September 10, 2018
The Future Of Private Medical Practice
By Michael D. Shaw
Readers of a certain age are likely to remember childhood doctor visits along these lines: First, there would be a short ride to a medical building, which could be a large high-rise or a smaller off-street facility. You would enter your doctor’s office–identified by an impressive sign on the door–and there would be a pleasant enough waiting room, often featuring an aquarium. You might wait for five to ten minutes; rarely as long as a half hour.
Then, you would be seen by the smiling physician, inevitably dressed in a suit or businesslike skirt, under a crisp and clean white coat. The examining room would usually smell of isopropyl alcohol, and if you felt uncomfortable, you knew the whole thing would be over with quickly. As you were leaving, your parent would stop at the front desk, and pay for the office visit, either by check or with cash.
There were no bank credit cards then, and doctors were not quick to accept them when they were introduced. Insurance coverage for simple office visits was pretty much unknown. Chances are good that the practice you visited was owned by two, possibly three physicians.
To set a historical perspective, in 1960, 72 percent of physicians (MDs and DOs) were in private practice. In 2012, Accenture released a report giving figures of 57 percent in 2000 and 49 percent in 2005. A more recent source pegs the 2016 number at 33 percent.
It should be pointed out that statistics on private medical practice are promulgated by a variety of organizations. Methodologies and biases differ. Yet, the clear trend is toward fewer physicians in private practice.
The Accenture report and survey names reimbursement pressures and the cost of overhead–including implementation of costly electronic health record software–as the biggest concerns cited by independent physicians. As such, 26 percent of those polled are refusing Medicaid patients; 15 percent opting out of health exchange plans, and 3 percent not seeing Medicare patients. The number of Medicaid patients would increase greatly, as a result of Obamacare.
From the physician’s point of view, Medicare came under a bit of a cloud as a result of MACRA (Medicare Access and CHIP Reauthorization Act of 2015). As to the acronym within an acronym, “CHIP” stands for Children’s Health Insurance Program. A key component of MACRA changed physician reimbursement from rewarding volume to rewarding value. The Centers for Medicare & Medicaid Services’ own projections indicated that the law would reduce payments for most solo practices.
Along with older private practice physicians retiring, plenty of the new ones coming in are faced with massive student debt, and are drawn to the notion of a regular paycheck and better work/life balance. Thus, the attraction of joining an integrated managed care consortium such as Kaiser Permanente, or becoming a hospitalist.
It’s not only young physicians who choose alternatives to private practice. Some established private practice docs have decided to move to managed care groups. And, their practices are also being acquired by hospitals.
As private practices disappear, pundits talk about economies of scale, pointing to such items as improved healthcare informatics, multidisciplinary care teams, and after-hours access. But somehow, economies of scale don’t seem to lower overall costs. In April, 2015, healthcare blogger Dan Brennan documented how costs increase when hospitals buy up private practices. This finding is echoed in many other works.
More than that, a study published in 2014 found that patients of physicians practicing in solo and small practices have lower rates of preventable readmissions than those in larger practices.
Commonwealth Fund experts David Squires and David Blumenthal, M.D. offer some suggestions to help small practices:
- Encourage physician networks, enabling small practices to share resources.
- Develop payment models that include upfront grants or loans for practices to invest in necessary infrastructure.
- Improve health information technology so that it reduces–rather than increases–the burdens of solo practice.
The good news is that CMS wants to help small and solo practices. We’ll see if this will stem the tide.