Who Will Save the Independent Physicians?
The Wall Street Journal is my favorite newspaper, but its Op-Ed page is not the place to turn to for sober, non-partisan analysis. So I was only a little bit surprised to read The Doctor’s Office as Union Shop, which blames the Affordable Care Act (ACA) for ushering in “a potentially radical factor in the transformation of health care –the doctor as union worker.” The author, Dr. David Leffell from Yale Medical School, asserts that the ACA’s reimbursement schemes are forcing doctors to abandon their practices, although he doesn’t get into specifics. But reading between the lines it’s clear that Leffell understands that the shift of physicians from independent practice to hospital employment pre-dates ObamaCare and has other powerful causes.
Actually, I am at least as concerned as Leffell about the rapid switch of physicians away from independent practice. I’m cited in InformationWeek’s 2013 crystal ball article as predicting that doctors will continue to abandon independent practices. However, I added a hopeful caveat that I’ll explore further in this post:
“On the other hand we will see more independent physician practices adopt technologies that enable them to retain their autonomy, improve their financial performance, and serve patients better,” Williams said. “Staying independent will again feel like a viable option, and we may even see new physicians hanging up their own shingles again.”
I’ll admit that’s on the optimistic side, and its coming from someone who prefers to be a patient in a small practice rather than a large institutional one. But I truly believe that the small practice model can be viable. After all, other professionals with advanced training –including accountants, lawyers, and management consultants like me– have been able to leverage various tools to practice in smaller, more flexible settings than was possible a decade or two ago. These arrangements are rewarding to work in and better for clients (at least in my biased view). Granted, the dynamics of medicine are different, but many of the same lessons apply.
So, what needs to happen, and who can help?
First and foremost, physicians need to be able to get paid for their services in a timely fashion. For better or worse that still means dealing with third-party payment from health plans and the government. Athenahealth is the leader in the so-called “revenue cycle management” arena, offering a cloud-based infrastructure that ensures a steadier and more predictable cash flow than traditional billing services. Others, including electronic medical record vendors with integrated practice management systems like eClinicalWorks, help achieve similar results.
Another challenge beyond the timeliness and predictability of payments is the ability to get good rates for services provided. Independent physicians don’t have great negotiating leverage with payers, although with an overall shortage of physicians their situation isn’t as grim as it could be. One way to deal with the reimbursement challenge is to abandon independent practice and move over to a hospital-based system that has negotiated better rates. But IPAs (independent practice associations) can achieve much the same result if they’re savvy. Even better are the management service organizations like Women’s Health Connecticut, that put business people firmly in charge of the business aspects and let the doctors run the clinical aspects. Women’s Health takes matters a step further and operates its own malpractice insurance carrier, enabling it to take active steps to control the notoriously high malpractice premiums paid by OBs.
Health plans, employers and other buyers of health care also have a role to play by making sure that their contracting does not inadvertently erode the viability of the smaller practices.
Physicians can make the customer service and patient comfort aspects of their practices more inviting by taking a page from the dental industry, which is used to catering to self-pay patients and competing more on the service aspects. My dentist, Dr. Daniel Whiteman is a great example of a comfortable, modern practice with high-end equipment and customer care.
Smaller physician offices can also benefit from general service providers that figure out how to cater to their needs. For example, financial services companies have helped physicians offer ways for patients to finance self-pay procedures such as LASIK and cosmetic dentistry. But they could do more if they delved into the somewhat peculiar financial characteristics of physician practices and supported those needs with tailored product offerings and customer portals. Telecommunications firms also have the opportunity to segment out physicians and create packages just for them.
Even if the financial services and telecommunications packages are similar to what are offered to other professions, there is a real marketing opportunity for these firms to position themselves as supporters of small physicians practices, which are small businesses. For example, the Amex Small Business Saturday program is a terrific way to support small businesses and build goodwill among cardholders. Last year I went with a family member to a wonderful boutique wine merchant that I would never have patronized if it hadn’t been for the program. What is the equivalent for a physician’s office?
One of Leffell’s arguments is that standardization of clinical practice is coming, and can’t be enforced unless doctors are organized into huge groupings. That’s a fundamentally flawed argument in the age of tablets, smart phones and cloud-based information technology. There’s absolutely no reason that even a solo practice physician should have trouble adhering to clinical guidelines and best practices. These physicians should be able to access data on how other physicians like them are practicing in similar situations. There’s also no reason that clinical quality improvement has to lead to cookie-cutter medicine that doesn’t take into account the individual. If anything we should see unproductive variation reduced and an increase in personalized approaches. That’s what I expect from my physicians and it’s what I increasingly see. You don’t need a giant practice to access UpToDate or other clinical information and decision support tools.
As quality reporting evolves, these smaller physician practices should also be able to demonstrate how well they take care of patients. If they can show they’re doing a great job then I’m confident that in the long run they’ll be able to not just survive but to thrive as consumers increasingly take their business to those who can show they are the best, regardless of setting. In the meantime there’s plenty of opportunity for technology and business vendors to help these independent practices out and make a good return for their shareholders as they do so.
David E. Williams is President of the Health Business Group, strategy consultant in technology enabled health care services, pharma, biotech, and medical devices. Formerly with BCG and LEK. MBA (Harvard), BA (Wesleyan).
Williams has written the Health Business Blog every business day since 2005.