Are Independent Physician Practices Doomed?

December 08, 2016

The healthcare industry is changing at a whirlwind pace making many physicians anxious about the present and uncertain about the future. In the last year alone physicians have had to address a series of simultaneously occurring events which one can only describe as tumultuous:

  • Expansion of health insurance to include 20 million people through the Affordable Care Act
  • Passage of MACRA, completely revamping how Medicare pays physicians
  • Implementation of ICD-10, raising the number of disease classification codes from 14,000 to 68,000
  • The “corporatization” of healthcare, including over $400 billion in merger activity in 2015 and 100 hospital/health system consolidations (1)

It’s no wonder that more and more physicians are throwing up their hands in frustration and are considering leaving private practice for hospital employment.

Physician practice acquisition mania is in full throttle. Consider these trends highlighted in a study by the Physicians Advocacy Institute:

July 2012 July 2015 Three Year Change
# of Hospital-Employed Physicians 95,000 141,000 + 46,000
% of Hospital-Employed Physicians 26% 38% + 49%
# of Hospital-Owned Physician Practices 36,000 67,000 + 31,000
% of Hospital-Owned Physician Practices 14% (1 in 7 practices) 26% (1 in 4 practices) + 86%

Looking at these numbers one could easily build the case that independent physician practices are on the path to extinction and that employment may be the road to improved satisfaction and survival.

Employment certainly provides benefits such as reduced involvement in the business aspects of running a practice, guaranteed income, steady cash flow, access to capital and technology and more regular hours. But employment isn’t without its drawbacks. Medscape’s “Employed Doctors Report 2016 Who’s Happier- Employed or Self-Employed Doctors?” surveyed 5,000 employed physicians and found that the self-employed were happier than their employed counterparts. In fact 71% of self-employed physicians who were previously employed reported that their satisfaction improved when they switched their job situation. And, across all types of medicine, self-employed physicians earned more than employed physicians and spent less time on paperwork and administration. Employed physicians cited the downside of being an employee include limited influence in decision making, less control over their work and schedule, too many rules and less autonomy. (3) (4)

Whether private practice or hospital employment is right for you depends on a number of factors. I believe that physicians generally would like to remain independent rather than becoming an employee of a corporate entity. But to succeed in private practice they need help navigating all of the changes and administrative demands that they’re faced with. That’s where an Independent Practice Association (IPA) affiliation might be an option worth considering. An IPA can eliminate the isolation, administrative burdens and risks associated with private practice while also providing a strategic “road map” designed to keep private practice relevant in the marketplace.

Times are definitely tumultuous. Trying to navigate them on your own is a daunting task. Employment is certainly an option but it’s not your only option. Private practice and success do not need to be mutually exclusive. An IPA affiliation can help you gain patients, leverage and support while retaining your autonomy.

Coming Next: How IPAs Can Help Private Practices Survive And Thrive

Scott F. Kronlund, MD, MS
President & Chief Medical Officer​
Northwest Physicians Network

  1. The Physician’s Foundation, “2016 Survey of America’s Physicians: Preactice Patterns and Perspectives”, September, 2016
  2. Physician Advocacy Institute,” Physician Practice Acquisition Study”, September, 2016
  3. Medscape’, “Employed Doctors Report 2016 Who’s Happier- Employed or Self-Employed Doctors?”, June, 2016
  4. Medscape,”Physician Compensation Report 2016”, April, 2016

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