The Future of the Small Practice
It seems that in healthcare (as in almost all else) the big keep getting bigger and the small keep getting smaller. So what is the fate of the solo practitioner? And what of the small, independent medical clinic?
It is a fact that smaller practices are not as common as they used to be. The trend is downward: in 1980, 40% of all practices were solo practitioners. Today? 17%. And although four in ten physicians today practice in independent clinics (with five or less docs), that number has diminished over the last couple of decades, as well.
There seem to be several factors militating against the smaller clinics.
The workforce: most young physicians are joining hospitals and large integrated care entities. This may be because most independent practices require participating physicians to assume a financial risk, whereas larger operations usually offer employees a guaranteed salary. A regular, predictable paycheck is attractive to recently graduated young physicians with significant educational debt that must be serviced. Fueling the trend for younger doctors to eschew smaller operations are hospitals and large multispecialty practices intent on buying practices and hiring young doctors to shore up their market positions.
The work load: many physicians flee smaller practices to escape the administrative burdens associated with running a clinic. The fiscal, emotional and temporal burdens of operating any small business can take their toll, and this is especially true in health care. In addition to business management responsibilities and the ever-increasing government mandates regarding documentation, outcomes and reimbursement, care givers at smaller practices may also be responsible for taking calls at night or going to emergency rooms for admissions. There is often more pressure on physicians in smaller practices to be present for patients, as well: there isn’t always someone to step in to see patients when small-clinic practitioners are sick or want to go on vacation.
The competition: large-scale operations seem to simplify care coordination and have the staff and resources to ease many of the worries found in smaller clinics. Many providers are lured away from small practices with the promise of a 9 to 5 workday and a much smaller personal stake in the financial success of the enterprise. Larger groups can also leverage economies of scale which endows them with greater purchasing power and with more clout when negotiating with payers.
The market: Market dynamics also present unique challenges to smaller practices. “Brand loyalty” is seriously eroded in a marketplace where your employer chooses your insurance (and therefore your doctor). Increased specialization narrows patient bases and oftentimes rewards larger, multispecialty practices that offer several solutions in one location. Some larger entities even resort to price wars to force smaller competitors from the market.
So, are small and solo practices doomed?
No. Small clinics will probably always be the norm in rural areas, and many are even thriving in metropolitan areas. There have been several studies (e.g., Lawrence Casalino et al., funded by The Commonwealth Fund) that indicate patients of physicians in small and solo practices have some of the lowest rates of preventable readmissions. Many patients prefer to go to a physician with whom they have a personal relationship, perhaps because they feel the physician has more of a personal stake in the patients’ health outcomes.
And there are movements afoot to provide small practices with relief from burdensome government programs.
CMS is actively investigating ways to nurture independent practices. For example, proposed revisions to MACRA 2018 would increase the participation exemption threshold for MIPS from $30,000 / year in Medicaid reimbursements to $90,000 / year in reimbursements, thereby relieving most small practices from having to participate at all. They have also tentatively set aside $100 million for small practice technical support. And the Medicare Payment Advisory Commission (MedPAC) continues to actively campaign for the repeal of MACRA. But providers can also ‘take the bull by the horns’ and mitigate some of the pressures. For example:
Explore the advantages of independent physician networks and associations that enable the sharing of resources
Investigate alternatives to insurance-driven reimbursement
Use third-party entities to provide technical support for HIPAA compliance, HITECH adherence and office management.
Optimize the use of health information technology so that it reduces (rather than increases) the burdens on small practices.
CaduRx is excited to work with providers to help them optimize their operations. Whether just using our electronic health record or entire suite of products and services, our aim is to support you in your profession.