MedCity Influencers

The demise of independent physicians practice greatly exaggerated

The predicted demise of the independent physician’s practice, long predicted by experts, is not matching reality. A new report by Black Book Market Research LLC which was looking at the issue of value-based care has noted a dramatic shift away from physician employment by hospitals as well as hospital-owned practices. Black Book reports that independent […]

The predicted demise of the independent physician’s practice, long predicted by experts, is not matching reality. A new report by Black Book Market Research LLC which was looking at the issue of value-based care has noted a dramatic shift away from physician employment by hospitals as well as hospital-owned practices. Black Book reports that independent practices and physician-led group practices rallied back up to account for 72% of practicing physicians in 2017.

What happened?

Many hospitals have learned that running a medical practice is not easy, and it’s not like running a hospital. And many practices that were economically viable as independent practices became economic losers under the tutelage of hospital administrators. For example, a 2015 report out of Kentucky revealed that 58% of hospitals reported annual per-physician losses of more than $100,000—an increase of 17% over the prior year. How long can a hospital sustain those losses, and justify them by claiming that they will make up those losses on hospital admissions and outpatient services?

Then as hospitals consolidate and monopolize the provision of many services, they see less of the need to own physicians steer patients to their facilities as they are often the only game in town.

Free at last, physician practices are moving to organize themselves into clinically integrated networks to take on the opportunities of value-based contracts, contracts that provide economic upsides for reducing costs, and passing quality benchmarks. Unfettered by the obligation to refer outpatients to costly hospital owned services, these networks are shifting where care is being delivered, rapidly acting on their collective knowledge of both the quality of the care and now adding in the decision making the cost. While hospitals may control inpatient, outpatient services are developing as cost-effective non-hospital-controlled alternatives.

This movement toward physician-sponsored networks is being added by improvements in data sharing among EHRs, allowing cost-effective data analytics to support decision making.

Physicians are also providing a willingness to take some measured risk in return for upsides, as well as showing that they can provide leadership in addressing issues of quality and access within their practice groups and networks.

With the re-emergence of independent practices, there are more opportunities for new physicians than just hanging out a shingle or taking a hospital job. It also means the greater speed at adaption to information flowing from data sharing. Physician practices are showing that without the overhead of a hospital, there is greater flexibility to pursue programs that can deliver care in less costly modes.

While in some communities’ dominance by hospitals continues, and their control of high cost and complex care scenarios will continue, independent physicians working together and in larger group practices have the opportunity to change the dynamics of care, especially for the majority of the care needs in the population. This means that they are in the position to take on value-based contract offerings and enjoy the benefits of delivering on the success of that model of payment.

The trend of physicians employment by hospitals appear to have abated.

 

This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.

Topics