November 26, 2012

The Vanishing Private Practice

John Kelly of Grove Medical Associates in Auburn checks the blood pressure of his patient, Charles Monahan, president of Massachusetts College of Pharmacy and Health Sciences. Dr. Kelly, who has had a primary care practice for 25 years, said practices such as his will have to align with others in some way because of the cost-savings requirements that are part of health care reform.
Dr. Richard Aghababian, president of the Massachusetts Medical Society: “Unless you’re independently wealthy, it’s almost impossible to get started in your own practice.”

John Kelly, co-owner and physician at Grove Medical Associates in Auburn, is the kind of doctor who knows patients by name, treating families through the generations at his four-physician practice.

But soon, he may be a relic.

That's because the private practice is something that will struggle to survive as doctors opt to join large medical groups and hospitals to avoid the mounting costs and administrative duties associated with delivering health care.

"Primary care docs have been, for lack of a better word, gobbled up," said Kelly, who launched his practice in 1987.

Reflective of the trend Kelly referenced are the number of New England physicians employed by hospitals — an option seen as a cost- and time-saver. Where a private physician has to deal with overhead themselves, hospitals have budgets and personnel to tackle it.

A recent survey conducted by the Medical Group Management Association (MGMA), a professional association for medical administrators, showed a nearly 75-percent increase in the number of physicians employed by hospitals since 2000.

Adding to this evidence are results of an email survey conducted by the Massachusetts Medical Society and released in March that showed 38 percent of respondents were self-employed at private practices, while 62 percent worked for group practices or hospitals, or were considering making the switch from self-employment.

There are a few factors at work here, according to Robin Richman, chief medical officer at Worcester-based Reliant Medical Group, which employs 250 physicians at practices throughout Central Massachusetts and MetroWest.

Move Toward ACOs

First, state and federal health care reform measures favor accountable care organizations (ACOs), which have the ability to streamline care between different organizations (like a primary care office and specialist office) to save money and improve the quality of care. Larger medical groups and hospitals are able to take the necessary steps to become ACOs with greater ease than small, private practices can.

The implementation of electronic health records — a requirement of health care reform — and rising costs, including malpractice insurance and rent, make running your own practice an expensive, time-consuming endeavor, Richman said.

Richman has experience on both ends of the health care delivery spectrum. She established her own practice upon graduating from medical school, when it was much more feasible to do so. Now, as a Reliant administrator, she sees that young physicians coming out of medical school don't typically want to take the private practice road, because the health care world is so different.

"A lot of the people coming out have very different lifestyles, and very different visions about how much time they want to spend with the practice as opposed to the family and personal interests," Richman said.

The shift from private practice ownership to employment at larger groups or hospitals is real, according to Richman, but it seems to be driven by the new physician crowd at this point. Those who are working in established private practices may tend to stay put, even as pressure to cut costs and improve care delivery mount.

More Interest In Open Jobs

But one indication that even seasoned physicians are at least considering taking the leap from self-employment to employment at larger groups is increased interest in open positions, Richman said.

"What I do see is that as we look to hire, particularly in primary care, we take more inquiries from people who've been in practice a while," Richman said.

Not all will go willingly, though. Richard Aghababian, president of the Massachusetts Medical Society, said the public and many doctors have a rosy view of the private practice that once dominated health care. Doctors often knew their patients well, and patients appreciated the personal service. But, Aghababian said, it wasn't a very efficient model of care. Eventually, the private practice will be obsolete, giving way to a larger, corporate health care structure because of changes in health care laws.

"The old Marcus Welby days will be gone," Aghababian said, referring to a television show from the 1970s that focused on a doctor and his private practice.


But like Richman, Aghababian said it also goes back to the costs of establishing a private practice.

He said it's not uncommon for students to leave medical school today with $200,000 to $300,000 in debt, and the large costs of setting up an office compound that problem. Plus, it takes three to six months for insurance companies to release their first payments to new practices, Aghababian said.

"Unless you're independently wealthy, it's almost impossible to get started in your own practice," Aghababian said.

But if you have the capital, Kelly, the co-owner at Grove Medical Associates, believes the private practice model can still work.

Kelly rejected the idea that larger health care organizations are more cost-efficient than small practices. The vice president of the Central Massachusetts Independent Physicians Association (CMIPA), Kelly estimated just three cents of every dollar spent on health care is spent on primary care.

"My problem with that is the most inefficient delivery of healthcare is through a large institution," Kelly said.

Alignment Mandatory?

Still, Kelly said private practices will have to align with others in some way moving forward, in order to meet the cost-savings requirements outlined by health care reform to win contracts from health insurance companies. Through affiliation with the CMIPA, Kelly and other members are able to stay afloat, creating strength in numbers required to obtain contracts from payers.

Kelly said doctors also have to be willing to do the footwork to keep up with health care regulations — no small task in a field that's undergoing massive change.

"If you're doing a good job, you can survive in private practice," Kelly said.

Gail Sillman, executive director of the CMIPA, added to Kelly's assertion that the private practice can survive with the right ingredients. One thing they have going for them are relatively lean operating budgets, making them attractive to insurance companies offering lower-cost products, Sillman said. And, the CMIPA has implemented an electronic records system for its members as required by health care reform, which she said has reduced operating costs for many physicians.

Still, Sillman said the state and federal governments have implemented reforms that seem to conspire against the small practice of the days of old, and the trend toward fewer, large medical providers will continue.

"They're almost forcing consolidation," Sillman said.


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