Dr. Datta and his patients are not alone in feeling the recession’s sting. The health care industry, the largest sector in the U.S. once thought recession proof, is hurting. In 2009, overall health spending grew by only 4.4 percent, the smallest percentage increase since the Centers for Medicare and Medicaid Services started tracking spending in 1960. The recession has claimed over five million jobs, increased the rate of personal bankruptcies by 10 percent and seen COBRA coverage expire for over one million unemployed workers.
—Rajiv Datta, MD
The 2009 Medical Group Management Association’s survey (www.amga.org) showed physicians losing ground financially to the recession. Gross revenues per physician were down 7.8 percent, from $690,032 in 2007 to $637,677 in 2008. The number of patients seen dropped 11.3 percent, while outpatient procedure volume declined 9.9 percent. Compounding the problem was a 13 percent increase in patient bad debt.
Marc Lion, CPA, CFP, a managing partner at Lion & Company CPAs, LLP, a national organization of accountants specializing in health care, explains that while the health sector is recession resistant, it’s not recession proof. “I saw elective procedures and all volume dropping one or two years ago, and as much as a 40 percent falloff in ENT practices that do a lot of plastic surgery,” he said. “While pediatric and Medicare practices had less drastic revenue and volume declines, cutbacks in insurance reimbursement can cripple ENT practices.”