The Shocking Truth About The Future Of Physician Practices

By John Oncea, Editor

A study of physicians reveals profitability is down, EHRs are still a hot topic, and private practices are still around … for now

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CareCloud and QuantiaMD released the first Practice Profitability Index (PPI), a study aimed at tracking the operational and financial health of US physician practices. The results, based on a survey of 5,012 physicians during April, 2013, found:

• an overall downward trend in profitability
• reform efforts create the strongest operational headwinds for physicians
• physicians across the board are targeting operational changes to improve performance

HIT Consultant points out the report indicates 65% of physicians say declining reimbursements are the greatest threat to profitability, 59% spend at least one day per week on paperwork instead of treating patients, 48% say they lack the resources to accept any of the 30 million new patients from the ACA, and only 9% are very confident in their current processes for getting paid.

Becker’s Hospital Review takes a look at the more than 2,000 physicians who reported that their practices have specific plans aimed at operational improvements and writes that “41% reported that their practice will implement electronic health records, 28% reported that their practice will replace their existing EHR system, 18% reported that their practice will outsource billing/collections, and 16% reported that their practice will replace practice management systems.”

Of the 2,094 respondents who own their own practice, reports Healthcare Finance News, “only 11% are ‘actively’ looking to sell, 10% said they already have sold due to profit challenges, and nearly 60% said they are not looking to sell their practices at all.”

The study details the plight of private practices in a section titled “Rumors Of The Death Of Independent Practices: Exaggerated ... For Now,” writing, “In contrast to the conventional wisdom of industry pundits – and to the wishes of some hospitals, delivery networks and nascent ACOs – independent physician practices largely want to stay that way.” It goes on to characterize private practices as follows:

• Perhaps surprisingly, solo practitioners – who may experience the greatest operational uncertainty – are the least likely to want to sell out. In fact, desire to sell a practice increases as the number of providers grows to 50. Specifically, 65% of solo practitioners say they are not looking to sell their practices – only 6% are actively pursuing this outcome. By comparison, 64% of practices with 2-9 providers, 46% of 10-25 providers, and 42% of 26-49 providers do not wish to sell. Large practices with more than 50 providers are again very interested in going it alone, with 61% uninterested in selling.
• Among psychiatrists, a full 70% are not looking to sell their practices, and only 16% are considering it. Pediatricians are also less likely to want to sell their practices – 68% are not considering it. Cardiologists are more likely to entertain selling their practices. Fewer than half – 44% – say they are not looking to sell their practices. 19% have already sold due to profitability issues, with 14% actively seeking suitors.
• Physicians in Texas are the most independent-minded, followed by peers in Massachusetts and California. The percentage of physicians who reject selling out in these states stands at 71%, 66%, and 63%, respectively. Physicians in New York and Illinois are more likely than average to seek a buyout.

Despite the desire of solo practitioners to remain that way, “The number of independent physician practices in the United States is shrinking rapidly, and this trend is projected to continue. Over the next five to 10 years, private practice in its traditional form – where a single practitioner or a small number of practitioners work independently to provide patient care – will continue to evolve, and existing private practices will need to decide whether to remain independent,” – this according to Debbie Redd writing for Health Management Technology.

Redd, president and CEO at Capital Women’s Care, writes the emergence of electronic health records (EHRs) and the automation of business processes such as billing, claims submission, and denials management are forcing practices “to leverage technology to streamline the revenue cycle and enhance cash flow to remain competitive,” and to accomplish this “A practice needs to have computer programmers on staff, as well as people charged with keeping up with changing regulations and ensuring the practice remains compliant. Many private practices simply cannot afford to navigate this effort on their own.”

Redd goes on to write, “To help overcome these challenges, many practices are seeking partnerships with larger entities, such as hospitals or group practices. The amount of autonomy that a private practice can keep within these different models varies depending on the nature of the partnership.”

That solution, however, is not without its own set of problems. Brian Klepper of Health News Florida writes, “Several physicians have reached out recently to discuss attractive employment offers from health systems. They are invariably conflicted. They understand the trade-offs, that they’ll give up the autonomy they’ve become accustomed to in exchange for more money and fewer practice management headaches. On the down side, they’ll be accountable for generating significant revenues, sometimes independent of care appropriateness.”