The healthcare system in the United States is changing. The 2018 AMA Physician Practice Benchmark Survey showed that, for the first time in U.S. history, fewer physicians owned their practices compared to those working for larger organizations or hospitals. This trend raises important questions about why physicians are leaving private practice in favor of employment. Key reasons include rising costs, increased complexity in practice management, and a variety of regulatory challenges.
A Declining Rate of Physician-Owned Practices
The AMA survey indicates that the share of physicians who were practice owners has dropped to 45.9%, while those employed make up 47.4%. This marks a decline of more than 7 percentage points in ownership since 2012. Additionally, the number of solo practitioners fell from 18.4% to 14.8%. Challenges such as lower reimbursements and rising operational costs are pushing many physicians to seek employment with hospitals or larger healthcare organizations.
Challenges in Private Practice
Several factors make it harder to maintain a private practice:
- Financial Pressures: Many physicians struggle with falling reimbursements, making it difficult to keep their practices afloat. Rising real estate prices and operational costs increase the financial burden on independent practices. According to Vicrum Puri, CEO of Lina, “Many practitioners who would prefer to operate independently feel it is just not an option.”
- Increased Administrative Burdens: Running a practice has become more complex due to growing regulatory requirements. Detailed billing, compliance measures, and increased administrative tasks take up significant time and resources. Lou Goodman, Ph.D., president of the Physicians Foundation, noted that this complexity drives many practitioners towards employment, where administrative tasks can be reduced.
- Limited Reimbursement: Recent trends in reimbursements discourage many from staying in private practice. Between 2012 and 2018, reimbursements declined, increasing competition among practices. Many physicians choose employment since hospitals often cover operational costs, allowing healthcare providers to concentrate on patient care instead of financial management.
- Shift Towards Large Practices: From 2012 to 2018, the percentage of physicians working in larger organizations rose from 12.2% to 14.7%. This shift suggests that many physicians prefer larger practices where administrative and technological support is stronger.
- Impact on Patient Access: The decrease in small and solo practices affects more than just the practitioners. Fewer small practices can lead to challenges in access to care, as they often offer more personalized services and a local presence. Louis McIntyre, MD, chief of orthopedics at Westchester Orthopedic Associates, cautioned that the disappearance of private practices could hurt patient access, local jobs, and tax revenues.
Regulatory Environment
Keeping up with the rules and regulations governing healthcare is becoming increasingly difficult. These regulatory demands can overwhelm independent practitioners:
- Compliance Requirements: Healthcare regulations are constantly changing, and compliance can be burdensome. New federal guidelines concerning billing, insurance, and quality metrics complicate matters, often requiring costly expert assistance. Many small practices lack the resources to handle these challenges without incurring significant costs.
- Quality Measurement Metrics: Regulatory agencies require adherence to specific quality metrics, prompting practitioners to continuously adjust their practices to meet these demands. As practices grapple with changing metrics, the focus on compliance can detract from patient care, leading to dissatisfaction among physicians who entered medicine to work closely with patients.
- Changing Payment Models: The shift from fee-for-service to value-based care models alters the healthcare payment landscape. Though this might improve care quality and efficiency in the long run, it complicates the sustainability of private practices. Adopting electronic health records (EHRs) to track outcomes requires technological investment that many practitioners find daunting, pushing them towards employment.
Opportunities for Innovation Amidst Challenges
Even with these difficulties, opportunities for innovation could revitalize private practices. Recognizing these opportunities is important for practice administrators, owners, and IT managers:
- Support from Organizations: Medical associations like the American Medical Association are working to strengthen private practices through initiatives. Proposals aim to improve reimbursement systems and simplify administrative processes. Understanding the barriers to small practices can help in creating frameworks that allow them to be competitive.
- Collaborative Models: Ideas like medical coworking offer alternatives for physicians wanting to maintain independence while gaining collaborative benefits. Shared spaces encourage resource pooling—such as equipment and staff—thus lowering operational costs and improving patient care through collective learning.
- Technology as a Force for Change: Collaborations with technology companies like Simbo AI can significantly improve operational efficiency.
Role of AI and Workflow Automation in Healthcare
Integrating artificial intelligence (AI) in healthcare can help address factors driving physicians toward employment. With the increasing complexity of practice management, efficient solutions are needed. Simbo AI is leading this change by providing phone automation and answering services tailored for healthcare.
- Cost Reduction: Automating routine tasks like appointment scheduling and follow-up calls can lower operational costs. This is especially beneficial for smaller practices that cannot afford to hire extensive administrative staff.
- Improved Patient Experience: AI systems can streamline patient interactions by ensuring prompt and accurate responses, reducing wait times and enhancing overall satisfaction. Automated responders gather information before transitioning to a live assistant, enabling better-prepared staff interactions.
- Data Management: AI systems facilitate more efficient data management, ensuring patient information is organized and accessible. This reduces time spent on administrative tasks, allowing healthcare professionals to focus on patient care.
- Analytics for Better Decision Making: Workflow automation with analytics helps practices track patient trends and analyze satisfaction rates, allowing for better resource management and informed decisions.
- Increased Flexibility for Practices: Adopting AI solutions can improve work-life balance for physicians by lessening the administrative load. This enables more time investment in patient care and boosts job satisfaction.
Future Trends Impacting Physician Employment
As organizations review their practice arrangements, certain future trends will likely affect the shift from private practice to employment:
- Continued Consolidation: Economic pressures may lead more solo and small practices to partner with larger healthcare systems, potentially resulting in a more uniform approach to care but possibly diminishing local care provided by small practices.
- Emergence of Value-Based Care Models: The healthcare sector’s move towards value-based care will persist, with success measured by patient outcomes rather than individual services. This transition necessitates stronger data collection and management, requiring further investment, favoring larger practices with more resources.
- Emphasis on Telehealth and Remote Care: Telehealth will continue to be important post-pandemic. As patients become accustomed to remote care, practices must adapt by investing in technology for these services. Embracing telemedicine can attract new patients and retain current ones.
- Patient Demand for Convenience: Increasing consumer expectations will push practices to improve processes for a better patient experience. Technology can help automate routine tasks, making practices more appealing and accessible.
- Insurance and Value-Based Contracting: Insurers are increasingly exploring bundled pricing and innovative payment structures, requiring practices to adopt new technologies to effectively track outcomes.
In conclusion, the decline in physician-owned practices results from rising costs, complex practice management, and regulatory pressures. However, there are opportunities, particularly in utilizing technology to tackle these challenges. By implementing AI and workflow automation solutions, practices can improve efficiency and refocus on providing quality patient care. This could lead to a more sustainable model that preserves the benefits independent practices offer while providing necessary support in a complicated healthcare environment.
