Hospitals taking over private practices

A decade and a half ago, when I moved to Memphis, I proudly hung a sign outside an office I shared with another doctor. It had my name followed by an MD. I had started my own small business as a solo practitioner in medicine.

Over the years, the practice has grown. I now have several employees and my own office, with the names of several other doctors alongside mine on the sign.

But across Memphis and the nation, health care delivery systems are shifting, and doctors are radically changing how they practice medicine. In a matter of a few years, small and large medical practices are crumbling, lumping, merging, or rebuilding — depending on one’s perspective.

According to the Medical Group Management Association, in 2005 more than 65 percent of medical practices were physician-owned. Within three years that figure had dropped to 50 percent, and by now I suspect it is much lower.

So why all these changes, and ultimately what will it mean for patients?

For one, providing health care is becoming increasingly complex. Keeping up with innumerable regulations from private insurers and the government, transitioning to electronic medical records (EMR) and caring for a growing population of chronically ill patients make it nearly impossible for a full-time practicing doctor to manage patients and a practice. For example, last year, I invested $15,000 in an EMR only to scrap it because it did not connect efficiently with hospital computer records.

There is another more significant reason for the demise of physician-owned practices. Two years ago, a cardiologist educated me over a coffee at Starbucks about the way Medicare was changing its payments. For the technical component of an echocardiogram, a hospital-outpatient department receives $450, while a physician-owned cardiology office gets $180. “It doesn’t make sense. We are going to go out of business.” According to rumors, that’s what was happening with many large private practices that had invested heavily in technology and diagnostic equipment. With the cuts, the practices were not sustainable.

So why did Medicare cut payment to doctors for office procedures? Many studies have found that if doctors have medical equipment in their offices, they tend to overuse it. One study showed that doctors who have an MRI machine in their office tend to order three times more MRI scans per 1,000 office visits compared to other physicians. For a cardiologist it was 2.6 times more cardiac echoes, according to a 2009 Medicare Payment Advisory Commission’s report. Overuse of imaging studies is a major factor contributing to skyrocketing health care costs.

So I asked a few doctors why did Medicare not cut payments to the hospitals. Some say, “That is coming soon,” while others say, “The hospital lobby was stronger than the doctor lobby.”

Whatever the case, the new health care landscape gives hospitals greater control over local health care resources. But as one hospital CEO told me, “I really don’t want to take over doctor practices. Managing doctors is like herding cats. But there is no choice.”

True — doctors are independent, autocratic and often have trouble working together. “I didn’t go through medical school, residency and fellowship training to be told what to do by an administrator,” one doctor told me. But a more efficient system requires more hospital and doctor collaboration.

What many people might not realize is that these Medicare payment changes predate the health reform law that was passed last March. The new law does encourage the bundling of care where doctors and hospitals must join together in pilot projects to bring efficiency, but the law does not mandate these changes.

A simple but important lesson from all this is: One of the best ways to change health care is to change the way one pays for health care. Businesses and insurance companies are watching and preparing to do just this.

So, with my small practice and business, like many other doctors, I am at a crossroads — to join hospitals or to tough it out. Nothing is certain in today’s health care conundrum.

Manoj Jain is an infectious disease physician and contributor to the Washington Post.  He can be reached at his self-titled site, Dr. Manoj Jain.

Submit a guest post and be heard on social media’s leading physician voice.

View 25 Comments >

Most Popular