Physician Practice Consolidation

By October 12, 2016Commentary

It has been apparent for the last decade that physicians are being driven out of smaller independent practices and increasingly work for hospitals, health plans and in large groups.  A study in Health Affairs confirms this trend.   (Health Affairs Article)   The study looks at practice size changes for doctors participating in Medicare (which is most physicians) over just a two and a half-year period, from June 2013 to December 2015, finding that just in this time frame the number of doctors practicing in a group of 9 or less dropped from 40% to 35%.  The number practicing in groups from about 25 to 100 doctors stayed stable, but the per cent in a practice of over 100 physicians rose from 30% to 35%.  It is hard to imagine that these very large practices, many of which have over 500 doctors, can be managed efficiently, even if they do have greater IT and other resources.  The movement from smaller to larger practices was especially pronounced among primary care physicians, who tend to be the lowest paid.  The data in the Health Affairs study is buttressed by a recent study conducted for MedPAC, which used a new data source.  Over a two-year period, this study found an increase in the number of doctors working for a hospital or health system, from 34% in 2012 to 39% in 2014 and a similar decrease in physicians practicing in smaller groups.

Regulatory and payer overload has made life miserable for many physicians.  The difficulty in coping with reduced reimbursement, information technology requirements and a constant barrage of “quality” measuring and pay for performance programs made most doctors feel like they needed the resources and financial security of a bigger organization.  For any worker in any occupation, when you have less control of your work processes and work environment, you are less satisfied and productive.  This is certainly true of physicians and multiple surveys reflect the loss of job satisfaction and high levels of frustration doctors feel as they move from independent practitioners to employees of larger health entities.  Hard to believe this doesn’t have some impact on the care patients receive.  And the consolidation of physician practices and employment of physicians by health systems probably has an impact on competitive dynamics and likely raises prices, at least for commercial health plans.  Not a trend that should be encouraged.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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