Fed up with the pressures of managed care, a growing number of California doctors are peeling off their scrubs and packing up their stethoscopes to pursue careers elsewhere.
Many physicians are moving out of state, where their incomes can buy a better quality of life. Others are switching to more profitable careers such as consulting or technology. Some are simply retiring early. And medical groups are having a harder time recruiting new doctors to replace those who are leaving.
Some of the doctors' frustrations are global. They complain of increased administrative hassles, decreasing payments from health plans and being second-guessed by insurance people who've never held a scalpel in their lives.
But some frustrations are unique to the Golden State. Although California is one of the nation's richest states by income per capita, it ranks 47th in physician reimbursement rates. At the same time, the cost of living is soaring, and doctors are losing good employees to the booming high-tech fields in San Diego and Silicon Valley.
As a result, California's ratio of doctors to population has dropped steadily in the past 10 years. The state ranks 12th in the nation, with 214 physicians per 100,000 residents, according to the Medicare Payment Advisory Commission. It ranked eighth a decade ago.
"I wouldn't call it a mass exodus, but the mood among our doctors is certainly bleak," says Ron Lopp, spokesman for the California Medical Association, which represents 34,000 physicians. "A good many members are stepping back and re-evaluating their future in the profession."
For many departing doctors, the financial squeeze of managed care has simply proved too great. California's average capitation rate, or monthly reimbursement per patient, slid 35% to $29 last year from $45 in 1993, while the cost of living climbed 25% during the same period, according to a report by PricewaterhouseCoopers.
Because of those trends, 90% of the state's physician groups are tottering on the brink of collapse. And those that are scraping by are working twice as hard for the same pay. Most doctors are now seeing 30 to 35 patients per day, up from about 20 a decade ago.
A study by the CMA, in fact, found that California pediatricians receive about $24.24 a month per child, while their monthly costs average $47 per child. Even without factoring in the cost of drugs and medical care, a solo practitioner would have to see 708 children a month just to cover an average of $17,000 in monthly expenses for rent, utilities and staffing, according to the PricewaterhouseCoopers report.
Calling it quits. Disenchanted with this push toward "assembly-line medicine," many doctors have stopped seeing patients altogether.
"Over the past five years, I've seen physicians retiring in significant numbers, and many are retiring earlier," said D. Ted Lewers, M.D., chairman of the American Medical Association's board of trustees. "It used to be that older physicians were the profession's workhorses. Now, because of managed care, we're seeing doctors who can scarcely wait to get out of the field."
Nationally, almost 40% of doctors age 50 or older plan to retire within three years, according to a survey by Merritt, Hawkins & Associates, an Irving, Texas-based physician recruiting firm. Another 16% said they intend to significantly reduce their practices or refuse new patients.
California doctors face greater incentives to pack it in early than those practicing elsewhere. California's run-up in real estate values, for instance, has been a big lure for those considering selling their homes and retiring to lower-cost states.
Trying something new. Then there are those physicians who, unwilling or unable to retire early, are hanging up their white coats to pursue more satisfying careers outside the examination room.
"More and more physicians are moving into medically related fields like research or consulting, where they can still apply their expertise but don't have to deal with the restrictions of managed care," says Gigi Hirsch, M.D., a psychiatrist and emergency specialist who dropped out of medicine to start MD Intellinet, a doctors' career-switching consulting firm based in Brookline, Mass.
"I've been flooded by inquiries, many from doctors in California who are frustrated, burned out or just plain bored," she adds. "They're running around in circles trying to meet productivity levels, spending just a minute or two with each patient, and they're saying, `This isn't what I entered the profession for."'
One former Orange County physician is now a cattle rancher. Another doctor, in Davis, Calif., has gone back to school to study computer programming. Many others are being lured by the high pay, flexible hours and intellectual challenges offered by California's many Internet start-ups.
"In my case, it wasn't that I was dissatisfied with medicine so much," said Tao Le, who left his internist residency to co-found Medschool.com, a Santa Monica, Calif.-based Web site that provides online medical education. "But the opportunity for e-learning was just so compelling that I couldn't turn it down."
About 12 doctors work for the site, doing everything from managing the books to writing editorial content.
"Physicians are smart, ambitious, hard-driving people who are used to being in leadership positions," Le says. "But with all the bureaucracy that's sprung up in recent years, they've lost that sense of control. So rather than being at the bottom of the pile, they're finding other careers where they can be leaders again and really make a difference."
Greener pastures. To be sure, most doctors still remain committed to the medical field, though for many California is no longer the ideal place to run a practice.
Ironically, the same high real estate rates that are encouraging many physicians to retire early have become a huge barrier for freshly minted doctors who are deciding where to hang their shingles. Juggling an average of $75,000 in medical-school debt, new physicians are increasingly swapping California's sun and fun for the higher reimbursement rates and lower living costs of other regions.
California has among the country's highest costs of living, yet its HMO premiums are among the lowest. California health plans receive an average of $135.19 per member monthly, while in Northeast states with comparable living costs, HMOs pull in $174.86, roughly 29% more. (For every premium dollar paid, about 22 cents go to doctors.)
California's family practitioners earn as little as $75,000 per year--fully 44% less than the national average of $134,000, the PricewaterhouseCoopers report shows. Other surveys put the national average at anywhere from $115,300 to $152,000 (See Physician Compensation Report, p. 39).
"California is in a league of its own," says Laura Morasch, director of medical practice affairs at the California Academy of Family Physicians. "And for many physicians, it's not a league they can afford to be in anymore."