Does Independence Matter for Physician Practices?

I recently had the opportunity to attend the Medical Group Management Association (MGMA) annual conference in New Orleans (MGMA19AC). I love this event as it gives me a rare opportunity to learn what’s on the minds of physician practices around the country. It was clear this year that the wave of consolidation of physician practices is continuing…and it made me wonder whether this is good thing or a bad thing or a neutral thing?

Earlier this year the American Medical Association released the results of the 2018 Physician Practice Benchmark Survey. It showed that employed physicians outnumbered those that owned their own practices for the first time. According to the survey, 47.4% of practicing physicians were employed vs 45.9% who owned their practices. Also, just under 15% of physicians were in solo practices, down from 18.4% in 2012.

The growing complexity of healthcare is one of the reasons why more physicians are opting to become an employee of a larger organization. As an employee, physicians do not have to directly deal with billing, claims, collecting money, marketing to patients, MIPS reporting, HIPAA audits, etc. Large healthcare organizations have teams of people who focus on those things, allowing physicians to focus more on what they do best – work with patients.

Or so the theory goes. While there is certainly less business stress being an employee vs owning your own business, there are some who believe that the “paperwork” involved in delivering care is the same no matter who owns the physician practice.

At MGMA19AC, the opening keynote speaker. Senator Bill Cassidy from Louisiana (an MD) told the audience that he meets 3 different type of physicians in private practice:

  • Employed physicians of larger health systems
  • Entrepreneurial physicians who are actively looking for ways to grow their business
  • Exiting physicians who don’t want to deal with healthcare anymore (and are retiring or finding other medical-related work)

The subtext of Senator Cassidy’s message: physicians-as-small-business-owners were a thing of the past. Moving forward, physicians will have to decide between being an employee at a larger healthcare organization (a hospital network or a large group practice) or a part owner of a large group practice. There will be no room for anything in-between.

While I doubt we will ever see the complete demise of solo physician practices, I do believe that healthcare today is biased towards larger entities. It is difficult for a single doctor to compete and be successful in today’s environment.

To me, the issue of who owns a practice is not relevant. There is no evidence that patients receive better care from hospital-owned vs physician-owned practices. Nor is there evidence that healthcare costs are lower at one type of practice over the other.

In the past, it *may* have been true that independently owned practices were more nimble than their hospital-owned counterparts when it came to implementing new technologies and consumer-friend patient practices. However, given the importance of ratings, patient experience scores and loyalty in healthcare, EVERYONE moves quickly today.

In addition, the healthcare ecosystem is so intertwined today that health systems and non-owned practices HAVE TO work together to ensure patients remain healthy lest they incur financial penalties for preventable emergency re-admissions.

I sometimes wonder if, in the decade ahead, independent solo-practitioners will be like local general stores of yore. There aren’t many who would give up the convenience, quality and selection available at the supermarket down the street to return to the days of the general store. I believe what we will miss is not whether physicians owned their own practices or not, but the perception that physicians of the past were able to spend more time with patients – looking at them eye-to-eye.

Join me Tuesday October 22nd at 8:30pm ET for the next weekly #hcldr tweetchat (for your local time click here) when we will discuss the following topics:

  • T1 Is the ownership structure of a physician practice a factor in deciding whether or not to be a patient? (ex: large group owned by partners vs hospital owned)?
  • T2 In your opinion, would owning a practice, being an entrepreneur help or hinder a physician’s ability to care for patients?
  • T3 Do independent physician practices need to remain part of the healthcare ecosystem? Or would it be okay if they merged into larger organizations?
  • T4 What improvements would you like to see for patient experience at physician practices? Is there a consumer tech or process you would like to see adopted?

References

Lagasse, Jeff. “Physicians looking to become small practice owners have many factors to consider before making the leap”, Healthcare Finance, 21 August 2019, https://www.healthcarefinancenews.com/node/139086, accessed 19 October 2019

Machata, John MD. “How Big Medicine is hurting patients and putting small practices out of business”, KevinMD, 27 March 2019, https://www.kevinmd.com/blog/2019/03/how-big-medicine-is-hurting-patients-and-putting-small-practices-out-of-business.html, accessed 19 October 2019

Taweel, Fred. “Small Business Ownership and Private Practice: Alike, yet Different”, Privia Health, 21 December 2017, http://www.priviahealth.com/blog/small-business-ownership-private-practice-alike-yet-different/, accessed 19 October 2019

Squires, David and Blumenthal, David MD. “Do Small Physician Practices Have a Future?”, The Commonwealth Fund, https://www.commonwealthfund.org/blog/2016/do-small-physician-practices-have-future, accessed 19 October 2019

Murphy, Brendan. “For first time, physician practice owners are not the majority”, American Medical Association, 31 May 2017, https://www.ama-assn.org/practice-management/economics/first-time-physician-practice-owners-are-not-majority, accessed 19 October 2019

Cryts, Aine. “Business-minded physicians”, Physicians Practice, 31 July 2018, https://www.physicianspractice.com/healthcare-careers/business-minded-physicians, accessed 19 October 2019

Liu, Davis MD. “Physicians must embrace the business side of medicine”, KevinMD, 26 November 2017, https://www.kevinmd.com/blog/2017/11/physicians-must-embrace-business-side-medicine.html, accessed 19 October 2019

Dyrda, Laura. “The entrepreneur mindset: How an MBA opened doors for one spine surgeon’s practice”, Becker’s Spine, 24 February 2016, https://www.beckersspine.com/spine/item/29957-the-entrepreneur-mindset-how-an-mba-opened-doors-for-one-spine-surgeon-s-practice.html, accessed 19 October 2019

Van Voorhis, Scott. “Breaking Free: More Docs Go Independent”, MedPage Today, 16 April 2019, https://www.medpagetoday.com/practicemanagement/practicemanagement/79265, accessed 19 October 2019

Abelson, Reed and Creswell, Julie. “The Disappearing Doctor: How Mega-Mergers Are Changing the Business of Medical Care”, The New York Times, 7 April 2018,  https://www.nytimes.com/2018/04/07/health/health-care-mergers-doctors.html, accessed 19 October 2019

Image Credit

Photo by Abby Anaday on Unsplash

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