"This winter was a very trying, difficult time for me," the young physician said as he explained how his income from patients had not covered his fairy expenses.

The doctor, a Washington area internist who did not want to identified, enumerate the "every-day expenses" burdening him: rent, telephone, his nurse's salary, laboratory fees, malpractice insurance.

His monthly expenses, he said, ran about $4,000 - against income from fees of only %3,800 in January, $3,900 in February and $5,500 in March. The doctor said he was forced to take a loan from a bank to keep going.

"The way to overcome this," the doctor said he decided, was "to increase the business in some way, and the way to do that, I found, is to suggest to patients that they come in for an annual physical examination."

How did he do that?

"I just told them," the physician said with rare candor, "that they had either never had one, or it had been at least a year since the last time they had had one, and I think that they ought to come in for one . . . In fact, there are a lot of patients that have never been in for a physical.

"This is very much like many other professions, maybe even your own," the doctor told a reporter. "I mean, not every story you write gets published, but you get your salary anyway.

"A doctor has to do this sort of thing in order to provide a base income, so that he can continue to take care of his patients. Not every patient is going to be sick, not every patient is going to have a medicalproblem that warrants a completephysical, but in a way that's sort of the dues of the population to their doctor."

Reporter: What do you charge for a physical when they come in?

Doctor: The professional fee is $60 and then there's laboratory work on that, which is somewhat on their age and depending on what else is going on.

Reporter: But did you also become more prone to doing laboratory work?

Doctor: Well, along with the physical tends to go laboratory work. When a patient comes in for a cold, there's not much laboratoy work that's indicated, but along with the physical, generally, there's a problem of high blood pressure and there's a problem of heart disease or something of that sort which requires more laboratory work. I don't think that my percentage of laboratory work has gone up but I may wrong. Well, come to think of it, probably it has gone up because of doing more physicals . . . More tests get done.

Reporter: That's also an income producing item?

Doctor: Oh yeah, sure. Doctor have a formula that's worked out by Blue Cross/Blue Shield which allows them to charge a certain percentage of what the tests cost the doctor. I personally use a private laboratory. I send it out.

Reporter: What is your mark-up?

Doctor: I'm allowed 50 per cent of costs, up to a certain point.

Reporter: So in other words, you can increase what the lab charges $2, you can add $1 on?

Doctor: Yes.

Reporter: What percentage of your gross income do you calculate . . . from lab work?

Doctor: Maybe a quarter to a third.

Reporter: After you've paid the cost of doing the laboratory work you're still left with a sizable chunk of money?

Doctor: Well last year I grossed $60,000. I mean . . . I billed $60,000.

Reporter: In laboratory work?

Doctor: No, total . . . from private patients. We're excluding now Medicaid and Medicare and any other sources of income. We're talking about private billing.

Reporter: Well, do you exclude them?

Doctor: Well, because they don't pay properly for lab work because it's little Medicaid lab work because it's very unprofitable. I have to pay the lab more than Medicaid reimburses me.

Reporter: And if your expenses are $48,000 you're telling me you made $12,000 last year?

Doctor: I also have a part-time job . . . from which I make $10,000 a year. And I do get some Medicaid payments, not a heck of a lot. My taxable income last year was $25,000. I'm telling you it's tough to make a living, especially when you got a young practice, and you're just starting out and you've got big expenses. Setting up an office costs money. Loans have to be paid back. And the patients are young. They're not that sick. They're not chronically ill patients who need weekly treatment.

Reporter: How successful were you in getting people . . . to come in for a physical?

Doctor: Most complied.

Reporter: And a physical is something that they have to pay out of their pocket?

Doctor: The professional service part of the physical they have to pay out of their pocket. The insurance company will reimburse their laboratory work if it's for a particular diagnosis. For instance, you can't just do an electrocardiogram out of the clear blue, you have to have a patient who's been complaining of chest pain or been complaining of chest pain or shortness of breath, or something relevant to the test.

Reporter: Will you, as some doctors do, make a diagnosis in conjuction with the physical so that they can attempt to collect from their insurance company for it?

Doctor: I won't make up the diagnosis, but I'll be very general and vague in my description of the problem, such as weakness and fatigue, which justifies doing certain blood tests. Chest dicomfort of any sort justiries doing an electrocardiogram. I don't do x-rays because I consider that to be a potentially dangerous procedure which I wouldn't subject my patients to every year.

Reporter: Why do you do the other tests?

Doctor: Because they don't harm the patient and, from time to time, I do pick up some valuable information that's helpful to a patient . . . The pie can be cut up in so many ways - the pie being the fund of money to pay for professional medical care - and everybody is fighting for their share of the pie. So, do you use frugality with insurance companies . . . when everybofy else is not being frugal? Then you're the guy who doesn't make it financially. I mean, why should I go broke and not take my share of pie? That's our retainer. That's what keeps us going . . . I don't believe anybody in medicine takes care of 100 per cent sick people. You gotta take care of healthy people if you want to make a living.

Reporter: How do you go about determining what you charge?

