These are tough times for physicians – especially for those trying to run an independent practice.
Recent research suggests that low compensation levels are driving several trends that could negatively affect practice economics.
The Medical Group Management Association’s new Physician Compensation and Production Survey, based on 2006 data, found that compensation for both primary and specialty care physicians fails to keep pace with inflation. Furthermore, physician production is outpacing compensation.
The survey accounts for all sources of physician compensation, including grants, private insurers and Medicare.
Medicare payments in 2006 were almost exactly the same as in 1998, said William Jessee, MD, president and chief executive of MGMA.
“A lot of the private payers benchmark their rates on the Medicare rates,” he said. “For a number of years, physicians were able to increase the volume of services, but you can only run so fast.”
As medical practice costs increase, many independent practices are left to cut clinical staff while retaining administrative staff, said Jessee. “A lot of the administrative staff spend hours trying to get paid for the services provided despite slow claims, denied claims – one of the most visible trends is that more practices are going to hospitals and saying, ‘Buy my business, please.’”
This trend of doctors becoming employers of larger, integrated health systems could have positive results, said Jeffrey Bauer, a health futurist, medical economist and partner in management consulting for ACS Healthcare Solutions.
“One of the biggest dysfunctions in our healthcare delivery system is the fact that physicians and hospitals are not aligned and they’re competing,” said Bauer. “I think it’s great progress if they’re driven out of their mom-and-pop practices and into integrated health systems.”
Unfortunately, most doctors aren’t moving into large, multi-specialty integrated health systems, but are instead moving into mid-sized single-specialty practices, the Center for Studying Health System Change (HSC) found in a recent report.
Joy Grossman, senior health researcher for HSC, said it’s often difficult for small practices to invest in pay-for-performance and healthcare information technology – the two most popular avenues for increasing care quality and efficiency.
“In order to make those changes, most people believe physicians need to be organized into larger, multi-specialty practices,” she said. “We’ve seen this trend of them moving into midsize single-specialty practices.”
HSC’s survey didn’t look into the reasons that physicians cite for moving into mid-sized single-specialty practices, but it’s clear that they’re ditching their solo and two-physician practices due to financial pressures and lifestyle changes.
Grossman said it will most likely be aligned incentives, rather than dissatisfaction with practice management, that draws physicians into the larger multi-specialty groups.