Why physician practices are poor business models

This economist hits the nail on the head: “Most businesses are based on a scaleable model of sales. However the product of a doctors office can only be created by the doctor and delivered by the doctor. In essence, it is a one employee enterprise and everyone else in the office is ancillary staff. In fact, it could be argued that the doctor actually works for the employees and not the other way around. He has to see patients and do surgeries to pay his staff’s salaries. Thus the incentive of the doctor is to actually hire underqualified staff to pay lower salaries and cut costs.”

Not only are physicians poor at business to begin with, they are saddled with a DOA business model.

This is why the private practice model of medicine is dying. More practices are being bought by hospitals where the physicians are salaried. This relieves the burden of administrative tasks and supervising ancillary staff, so that the doctor can focus on medicine.

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