Even before the pandemic, independent physician practices were facing challenges.
Beyond safeguarding the health and welfare of their patients, independent physician practices play a critical role in the fabric of our health system. They’re also strong economic drivers tightly woven into their communities by the commerce and jobs they create—which generate taxes to support schools, housing, transportation, and other public services in local communities.
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But modern private practice faces increasing economic challenges often driven by non-medical issues such as increasing administrative burdens; large fixed overhead for staff, equipment, and space; and the lack of time or resources to develop expertise in evolving technology, regulation, and payment/reimbursement models.
A rough situation made worse
These pressures have been mounting for some time. A study on physician practice arrangements updated in May 2019 found that, for the first time in the United States, employed physicians outnumbered self-employed physicians.
As far back as 2014, one study co-authored by the American Medical Association and Mayo Clinic, found 26.6% of physician respondents indicating it was likely or definite that they would leave their current practice in the next 2 years, with burnout, dissatisfaction with work-life integration, and dissatisfaction with the electronic health record noted as independent predictors of intent to reduce clinical work hours and leave current practice.
The 2020 arrival of SARS-CoV-2 in the United States exacerbated the struggle with additional concerns and financial pressures. An August survey from the Larry A. Green Center and Primary Care Collaborative showed 2% of primary care practices had closed, and another 2% were considering bankruptcy. The survey further found 1 in 10 practices uncertain of their solvency for the coming month.
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Daphne Li and Michael Tutty Daphne Li is Managing Director of Business Acceleration at Health2047. and Chief Operating Officer for First Mile Care. During her career, she has helped launch and scale numerous technology-based startups as well as identify and develop new growth areas for Fortune 500 brands. Her passion for scaling companies started at […]
While telehealth expansion helped fill some revenue gap, physician personal protective equipment (PPE) shortages continue to be a serious problem for individual physician practices in many states, making in-person services difficult, and patients have deferred non-urgent or preventive care. Research from the Commonwealth Fund shows that “the number of visits to ambulatory practices fell nearly 60 percent by early April before rebounding through mid-June. From then through the end of July, weekly visits plateaued at 10 percent below the pre-pandemic baseline.” Independent physician practices “are being forced to make do with less revenue, some of which may never come back,” according to a recent Washington Post healthcare business exposé.
To be fair, it’s not just primary care, and it’s not just private practice. The pandemic has exposed questions that have rocked the entire healthcare industry in general. But for most specialties, if independent practices were struggling before, the pandemic probably made it worse.
Practicing possibilities post-pandemic
Physicians should be able to work in a healthcare system that provides opportunities for both employed and independent physicians. However, with many employee physicians facing furloughs and layoffs due to the pandemic’s impact on regional hospital and health system patient volumes and revenue, the old truism practicing medicine is recession-proof has given way to the reality that it isn’t pandemic-proof. Some physicians may have no choice but to pursue self-employment.
There are also a lot of physicians who simply prefer the autonomy afforded by self-employment. A 2019 McKinsey survey reported 79% of small independent practitioners and 67% of large independent practitioners cited autonomy as a top factor in selecting their current practice model. In that same survey, 84% of all independent physicians who did not proceed with an employment opportunity in previous years, and 59% who had returned to independent practice after employment, indicated autonomy was a primary influencer in their decision.
And physician self-employment as a model can produce positive outcomes. A seminal 2016 paper in the Annals of Family Medicine showed that “small, physician-owned practices, while providing a greater level of personalization and responsiveness to patient needs, have lower average cost per patient, fewer preventable hospital admissions, and lower readmission rates” than larger or hospital-owned practices.
Fostering independent practice sustainability
Independent physician practice represents an invaluable thread in the fabric of American healthcare delivery that should be preserved. But even without the pandemic continued viability of independent practice business models is long-overdue for redress.
