Private practice's future in a changing time for medicine

A message to all physicians from AMA President Jeremy A. Lazarus, MD, on private practice in these days of health care reform.

By — Posted April 29, 2013.

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First, a disclaimer. I am a solo practitioner, and I love practicing this way. While I try to stay informed about what's happening with medical practices as health care reform evolves, I have no interest in or intention of joining a larger group or seeking employment with a medical center or hospital.

Having said that, the subject of private practice is one that is being much discussed these days. How many medical students want to go into private practice now versus a decade ago? How many solo practitioners or small practice groups are creating an alliance with another or larger group? How many are simply closing up shop and seeking employment? What difference is there in terms of physician satisfaction? Of patient care? Stress?

The challenges are great, certainly financially as practices cope with paying staff, rent and equipment; an ever-increasing administrative burden; and the costs of installing electronic medical recordkeeping systems in the face of decreasing Medicare and insurance payments.

And there is also the unknown, which certainly adds to the stress, if not the cost. Will accountable care organizations, medical homes and other novel delivery systems live up to their promise of higher-quality, high-efficiency care delivery? And what about bundling of payments? How can we be sure that our share of the payments actually matches our share of the involvement?

The consulting firm Accenture predicted in 2011 that only a third of U.S. doctors would be truly independent by 2013. And medical search firm Merritt Hawkins has projected that within two years, 75% of all newly hired physicians will be hospital employees, based in part on the fact that in the 2011-12 search season only 1% of the company's search assignments were to recruit physicians into solo practices.

From the employment side, a 2011 American Hospital Assn. survey reported that the number of doctors on hospital payrolls increased by 32% between 2000 and 2010, with the rate of increase accelerating after 2005. The AHA also estimates that about 20% of practicing physicians now work for hospitals.

The move of many physicians into employment is happening for a reason. It's tough out here. In 2011, the average American medical practice spent $82,975 per doctor to deal with insurers, according to the Commonwealth Fund. And, according to the American Academy of Family Physicians, practices had, on average, 3,281 active patients.

There are things that could be done that might make more physicians rethink private practice versus employment. Eliminating the sustainable growth rate formula and replacing it with a stable payment process is one. Finding a way to eliminate or reduce medical school debt. Passing liability reform legislation.

Antitrust law reforms that would allow providers to compete on quality and price or band together to negotiate against large entities like hospitals would also be a big help to anyone in private practice.

Historically, physicians have been small-business men as well as healers, and small-business men are nothing if not innovative.

We are seeing a variety of practice merger models, all of which leave physicians relatively independent. For example, independent practice associations allow physicians to integrate financially or clinically and contract as a group while still maintaining their independent corporate status.

Concierge medicine has been the path chosen by a growing number of small practices. By guaranteeing their income with a monthly fee from a set number of patients, both the physicians and patients report good results. On the down side, concierge practices limit the number of patients, raising major questions as we look to 30 million more insured and an already-existing shortage of primary care physicians.

The example of high-quality, patient-centered health care comes to us in the form of physician-led health care teams — places like Geisinger, Mayo, Kaiser and Cleveland Clinic. Similarly, physicians with good management skills in this time of focusing on quality patient care should be able to negotiate relationships with hospitals but still maintain their independence.

And while once it would have been prohibitive for physicians to lead ACOs and other new quality-based systems because of the up-front risks, AMA advocacy persuaded CMS to dramatically improve the rules and create a $170 million advance payment option to help physicians cover start-up costs.

In the past three years, more than 250 new ACOs have been established, and physicians lead almost half of them.

For more information and resources on private practice or for those considering employment, go to the AMA website (link).

So long as there are physicians, I am confident there will be entrepreneurial types and others who seek the autonomy and satisfaction of running the show themselves.

And that makes me wonder just how much about the demise of solo or small group medical practice, in Mark Twain's classic rejoinder to news that he had died, has been “greatly exaggerated.”

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