THE RECESSION HIT MANY PHYSICIAN PRACTICES hard in 2009, forcing docs to become creative in their approach to the delivery of care, practice ownership, and other administrative issues.
A solo medical practitioner is harder to find these days, as the number of hospital-owned physician practices has climbed steadily over the past four years. Data from the 2009 Medical Group Management Association’s annual physician compensation survey underscores this trend.
“The reason is pretty straightforward,” said MGMA president Bill Jessee. “The economic situation is so severe that a lot of physicians are throwing up their hands. They are giving up some of their professional autonomy rather than worrying if they can make payroll and their own income.”
According to Randy Bauman, author of the article “Is It Time To Sell?” in The Journal of Medical Practice Management, solo and small physician groups have lost the managed care battle.
“They have no leverage in negotiating payment rates, and Medicare operates under a perennial threat of double-digit rate cuts,” Bauman said.
Increases in physicians’ overall compensation in both primary and specialty care did not keep up with inflation in 2008, according to the MGMA’s “Physician Compensation and Production Survey: 2009 Report Based on 2008 Data.”
Oncology was among the specialties hit pretty hard in overall compensation versus inflation, due to the recent large increases in the cost of cancer medication.
“My profit margin on chemo drugs disappeared within the period of a year,” said James Stark, MD, of StarkOncology in Suffolk, Va., part of the Riverside Medical Group. “Medicare reimbursement is supposedly 6 percent over market value for chemo in the office. It wasn’t covering my costs.”
Recruitment was another sore spot in the 2009 physician sector, whether it was among hospitalists or in simply coaxing new medical students to embrace primary care as a career choice.
On average, it can cost a large healthcare organization $1.2 million per year for recruitment costs, according to Connie C. Long, a member of the Association of Staff Physician Recruiters and director of Physician Recruitment for Fargo, N.D.-based Innovis Health, which serves western Minnesota and eastern North Dakota.
Long said it can cost up to $20,000 to recruit one doctor, including relocation costs. Interviews alone can run $2,500-$5,000. Those costs are tough to bear in a recession.
“I don’t think anybody is having an easy time,” said Laura Screeney, who works in the Office of Physician Recruitment at Raymond W. Bliss Army Health Center in Fort Huachuca, Ariz. “Although people are doing more recruiting using online resources. It’s less expensive and streamlines the recruitment process.”
Physician consolidation also grew more common in urban areas in 2009.
According to a “Chicago Market Overview” by Nashville, Tenn.-based HealthLeaders-InterStudy, lower patient volumes, a higher percentage of uninsured patients and tighter access to capital were likely to force consolidation on physicians who were already dealing with stagnant reimbursement from insurers and increased costs for electronic medical records and malpractice insurance.
“While increased consolidation will provide Chicago physicians with additional resources and better leverage with insurers, it’s not all positive for the medical community, particularly for those physicians who value greater independence,” said Mark Cherry, analyst with HealthLeaders-InterStudy.