Doctor: Well, there is a certain amount of communication between doctors as to whatour fees are . . . In my case I started working with another physician for a couple years, and I kenw what he charged . . . Then I moved on and set up my own practice, I knew that I needed a certain amount of income for the first year and figured out the number of patients I was intending to see a day and just myltiplied and came up with a figure. But I must say I did check that out with other physicians to make sure that I wasn't out of line.

Reporter: Charging too much or too little?

Doctor: Charging too much was my concern. I wouldn't want to be the guy at the top . . . People woul djust not come as readily if I was outrageously expensive . . . I don't want to be at the bottom either because I want to make a living.

Reporter: This is the way the entire system operates?

Doctor: I talked to (another internist) . . . He was grossing $170,000. He claims he's only seeing 12 patients a day. And I see about 12 patiens a day . . . His fees weren't that high; in fact, they were lower than mine. There was something going on, and I can't really tell you what it was.

Reporter: What do you think it was?

Doctor: I think it was x-rays, I think he was doing an enormous number of x-rays, absolutely outrageous and unnecessary x-rays.

Reporter: Yeah . . . I know another guy who was charging far less than I charge, and he was grossing $190,000 a year . . . (because) he was seeing 40 or 50 patients a day.

Reporter: So he was busy.

Doctor: He was busy, but how do you get to see 40 or 50 patients in an eight-hour day or even longer? You can't see that many patients and really be taking care of a medical problem because it does take a little time and talking to. You can't zip in an out . . . He created the need in his patients for weekly, or biweekly or monthly vitamin shots.

Reporter: So, in other words, he didn't have that many patients, he was seeing them frequently?

Doctor: For vitamin shots.

Reporter: And how much was he charging for vitamin shots?

Doctor: Just his office fee. A big bottle of vitamins only cost him a buck. I mean, they're cheap, you know . . . He was charging for a few minutes with his patients and the vitamin shot, $15.

Reporter: Was their any medical benefit from the vitamin shot?

Doctor: No.

reporter: Do you see anything improper in that?

Doctor: I don't know. It depends, the whole issue in medicine now is placebos. If the patients feel better and feel that they are getting help, isn't that valid treatment? Lots of people think placebo is a valid treatment. I personally can't do it. I don't like it. It doesn't suit my style of practice. But lots of people think placebo treatment is a very good way, as long as you're not harming the patients and they feel better as a result . . .

It depends on what the patients want and what they're looking for. My best patient relations have been with people who I've given-lots of time beyond what I'm billing them for, marriages, resulted, truly, I believe, in saving of lives. There's potential suicide victims who, after talking for a while, and working things our getting victims on a good psychothrapy schedule, don't kill themselves, or their marriages don't break up, or they don't become drug addicts or alcoholics. So who's to say that my talking is less or more valuable than that other guy's B-12 shots.

Reporter: Are you still suggesting to patients that they should come in for a physical?

Doctor: yes . . .It's something that I'm going to do more regularly because I found they're very helpful to me . . . I'm not sure that it's economically sound in terms of the money that's spent on annual physicals every year. But there have been things that I've picked up that would otherwise not have been picked up.

I also consider it part of the retainer - doing the physical. Collecting the fee is part of my retainer for being available 24 hours a day, 7 days a week. That's part of the routine. I can't make it by seeing every patient for one visit a year for $20. There's no way I could stay in partice.

Reporter: Would you rather go to a system where you are guaranteed an income.

Doctor: Yes.

Reporter: If you did, would you still ask those people to come in for physicals?

Doctor: Yes. Then I'd be taking the best care I could of my patients.

Reporter: And would you be doing the tests that you're doing?

Doctor: Yes. I mean it's to the doctor's advantage to have all the data he can. Why shoul he skimp?

Reporter: Do you pay attention in doing the lab work to whether or not your patient is paying for it?

Doctor: I don't do lab work on people that don't have insurance.

Reporter: You don't?

Doctor: No, because if I'm paying anywhere from half to two-thirds of the cost of the laboratory work and a patient has no insurance and looks like a deadbeat - which I have many of - then I've lost that money.

Reporter: How does that square with the Hippocratic oath?

Doctor: The Hippocratic oath in no way says that I have to give free health care or anticipate free health care . . . I've been burned too many times by people without health insurance. Part of the responsibility of living in our society and coming to see a doctor is that you have some health insurance . . . I won't let anybody die, but what happens when a guy comes to the office with a bleeding ulcer and has no health insurance? What do I do? Do I send him to George Washington University Hospital for admission or do I tell him to go to D.C. General Hospital?

Reporter: What do you do?

Doctor: I tell him to go to D.C. General. I give him some medicine and tell him these are the signs and these are the warnings that you have to be cautious of. But I send him to D.C. General or to a public clinic. If I think the lab work is indicated and he doesn't have insurance, I tell him to go to the clinic . . .

I'm thinking about starting to ask people to pay their money before they leave. Except if I know them real well and have experience with them. If they pay their bills, I'll let them be billed . . . or if it's directly insured with Blue Cross/Blue Shield. Other than that, I'm going to ask people pay their fees directly. Most doctors do now. The guy down the hall, a gynecologist, doesn't even take checks. He takes only cash.

Reporter: Is there something else you want to say?

Doctor: just that I hope people pay their bills, that' all. Tell people to pay their bills intead of criticizing the doctors.