The number of physicians in independent practice has been dwindling for the past several years due to the many regulatory challenges set into action via the Affordable Care Act. In addition, ICD-10 implementation will happen in October and with the AMA estimating costs for small practices running up to $226,000, it’s not surprising that more physicians are working in hospitals or medical groups.
Accenture’s latest survey, "Clinical care: The independent doctor will NOT see you now," reports that only one in three physicians will stay independent by the end of next year, down 10 percent from the company’s 2012 report.
An estimated 71,000 physicians left their private practice for hospital employment between 2005 and 2013, with an additional 27,000 projected to leave by the end of 2016, according to Kaveh Safavi, global managing director of Accenture’s health business.
“The complexity of running an independent practice is growing but not the economics. What’s changed in recent years is independent practices need more technology, an efficient revenue cycle and business model to generate enough profit to counterbalance overhead costs,” Safavi said. He added that the attraction of solo practice twenty years ago was about autonomy, both clinical and business.
“Although self-employed doctors can still tweak their business model as they see fit, the clinical side of autonomy has been challenged by a certain level of standardization, so it remains no more prominent in solo practices than in large health systems," he said.
Similar data was reported in a 2014 survey by The Physicians Foundation. In that survey, only 17 percent of 20,000 physicians said they had a solo practice, down from 25 percent in 2012. Fifty-three percent were hospital or medical group employees, up from 44 percent in 2012.
However, Kurt Mosley, vice president of strategic alliances for Merritt Hawkins, which conducted the survey, said physicians are also seeking employment at large clinics, retail medical locations (urgent care centers, stand-alone emergency care, ambulatory surgical centers, etc) and insurance companies are also hiring physicians. “It’s a new world where people who never hired doctors before are now seeking them,” said Mosley.
In addition, with the trend of large hospital systems merging, Mosley explained that the key is getting doctors aligned. “It used to be whoever had the most doctors wins, but now it’s about having the right number of doctors engaging in the right behaviors in the right settings. Many of the older doctors are not used to working in a team environment and being paid based on patient satisfaction," he said.
And the younger physicians, according to Mosley, are well trained and ready to work in a team environment, but want nothing to do with the business of medicine. “That correlates with wanting to be employed.”
Reasons to Leave
The top three reasons cited for leaving private practice in the above surveys, in addition to a third survey conducted earlier this year by Jackson Healthcare, are high overhead and costs of maintaining a medical practice, reimbursement cuts, and too much focus on administrative tasks rather than patient care.
Physician overhead includes the costs of specialized labor. “Professional labor, which accounts for up to two-thirds of total costs, is the single most expensive component of healthcare,” said Safavi.
A 2013 article in Western Pennsylvania Healthcare News estimates that overhead is between 60 and 70 percent of practice charges thanks to increased costs for employee healthcare, reduced reimbursements, expensive technology and a more complicated billing process to third-party payers. “With all these changes, some physicians have taken a 50 percent cut in pay – or more,” the article states.
Medicare and Medicaid reimbursement rates dropped this year, averaging a 21.2 percent reduction in Medicare reimbursements, according to DHHS and an average 42.8 percent reduction in Medicaid reimbursements for primary care physicians, according to an Urban Institute survey, according to a Forbes article. And a Physicians Foundation’s “2014 survey of American Physicians” mentioned earlier in this article, found that 38 percent of doctors don’t see Medicaid patients or limit those they do see.
Not only do physicians say they have too much non-medical paperwork, but listed malpractice liability pressures, inadequate and inconsistent reimbursement, too many government regulations and reduced clinical autonomy as all factors contributing to discontentment.
In a 2012 Physicians Foundation survey, 68 percent of physicians described their morale as negative, but that number dropped to 44 percent in the group’s 2014 survey. Mosley attributes this to younger physicians participating in the survey. “In our survey, 66 percent of physicians under age 45 were employed compared to only 26 percent aged 46 and older. It seems the doctors who are younger and employed are happier,” Mosley concluded.
As the trends of hospital mergers and acquisitions continue, along with new consumer healthcare technologies and retail medical facilities, physicians will need to adapt to the changing times, and as Mosley commented, “It’s a brand new world.”