Safeguarding its future requires rethinking operational models to deliver long-term sustainability. Look for credible resources for increasing physician professional satisfaction and supporting practice sustainability. These include is a wealth of information on contemporary financial strategies and new federal programs available to physician practices to help address the challenges brought on by Covid-19; as well as guidance on overall practice transformation, effective change management, interventions and workflows that improve practice efficiency and shared best practices from exemplary healthcare organizations to improve both professional well-being and patient safety.
But the greatest issue that must be addressed is also the elephant in the room: reducing administrative burden on physicians. Regardless of specialty, in today’s world, there is simply no sustainable way for an individual to practice medicine and run their own business while also serving as facility manager, head of procurement, accountant, IT support, EHR administrator, regulatory compliance expert, marketing professional, HR and payroll specialist, coding and billing expert, and the man or woman who fixes the fax machine. Yet most independent practice requires some or all of those roles to be filled by medical doctors, and the proportion of a doctor’s time devoted to the simple joy of practicing medicine is increasingly encroached upon.
Changing that is going to require innovation in business support, as well as new ways to increase purchasing power, new types of practice networks, new revenue models, enhanced access to innovation, efforts to democratize patient access, and a significant reduction in government and payer administrative burdens. That may include permanent integration of telehealth and virtualized patient-physician interactions and appropriate billing coding to support it, as well as applying models from other industries to eliminate administrative overhead. These might take the form of new professional employer organization (PEO) services akin to JustWorks or TriNet, which could be customized to the unique requirements of healthcare practice to offload and aggregate administrative necessities and create services that help independent practices leverage the economies of scale that large healthcare organizations normally enjoy. Or they could iterate off concepts like the Amazon Seller Central example, which offers a turnkey online sales service so businesses can focus on making their product, much like offering turnkey back-office services to an independent physician who can then focus on practicing medicine. In addition, government regulators and public and private payers should minimize the administrative burdens placed on physicians, realizing the primary role and major driver of professional satisfaction of physicians is to care for patients.
Facing great challenges also presents great opportunities for positive change. But all of that transformation and reinvention shouldn’t fall on the physician’s shoulders alone. There are lots of interesting new services and technologies for supporting and streamlining businesses of all sizes, but applying them to healthcare practice should not become one more chore left for independent practitioners to figure out on their own.
Historically, innovation in healthcare has not always driven efficiencies and savings. But physicians are supportive of innovation if it works, provides cost savings or receives proper payment, is not an added liability, and fits into the practice workflow. This is where innovators and big thinkers and bright business minds beyond the healthcare realm can lend support in taking up both advocacy and solution development to ensure that not only do independent physician practices survive, but these physicians thrive well into the future.
Photo: PeopleImages, Getty Images
Daphne Li is Managing Director of Business Acceleration at Health2047. and Chief Operating Officer for First Mile Care. During her career, she has helped launch and scale numerous technology-based startups as well as identify and develop new growth areas for Fortune 500 brands. Her passion for scaling companies started at Bain & Company where she served on the business acceleration team, helping early-stage companies develop business models, secure investments, launch products, and scale operations. Prior to joining Health2047 Inc., Li was Senior Vice President and General Manager of Enterprise at SaaS platform provider Upwork where she grew new sales by 850%. She also led marketing and product management at ADP, transforming a shrinking claims business into a SaaS platform and data business that was sold for $1B. Additionally, as Director of Strategy for Apple’s $1.2B Education group, Li forged strategic partnerships, co-created a new sales model, and helped redefine Apple’s education market offering. She holds both an MBA and a BA in Economics from Stanford.
Michael Tutty, PhD, MHA is the Group Vice President of Professional Satisfaction and Practice Sustainability at the American Medical Association (AMA). Tutty leads AMA’s efforts to enhance practice efficiency, to improve professional satisfaction and to advance the delivery of high-quality care. Prior to joining the AMA, he had several roles at the University of Massachusetts Medical School where he maintains an assistant professor faculty appointment in the Department of Family Medicine and Community Health. Previously, Tutty worked at the Boston Consulting Group in their health care practice. He earned his PhD in Public Policy from the University of Massachusetts Boston and his MHA from Clark University.
