A Dinosaur With Her Shingle

Solo practitioners were hit hard with the move to Health Maintenance Organizations and Foundation models for healthcare delivery. The recession of 2009 didn’t help matters.

For the first time in U.S. history, doctors working as employees at large group practices outnumber solo practitioners. The proportion of physicians in solo and two-physician practices nationwide decreased from 40.7 percent in 1996–97 to 32.5 percent nearly a decade later, according to a study released by the Center for Studying Health System Change (Table I). Despite this trend, the economy and the reports that solo practitioners and small physician groups have lost the managed care battle, solo practice isn’t going extinct. The pendulum has swung, and my fellow solos are becoming more scarce, but don’t write our obituaries just yet.

Some basic truths reveal the etiology for the pendulum swing toward larger groups. Small groups have minimal to no leverage in negotiating payment rates. Small pediatric groups face daily the fact that approximately 50 percent of California’s children are covered by the ever-shrinking Medicaid or Healthy Families reimbursement. Small groups lament daily that the cost of overhead is often more than they are able to produce in revenue. We are all constantly under the threat of double-digit rate cuts from Medicare, which secondarily threatens private contracting rates. If all that weren’t enough, increases in physician’s overall compensation have not kept up with inflation.

So why haven’t all solos sold? Why haven’t we all been purchased by a Foundation? Why haven’t we all gone bankrupt? The answer: Regardless of the state of the pendulum at this moment in time, small business is and will always be the mainstay of the American economy and the core of entrepreneurship. The solo physician simply has to find the right niche at a time when the pendulum is so far from center.

The mere mention of an entrepreneur in medicine assaults the sensibilities of many. We don’t like to think of physicians as profit-driven. We prefer the Marcus Welby persona, i.e., a compassionate, highly intelligent, cross-specialty trained person with an amazing bedside manner who is at the ready until the patient’s personal and professional life is in perfect order.

If that isn’t enough, in a perfect world we would prefer to provide infinite care without the burden of overhead. Remember the Marcus Welby shows? No matter whom the patient was, how much care was needed, how long they stayed in the hospital, or how many times they stopped by the office, no one ever had to pay for care.

Despite our belief in the Marcus Welby physician, all medical groups (large and small, profit and nonprofit, public and private) are profit-driven. Employees, rent, benefit packages, information technology, and a myriad of other hidden costs loom over the practice of medicine. All modes of practice incentivize in some way through salary changes, bonuses, paid vacation time, awards, advancements in title, and upward mobility in the group. In my opinion, that makes all modes of practice a business. The belief that a salaried physician has no financial incentives is folly for those who criticize physicians for wanting to make a good living, and still others who prefer to ignore the profit-driven motives of their employers and that they, too, are incentivized by those employers.

Maneuvering the economic milieu is difficult for any business. My focus has been to move away from third-party payers and provide some uncovered services. Please note that I am not advocating all groups discontinue contracts. I am simply stating that as a solo physician, one might consider the option.

To date, I have dropped my contracts with Blue Shield, Blue Cross, and a select number of Independent Physician Associations. This was terrifying, to say the least, as I had always been told that this was simply practice suicide in the California. If I were allowed to share with you what Blue Cross and Blue Shield were paying me, you would applaud me for taking the leap of faith. I simply don’t have any negotiating power and can’t see enough patients a day to ethically and responsibly make up the difference.

In all honesty, I lost some patients. However, those who stayed are happy and work in a partnership with me to cover the overhead of the practice. In return, I provide 24-hour-a-day access to me via cell phone and email, state-of-the-art EMR, and same-day appointments for sick patients. Patients with mild to moderate diabetic ketoacidosis are brought in to the office for immediate management. My patients rarely go to the emergency room or get admitted to the hospital. Dehydrated patients will soon be given fluids in my office.

Lastly, I am going into patient homes to get a better understanding of the family dynamics. You would be amazed at the positive response to treatment plans with some basic psychosocial information. These practices unleash the emergency room for more pressing issues, decrease the number of admissions, decrease out-of-pocket expenses for emergency room visits and hospitalizations, decrease overall cost through decreased utilization, and limit patient exposure to resistant organisms. The only downside to this management style is that I find that I have to focus on maintaining enough hospitalized patients per year to maintain my privileges at Children’s Hospital. Imagine, a physician looking for ways to admit patients so that she doesn’t lose her privileges. Remember, you have to maintain privileges to stay eligible for the contracts with third-party payers. To put it mildly, the system has a wrinkle.

My plan, for now, is to continue negotiating contracts and only eliminate the ones that refuse to sit at the table. In all truth, many third-party payers and IPAs work diligently to keep solo practitioners around to provide the balance in their negotiating power with the larger groups. For those payers, I will always sit at the table. For the others, well, they can take their lead with me from the Blues of California. I am no longer terrified.

As a solo practitioner, people often ask me how the move toward a government-run healthcare system will affect me professionally. Speaking honestly, I tell them that it will help my practice. The more constraints placed, the more people are willing to seek a practice meeting their family’s needs. So remember, the solo practitioner may be less obvious these days, but in the land of choice and opportunity, we are unlikely to go extinct!

Table1: Physicians by Practice Setting, 1996–97 to 2004–05

1–2 Physician Practices

• 1996–97: 40.7%
• 1998–99: 37.4%
• 2000–01: 35.2%
• 2004–05: 32.5%*

3–5 Physician Practices

• 1996–97: 12.2%
• 1998–99: 9.6%
• 2000–01: 11.7%
• 2004–05: 9.8%*

6–50 Physician Practices

• 1996–97: 13.1%
• 1998–99: 14.2%
• 2000–01: 15.8%
• 2004–05: 17.6%*

>50 Physician Practices

• 1996–97: 2.9%
• 1998–99: 3.5%
• 2000–01: 2.7%
• 2004–05: 4.2%*

Medical School

• 1996–97: 7.3%
• 1998–99: 7.7%
• 2000–01: 8.4%
• 2004–05: 9.3%*

HMO

• 1996–97: 5.0%
• 1998–99: 4.6%
• 2000–01: 3.8%
• 2004–05: 4.5%

Hospital (1)

• 1996–97: 10.7%
• 1998–99: 12.6%
• 2000–01: 12.0%
• 2004–05: 12.0%

Other (2)

• 1996–97: 8.3%
• 1998–99: 10.5%
• 2000–01: 10.4%
• 2004–05: 10.1%*

*Change from 1996–97 is statistically significant at p<0.05.

1. Includes physicians employed in hospitals and office-based practices owned by hospitals. Forty percent of physicians in this category were in office-based practices in 2004–05.
2. ncludes physicians practicing in community health centers, freestanding clinics, and other settings, as well as independent contractors.

Source: HSC Community Tracking Study Physician Survey