This project is based on a current healthcare issue that many medical offices and disciplines face. From a business office managers perspective, validate the financial implications that the capital purchase incurs to the office, and provide possible solutions from a national, state, local, or office perspective to resolve these 'real world' problems that medical offices are facing with a baby boom generation on the brink of increased health care services on the horizon. For this assignment, read the post and replies from LinkedIn (Dr. Orr, a local Ophthalmologist). After reading the post, reply and follow up post, complete the following:

Create a response that you might provide as the business office manager at this location for/to Dr. Orr. Be sure to detail specific direct and indirect costs that impact or offset the costs of new treatment options to purchase and the reimbursement from pay sources for his concern.

Initial Post:

Stephen Orr 1st Ophthalmologist

1mo 1 month ago

Is this a $75,000 laser to perform a procedure that now pays about $200?! Oh, and you'll need medical malpractice insurance, an OSHA-compliant laser suite, and at least one assistant (technician preferably) to help stabilize the patient (many patients undergoing YAG are elderly and use walkers and/or wheelchairs). Oh, and what is this laser's extended warranty/maintenance cost? Probably another, say, $5,000 / year. So the overhead costs to run this laser probably runs north of 50% to 60%. Assuming a low overhead of, say, 50%, at about $100 payment per laser treatment for YAG, 750 lasers will need to be performed by the doctor just to pay for the laser and the overhead. Let's assume a doctor takes four weeks off a year; that would equate to about 16 lasers per week. How many doctors perform 16 YAGs a week? Not very many. Let's assume they perform half of this, say 8. So, it takes 2 years of work just to break even. The doctor makes NOTHING completing two years' worth of work. I foresee a collapse of this market

over the horizon. Also, Medicare has cut payments to eye doctors unadjusted for inflation by more than 20% over the last 20 years. Imagine if they continue to cut another 20% over the next 20 years, again unadjusted for inflation! Soon, eye doctors will be paying patients to perform the YAG laser!

Stephen Orr Reply to a comment on his post:

Paul, these medical device companies are producing amazing products and technology, which is excellent. However, Congress does not increase funding for Medicare Part B under "Pay-Go." So, service utilization continues to increase - the aging population needs more medical care .... so, CMS, each year, CMS consecutively decreases payment for services even though the cost (office overhead, disposables, office eye drops, medical equipment - such as lasers) continues to go up. Still, the underlying financial model is severely flawed. Medical students graduate with about $220,000+ in debt, and then they must complete a residency post-graduate training program which takes another 3 to 5 years. More and more doctors are transitioning to retirement or seeking non-clinical careers as a result of a combination of an unsustainable government-underfunded model combined with intrusive unfunded excessive regulatory requirements (such as Prior Authorization and Pre-Certification) administrative burdens that are imposed on practices by both CMS and the for-profit health insurance companies ... cool lasers are great.

Follow-up Post:

Stephen Orr

1st Ophthalmologist

1mo CMS is once again cutting payment for medical services in 2023. I am calling on all medical device companies to voluntarily reduce their prices for their products and reduce the maintenance service contract fees to help mitigate the ongoing increases in expenses to run a medical practice under lower and lower payments issued by both the government and lower and lower payment issued by the for-profit health insurance companies whose profits continue to accelerate and whose dividend payments to investors continue to go up. Medical device companies and for-profit health insurance companies had a terrific year in 2022. They all look forward to a wonderfully profitable 2023 as doctors will be forced to work harder, endure more regulatory requirements, be subject to more documentation scrutiny, and be paid less in 2023.