How Can Private Practice Survive Hospital Onslaught?

Kenneth Terry, MA


June 21, 2012

In This Article

Turning the Tide Around

For physicians in hospital-dominated markets, Kennedy and MGMA consultant Kenneth Hertz offer a few survival tips.

Referrals. To create economies of scale and preserve referrals, Kennedy suggests that small practices merge into single-specialty groups of 8 or 10 doctors. "That makes it harder for the hospital to hire those physicians," he observes. The lower availability of doctors in the specialty, he adds, makes the hospital question whether it's worthwhile integrating that specialty into its employed group.

In another scenario, the hospital group might refer only to certain independent specialists. If you're one of those favored physicians, Hertz says, don't rest on your laurels. If you get sloppy in how you handle referring doctors, you may suddenly find yourself out in the cold.

Marketing. If your practice depends on referrals, marketing to the public won't help you very much. In general, physician practices cannot compete with hospitals in marketing their services, notes Hertz. Nevertheless, he points out, you can make yourself stand out by filling a niche where the hospital doesn't have a service line. Also, you can beat the hospital group with a superior location or extended hours.

In addition, Hertz says, independent physicians can attract attention by courting the media. "Make yourself available to the media for public relations. There are breaking healthcare stories, and you can be seen as the expert."

Ancillaries. Some groups with profitable ancillary services have been able to withstand the hospitals' siren call, Kennedy points out. But if your practice doesn't already own ancillaries, it's too late to add them. "Most of the easy money in ancillaries has been lost to government regulation," he says. "There's still money to be made in imaging, but everyone knows that, so most markets have way too many magnets and way too many CT scanners."

The same is true for the lower-producing ancillaries of primary care practices, he notes. For example, dual-energy x-ray absorptiometry scanners used to be a moneymaker, "but a couple of years later, they weren't, because the reimbursement got cut."

Health information technology (IT): "We've seen the push for EHRs and meaningful use incentives be the straw that breaks the back of independent practice," says Kennedy. In some markets, hospitals will subsidize the cost of EHRs in private practices as a way to align the physicians. But that's not true everywhere, and sometimes the hospital will require practices to adopt an EHR that they can't live with, he points out.


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