Health Reform Doesn't Mean the End of Independent Medical Practices

There seems to be much public and private hysteria these days over the Affordable Care Act (ACA), or what many call "Obamacare." The rush for implementation of the health insurance exchanges has made real the intended changes to the healthcare system both locally and nationally. In the midst of all this uncertainty, I'm reminded of the British philosophy of, "Keep calm and carry on."

While a good message, I do understand why physicians are concerned. Physicians' earnings have been stagnant over the past several years, despite so-called bonuses for primary care and EHR implementation. Worse has been the uncertainty over Medicare -Will it or won't it get slashed? Because the work keeps getting harder, patients' needs are increasing, and the risks of operating an independent business grow more intense, many physicians feel driven to seek out "protection" by accepting employment with their local hospitals. After all, aren't the hospitals with their layers of administration better prepared for the changes this national "mandate" has created?

Not so fast say some practice management experts. One of the odd consequences of the political shift which accompanied the reform law is a focus on the way hospital systems are reimbursed. Many hospitals are not only seeing reductions in Medicare revenue but are also seeing state-based initiatives in the form of direct taxes on services with the thought that greater reimbursement of uncompensated care will shore up their bottom lines.

If anything, hospital administrators are looking more and more critically at physician employee compensation with an eye toward reducing their outpatient costs and increasing physician productivity. The message is that the fat package offered at the outset to physicians who "sell" to the institution is likely to be reduced significantly when renewal time arrives.

So it's time to take a closer look at decisions to sell or merge a medical practice. And this is where we get back to the infamous British philosophy.

Physicians who want to remain independent or who don't want to feel forced to sell their practices need to stop and really consider what is really happening in the market and what it means for their practice and patients.

Here are some important points to consider:

1. The ACA makes a point of assuring adequate primary-care reimbursement in two different ways. First is the broader definition of preventative services and the means by which providers are paid. Many of the newly insured patients registered with the exchanges will be facing large deductibles. However, the preventative services (those without copays) are paid first by these insurers so physicians will have fewer burdens chasing those patients for money initially.

2. A further mandate for those primary care physicians who provide Medicaid services is that their evaluation and management (E&M) services will now be paid at the federal Medicare level rather than the state, meaning more stability in revenue.

3. Those completing EHR conversion are beginning to see their checks. If you are with a large medical system or hospital, as a physician employee, you may not see those monies. If you have your own practice, you will.

4. Many physicians are beginning to recognize the value of alternative practice models such as full model or hybrid concierge programs. These programs give physicians who want to remain independent that option - plus, and this is important - they provide real choices and options for patients.

Most advisors I speak with have recognized for a long time that solvency in independent medical practice is dependent upon growth. Many primary-care practices have focused on reducing overhead and securing better fees. This "hunker down" mentality has resulted in stunted growth and reduced compensation. It's understandable why those practices would feel the need to consider selling. However, those practices that have embraced growth by looking at alternative practice models, or growing their practice by adding more physicians, extenders, and other specialized services, continue to see growth. This often involves financial investment in a practice by way of loans, but the added revenue often more than offsets the related expenses and improved income can be expected.

The message is - don't panic - and don't sell because you think there are no options. Independent primary-care practice should be able to flourish in this new environment giving physicians who want it the ability to own and maintain their destinies. In fact, the current environments make them more valuable as there are fewer independents physicians, making those services greater in demand.

The key is an eye toward growth and diversification of the medical delivery model. Implementing and/or expanding the physician extender model and incorporating an element of concierge care to facilitate compensation growth while ensuring the practice continues to meet the needs and preferences of all patients.

Has your practice been able to grow in this uncertain marketplace? What did you do?