Top 5 reasons why the physician practice is dying

Physician practices and recruiting experts appeared before Congress yesterday on whether health reform will accelerate the demise of the small practice, in favor of the employment models.

Mark Smith, president of physician recruiting firm Merritt Hawkins, pointed to statistics from this week's report, which noted hospitals will employ 75 percent of the nation's physicians by next year. Smith explained to the House Small Business Committee's Subcommittee on Investigations, Oversight and Regulations that "Virtually no one wants to be Marcus Welby anymore," The Business Journals reported. Smith attributed the decline of solo and small physician practice to the following five reasons:

1) Flat or declining reimbursement
2) More regulatory and administrative paperwork
3) Malpractice insurance costs
4) Health IT implementation
5) Health reform

For instance, Missouri Cardiovascular Specialists, a 17-person practice in Columbia, Mo., gave up independent practice to integrate with Boone Hospital Center a year ago.

"Continued cuts in Medicare reimbursement, combined with increasing overhead costs, increased regulation, unfunded mandates, a micromanaged payment system, and an uncertain, cloudy future are making it difficult for practices to remain viable," said Jerry Kennett, senior partner at Missouri Cardiovascular Specialists and chief medical officer at Boone Hospital.

Physicians are more likely to be hospital or medical group employees over practice owners these days, particularly true of residents coming out of training. While 60 percent of first-year residents said they prefer to be employed by a hospital, medical group, outpatient clinic or academic facility, a paltry 1 percent of them said they would prefer to be in an independent, solo practice, according to Smith.

The numbers aren't good news, especially for lawmakers who are concerned over the anticipated volume of patients that health reform is expected to bring.

Subcommittee Chairman Rep. Mike Coffman (R-Colo.) said in a statement, "As Washington considers implementation of the healthcare law and ways to improve our system, we must be cautious about increasing statutory and regulatory requirements, which can escalate the costs of a private practice."

Although Kennett noted that one hearing won't have a huge impact, he said he hopes it will persuade policy members to repeal the sustainable growth rate, which will cut nearly 30 percent of Medicare reimbursements in January, he said.

For more information:
- read the Business Journals article
- check out the testimony from Merritt Hawkins (.pdf)
- see the subcommittee hearing statement and other testimonies

Related Articles:
Physician employment could hit 75%, eclipsing private practice
32% of physicians desire hospital employment
Private practices must revisit recruitment strategy to stay alive