America, we have a beef problem! The inflation rate is high, and the inflation on beef is even more outrageous. At the time of this article, inflation hovers around 8 to 9 percent, while beef is priced at least 15 to 30 percent more than before COVID-19.
We are undoubtedly seeing corporate greed from the meatpacking companies as they have driven up prices throughout the COVID-19 pandemic. The numbers don’t make sense! Yes, the operating expenses have increased, but not to the same degree as the profits reported by the major meatpacking companies. Even though the larger meatpacking companies have reported tremendous profits, they have not proportionally compensated the ranchers for their cattle.
The current price gauging has motivated ranchers to disrupt their industry by cutting out the larger meat packing companies, the middleman, to have greater returns on their cattle. This article compares how the beef and locums industries have costly middlemen and what can be done about them by the Federal government.
Who are the middlemen in the beef industry?
In the beef industry, ranchers raise cattle until they become large enough to sell at auction to feedlots. Those feedlots fatten up the cattle and sell them to meatpacking companies. The meat is then processed, cut up, and sold to grocery stores and distributors by the meatpacking companies. Eventually, the beef is purchased by the consumer, us, the grocery shoppers.
These days, ranchers make very little profit, if any, from selling their cattle at auctions. The feedlots and grocery stores make only a small cut, whereas the meatpacking companies, the largest middleman, profit most from selling beef.
How does the beef industry compare to locums?
Physicians are like ranchers who continually get used and abused by the system for others to profit.
Medical facilities (i.e., hospitals/clinics) are like grocery shoppers, getting ripped off for the same services physicians provided before COVID.
Vendor management systems and job posting boards are like feedlots that take a small cut to be a part of the madness.
Locums agencies are like the meatpacking companies racking in crazy profits off physician services.
Why are the ranchers upset?
Ranchers are frustrated by how much the meatpackers are making off of their hard work. This is especially true in the current market where meatpackers are making significant profits, yet cattlemen do not see greater returns on their cattle. If meatpackers raise the price of beef at the grocery stores, ranchers do not see more in return because they can only sell their cattle at auction, where the price does not fluctuate much.
Wouldn’t this upset you? Well, it certainly has upset the ranchers.
How are ranchers seeking their independence?
To eliminate the need for these large meatpacking companies and disrupt their industry, ranchers in the Midwest have invested in their own meatpacking company, Sustainable Beef, LLC. The aim is to run this business similarly to a co-op so that cattlemen can make more selling their cattle, knowing that they have a small ownership in the meatpacking company. The idea has so much traction that even Walmart has invested in Sustainable Beef to lower the price of beef for their customers and treat the ranchers better.
What’s the federal government doing about the meat industry?
In 2022, President Biden raised his concern about the lack of competition in the beef industry, leading to beef prices that far outpaced the inflation rate. Recognizing that greater competition in the market could bring down the cost of beef for Americans, Biden’s administration pledged to provide $1 billion in grants and loans for new independent meatpacking processing plants. In addition, the USDA has made changes to the Packers and Stockyards Act so that there is greater transparency between the ranchers and meat processing plants.
What can physicians take from the beef industry, and what changes can the federal government make to help locums physicians go independent?
Just as the meatpacking companies have exploited the current demand for beef and their control over ranchers for their financial gains, so have the locums agencies. The staffing agencies have used the shortage of health care workers to boost their revenues. It’s time for a change in the locums industry!
We need a “direct-to-consumer” model that allows physicians to contract directly with medical facilities without needing a middleman for locum-type work.
Unlike the beef industry, the federal government has yet to set any initiatives to combat the cost of staffing agencies that supply physicians, allied health professionals, and nurses, which makes up a large part of our current health care cost.
The Biden administration should invest the money as they did into the beef industry to make changes that could help independent physicians contract directly with medical facilities rather than having to use staffing agencies. This would allow facilities to save money and pay physicians fairly. The items to consider for the administration would be the following:
- Provide loans and grants for physicians to create open communities and marketplaces for facilities to find physicians without going through a middleman.
- Provide legislation that brings transparency to what the facilities are paying staffing agencies and what the physicians are actually getting paid by these staffing agencies.
- Edit Stark laws to define Fair Market Value and Commercial Reasonability better as it applies to independent physicians that contract directly so that medical facilities can pay physicians well and save their facilities money from having to work with a middleman.
- Help speed up the credentialing process for physicians to obtain privileges at a facility.
- Allow physicians to obtain state medical licenses more efficiently or create one federal medical license.
- Assist physicians in finding affordable malpractice insurance to work in different states.
- Consider implementing Federal Tort reform and patient compensation funds to lessen the cost of malpractice insurance.
- Outlaw excessive and egregious “buy-out” fees placed on medical facilities by staffing agencies.
Ranchers are fed up with the meatpackers profiting off their work and founded Sustainable Beef to circumvent the industry’s middleman. Much like Walmart, which sees the importance of working directly with ranchers in the Sustainable Beef model, medical facilities should value contracting directly with physicians rather than staffing agencies.
Mr. President, how will you help us independent physicians that want to contract directly with facilities?
Aaron Morgenstein is a board-certified orthopedic surgeon and founder, FlexMedStaff.com, a fully transparent and free marketplace for physicians to find new clinical and non-clinical opportunities to improve work-life balance. Contact Aaron here.