Living costs handicap local doctors

While Hawaii doctors get paid slightly more than the national average, the state has the third-highest cost of living, making it difficult to attract and retain physicians, according to the Hawaii Medical Association.

Hawaii has the 22nd-highest average Medicare payment for an office visit at $77.86, compared with the national average of $72.81, according to an HMA analysis of Medicare reimbursements in 87 regions.

However, the state’s cost of living index is 165.7 points, far above the national average of 100. Hawaii is higher than all Medicare regions except Manhattan and Long Island in New York. Physicians in San Francisco, with a comparable cost of living to Honolulu, are paid $10 more for the same office visit, the data show.

"It shows when you make an adjustment for the cost of living, we’re underpaid by about 30 percent," said Christopher Flanders, executive director of HMA, a physician advocacy group with 1,100 members. "It’s a substantial amount, and we’ve never been able to get a real clear idea as to why that is."

Many local doctors are despondent having no say in what they’re paid by government programs or private insurers, despite having costlier overhead for equipment, utilities and office space.

"We don’t have that many commercial insurers, so competition tends to not exist, so that suppresses what the payments are," Flanders said. "(For Medicare) the equation has to balance out. If one state gets an increase in their reimbursements, it has to come at the expense of the other states. Nobody wants to get cut."

In addition, reimbursements for Medicaid, the government health insurance program for low-income residents, are about half of Medicare rates, he said.

The situation has grown so burdensome that many Hawaii physicians are retiring early or leaving the profession, contributing to a statewide shortage of 700 doctors, a number that is expected to double by 2020. Right now Hawaii needs 3,537 doctors but has only 2,795, according to data collected by the Hawaii/Pacific Basin Area Health Education Center at the University of Hawaii John A. Burns School of Medicine.

Officials at the Centers for Medicare & Medicaid Services didn’t return calls for comment. Medicare, the government insurance program for seniors, groups Hawaii with Guam, Saipan and American Samoa when determining physician payments.

Hawaii Medical Service Association, the state’s dominant health insurer with

65 percent of the market, said it calculates physician payments based on a range of factors that include Medicare reimbursements, the complexity of procedures, market situations, provider feedback and, most important, "the health care needs and financial circumstances of our members and our employer groups." The insurer didn’t disclose actual provider payments.

"Hawaii has excellent doctors and health care facilities. We know that it’s important to pay these providers enough to give them incentive to continue providing high quality care to our members," Hilton Raethel, HMSA’s chief health officer, said in a statement. "But we also work very hard to keep health insurance affordable so we can make it available to everyone in Hawaii. It’s a difficult balance to maintain."

More than 95 cents from every dollar collected in premiums last year went directly to pay for medical care for members, HMSA said.

"As a nonprofit organization, we need to raise member premiums when we raise provider reimbursements," the insurer said. "The only way we can solve this problem is to focus our efforts on lowering health care costs. And the way we’re going to accomplish that is to keep people healthy."

Flanders said physicians’ hands are tied as to what they can do to increase payments, which typically do not cover the cost of care, because the nation is focused on reducing overall costs through the federal Affordable Care Act, also known as Obamacare.

"The cost of medical care here is not a Hawaii issue. We have the lowest Medicare expenditure, and we’re in the bottom five as far as health insurance premiums go and our outcomes are high — those are triple aims of the ACA," he said. "Our issue is access. We can’t get doctors to come to Hawaii because the things we’ve done are not attractive to bringing people here."

Many local physicians who went into the practice of medicine to take care of patients are feeling the burnout of essentially being forced to become "bookkeepers" just to get paid for their services and keep their practices afloat. Doctors also say they must jump through hoops just to get paid, being required by government and private insurers to record information related to prior visits, tests ordered and X-rays in electronic medical records.

This has resulted in a drop in the number of solo physician practices in Hawaii over the past year to 60 percent from 65 percent, HMA said.

"The question is, Where did they go? A lot of that is due to administrative costs," Flanders said. "The data and reporting is just so overwhelming that they’re getting out and going to work on a salary basis or they just retire."