Doctors leave private practice in droves
The sound of doctors running from their private practices has become steady. Over the course of 2011, news reports consistently noted the exodus. Executive vice president of the Maine Medical Association, Gordon Smith, told Healthcare Finance News that the rush of doctors abandoning private practice “was epidemic.”
No hard and fast numbers are available for tracking the migration of doctors from private practice to large groups or hospital settings, but doctors, state medical associations and others within the medical community acknowledge that it’s happening and it’s a big deal.
Jennifer Hanscom, associate executive director/chief operating officer of the Washington State Medical Association, said about 40 percent of the WSMA's members are in groups of 100 or more, and in its March report, the organization cited that at least five large strategic alliances between hospital systems (or hospitals) and physician groups had formed in the state in the last year.
All the large cardiology firms in the Columbus, Ohio, area have been purchased by hospitals, said Mark Jarvis, senior director of practice economics at the Ohio State Medical Association. "We have seen more of a migration of doctors in small practices going into an employment setting with, typically, a large institution. We also probably have fewer start-up practices than we normally would," he said.
"Physicians are getting out for a number of reasons: For lifestyle issues; because of the need for access to capital; for administrative help, billing, coding. Health information technology is a big part of the (Affordable Care Act)," said Walker Ray, a retired physician and vice president of the Boston-based Physicians Foundation, a physician advocacy group.
Poor reimbursement from insurance companies, but from Medicare in particular, has put a lot of pressure on doctors. So much so that some have reported needing to use their personal finances to keep their practices open.
David Greer, MD, who operates a small, solo family practice in Henrietta, Texas, had to use $250,000 of his personal funds to keep his practice operating. Additionally, he and his wife, who does the office’s bookkeeping, didn’t pay themselves salaries.
Lack of prompt payment from payers caused Deborah Fuller, an OB/GYN in Dallas, to take $40,000 out of her 401(k) so she could pay her staff. “It’s not that I’m not busy,” she said. “I am busy. But I am making less and less money.”
Even though it looks bad, said Jarvis, private practice is not dead. “We are heading into very changing times,” he said. “I think that opens up a lot of opportunity, maybe on both sides, because I think we can kind of step away from private practice versus employed and say … ‘What's the highest quality, cheapest and most satisfying way of taking care of the patients?’ Let's figure that out first and then decide what’s the best business model.”
