Bigger isn’t always better for physician practices

Doctor putting money in pocket
When it comes to finances, expanding a physician practice isn't so easy.

Doctors who are thinking about growing a larger practice should proceed slowly.

Practices must be sure expansion makes financial sense before jumping in, says John B. Pinto, president of J. Pinto & Associates, an ophthalmology practice management and consulting firm. For instance, while it sounds counterintuitive, larger-scaled ophthalmic practices can translate into lower paychecks for eye surgeons, he writes in Ocular Surgery News.

Overall, one in four physician practices is now hospital-owned, with 38% of U.S. physicians now employed by hospitals and health systems.

One study predicts only one in three practices will remain independent. Hospital ownership of physician practices has increased in both urban and rural areas of the country, but those in rural areas are being acquired at a dramatic rate.

Although independent medical practices are on the decline, solo and small group private practices still make up the vast majority of eye clinics in the country, Pinto says.

If you are thinking of expanding your medical practice, first take a look at your market and whether there are enough patients to support growing your office, Pinto says. Second, he says, consider the capital investment you will need to make to open another clinic. With the costs of equipment, clerks to process insurance claims, regulatory hurdles and the need for expensive staff, it can be harder to generate a profit from a second clinic, Pinto says.

Related: Independent physician practice survival: A doctor's story [Q&A]

Another tactic: Consider subleasing existing office space to another practitioner, such as a therapist, or bringing in someone to offer other services, such as cosmetic procedures, as Arkansas doctor Mark Miller, M.D., did to preserve his autonomy.

You don't have to be part of a larger group if you see patients covered by Medicare, those who pay cash or those covered by regular insurance, Miller said in an interview with FierceHealthcare last year.

"But I think the landscape is changing, that eventually you are going to have to have associations with larger groups to be able to report quality data in order to be able see those patients," he said.