Solo Practice Is Dying

Solo practice is dying in America. As one of the remaining few solo practitioners, I’ve seen this coming for a long time. Today, according to a Merritt Hawkins survey, only 13 percent of all physicians are solo practitioners. Only 33 percent of all physicians remain in private practice. This is down from 62 percent in the year 2008.

What is driving this exodus from private practice, especially from solo practice? While changing career expectations from physicians and the increasing complexity of medicine have certainly contributed to this paradigm shift, the biggest driver of this change is the federal government – and ObamaCare.

Even before the passage of the Affordable Care Act, the federal government was changing the practice of medicine. As part of the American Recovery and Reinvestment Act of 2009, the Centers for Medicare and Medicaid Services (CMS) mandated that all medical providers participating in Medicare and Medicaid install electronic medical records (EMRs) by 2015. They provided incentives of $44,000 for Medicare and $65,000 for Medicaid for “successful compliance,” but also threatened penalties of deducted payments for failure to comply.

The rationale for these changes was to improve efficiency, lower costs, and decrease medical errors. But a 2014 study by the American College of Physicians found that Family Physicians spent 48 minutes more per day with EMRs, 90 % reported at least one data management function was slower, and 64 % reported note-taking took longer. One third reported it took longer to find and review medical records data, and to review other clinicians’ notes.

Costs are certainly not reduced. I have yet to interview a single physician using EMRs who has found his costs have been lowered. Most report a decline in efficiency as measured by the number of patients seen per day. Most report that personnel costs have gone up, not down, since they need data entry clerks to input the medical records. Many report an increase in medical errors, too.

The cost of EMR implementation is staggering, in terms of time and money, and most solo practitioners cannot afford them. This is driving many to retire, if possible, or join a group of physicians or a hospital, if it is not.

The Impact of ObamaCare on Private Practice

ObamaCare adds to this difficult situation by incentivizing doctors and hospitals to form cooperative relationships, ostensibly to lower healthcare costs. Yet there is ample evidence these partnerships may actually increase costs.

One of the provisions of the ACA that was supposed to lower costs was the formation of Accountable Care Organizations (ACOs). These cooperative partnerships between hospitals and doctors were supposed to incentivize these providers to lower costs by paying them bonuses if they kept spending below established benchmarks. However, recent reports in The Wall Street Journal indicate these ACO experiments have been largely a bust.

The Medicare “Pioneer” ACO project originally featured 32 experienced health systems hand-selected by HHS because they had already made progress toward the ACO model. Thirteen – or one-third of the program – have since dropped out as they spent more than the old status quo. In year one, spending increased at 14 sites and only 13 of the 32 qualified for a bonus. In year two, spending increased at six of the remaining 23 and 11 received a bonus.

After netting out the bonuses and penalties, the Pioneer ACOs saved taxpayers a grand total of $17.89 million in 2012 and $43.36 million in 2013. All in, per capita spending was a mere 0.45% lower compared to ordinary fee-for-service Medicare. Yet the upfront start-up investments for the pioneers (in administration, compliance and information technology) ran to $64 million; so at best the program is a wash.

The editorial board of The Wall Street Journal says, “ACOs are failing because HHS’s regulations are a classic case of counterproductive and arbitrary central planning: The government is paying hospital groups to generate slightly lower bills. As the quitters may have discovered, it is more remunerative to stay with the old system, with higher hospital bills but no bonuses.”

Scott Gottlieb, a physician and healthcare analyst at The American Enterprise Institute, writes of this situation in The Wall Street Journal. He says ObamaCare encourages doctors to join hospitals in order to better bear financial risk by partnering with better-capitalized institutions. This trend protects doctors from the large capital expenditures of EMRs, but also reduces competition much needed to maintain a market driven healthcare system.

Local competition between providers, who vie to contract with health plans, is largely eliminated by these consolidated health systems. Since all health care is local, the lack of completion will soon make it much harder to implement a market-based alternative to ObamaCare. The resulting medial monopolies will make more regulation the most obvious solution to the inevitable cost and quality problems.”

Gottlieb offers solutions:

  • First – Congress should remove the pervasive biases in ObamaCare that favor hospital ownership of medical practices.
  • Second – Waivers of certain anti-kickback provisions (that prevent doctors from forming needed business partnerships) are needed to “level the playing field” with hospitals.
  • Third – Individual, provider-ownedmedical practices also deserve equal footing when it comes to reimbursement. Right now, Medicare is paying much more for many procedures when performed in a hospital outpatient clinic rather than an independently owned medical office.

o   Heart scans ($749 in hospital v. $503 in private office)

o   Colonoscopies ($876 v. $402)

o   15 minute doctor visit ($124 v. $70)

 

Why would ObamaCare pay more for the same services in a hospital? They prefer hospital ownership of doctors and are willing to accept this relatively small cost. By eliminating private practice they are eliminating competition. Although competition drives down prices in a free market economy, it also encourages independence. That’s what ObamaCare officials want to eliminate.

When private practice is eliminated, the government will be one big step closer to single-payer or socialized medicine. That’s been the game plan from the beginning. Republicans need to replace ObamaCare with a better alternative that preserves private practice and the quality of healthcare Americans have come to enjoy in the past. The future of private practice, and American healthcare, is at stake.

 

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