MD | Policy
  • Recent Posts

    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • Decoding your medical bill: What those charges really mean

      Cheryl Spang | Finance
    • The emotional first responders of aesthetic medicine

      Sarah White, APRN | Conditions
    • Why testosterone matters more than you think in women’s health

      Andrea Caamano, MD | Conditions
    • A mind to guide the machine: Why physicians must help shape artificial intelligence in medicine

      Shanice Spence-Miller, MD | Tech
    • How subjective likability practices undermine Canada’s health workforce recruitment and retention

      Olumuyiwa Bamgbade, MD | Physician

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Leave a Comment

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...