Can Private Practice Physicians Survive the Employment Tsunami? Should They Try?

Thursday, September 29, 2016 | Larry Sobal

 

In the past few years, hospitals have gone on a physician feeding frenzy, with the number of practices owned by hospitals and health systems rising 86% from 2012 to 2015, according to a study by the Physician Advocacy Institute. This means that nearly 40% of the nation's physicians, or about 140,000, are now hospital-employed. It’s clearly a notable trend and begs the questions: Is health care better off with employed physicians? Should remaining private practice physicians resist the employment trend or follow suit to become employees?

The movement among physicians to seek employment is driven by (among other things) the thought it will be a shelter from the onslaught of coming regulations, reimbursement changes and administrative burdens—protecting valuable time spent with patients.

Generalizing about the pros and cons of employed physician practices, or any practice type, is difficult because of the variety of reasons why physicians do, or don’t, embrace employment versus private practice. For example, a 55-year-old employed physician who recently sold his practice to a hospital (yet still works in the same office with the same staff) might have a vastly different perspective and rationale than a 35-year-old employed physician who has worked for a large health system since day one after residency.

Some recent studies have attempted to look at different aspects of employment versus private practice, and those results are interesting. Let’s examine them.

A study in the September 20^th issue of Annals of Internal Medicine examined the changes in hospital–physician affiliations in U.S. hospitals and their effect on quality of care. This retrospective cohort study of U.S. acute care hospitals between 2003 and 2012 examined risk-adjusted hospital-level mortality rates, 30-day readmission rates, length of stay, and patient satisfaction scores for common medical conditions. The study examined performance up to two years after evidence of switching to an employment model; however, up to two years after conversion, no association was found between switching to an employment model and improvement in any of four primary composite quality metrics. The study concluded that physician employment alone probably is not a sufficient tool for improving hospital care.

Another recent study by The Physicians Foundation surveyed 17,000 physicians and examined professional morale, practice patterns, career plans and perspectives of today’s physicians. One of the survey’s findings was that employed physician respondents see 19% fewer patients than private practice physicians. This data correlates with MedAxiom’s own annual survey of its cardiology program members, which shows that our private practice members have a 14% larger patient panel and 31% greater total E&M visits (inpatient and outpatient, excluding 99211) per physician, compared to employed physicians (2015 year data).

Is health care better off and should private physicians give in to the trends and seek employment? I think the answers depend on various factors.

Another interesting output from this study was that 44% of respondents, or 7,480 physicians, said they don't believe hospital employment is a positive trend.

A third study, conducted by MedScape, surveyed almost 5,000 physicians to determine if they’d feel better off as an employee, a partner, or solo practitioner. The June report titled, “Who’s Happier—Employed or Self-Employed Doctors,” found that more self-employed physicians than employed physicians (63% versus 55%) are satisfied with their work; however, satisfaction rates for both groups have plummeted since 2014, especially for employed physicians. The rate for self-employed physicians fell from 74% to 63%, while the rate for employed physicians fell from 73% to 55%.

Getting back to my initial questions: Is health care better off and should private practice physicians give in to the trends and seek employment? I think the answers depend on various factors. 

Many employed doctors appreciate the advantages of not having to run a business and being able to reduce risk in an increasingly uncertain environment, but they’re not naïve. They acknowledge that they’re trading autonomy for perceived better security, and in most cases, they’re cognizant that their income may be less over time. I can attest that there are wide variations between the ability of hospitals to engage and satisfy physicians with a strategy deeply rooted in the Quadruple Aim.

On the other hand, self-employed physicians say they are happy that they can run their own show and don't have to play politics or follow hospital policies they disagree with. Payment policies from governmental agencies and health insurance companies heavily favor large health systems, however, and make it challenging for independent physician practices—especially smaller ones—to survive. At the same time, health care, especially Medicare, often costs less when patients receive treatment in a private physician's office. Medicare payments for some common services can be up to three times higher when performed in a hospital outpatient department instead of a physician-owned office.

For now, to some degree, physicians and patients still have choices. I think health care is better off if it stays that way—and the recent studies suggest it would be a mistake if private practice is erased from the health care landscape.

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Larry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. As part of his current role, Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.

 

 

 

 

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