Is Private Practice Making a Comeback?
Last year, the percentage of physicians who own a stake in their practices fell below the halfway mark for the first time, according to an American Medical Association survey. In 2016, only 47.1% of physicians held equity in their practices. That's down from 2000, when 57% of all doctors had an equity stake in their practices.
The drivers behind the trend are myriad and all too familiar: consolidation and hospital acquisitions, increased administrative and regulatory burdens, a desire for greater work-life balance, and more predictable hours. Pervasive as those trends may be, they haven't snuffed out private practice, says Randy Bauman, president of Delta Health Care and coauthor of Choosing Autonomy: The Physician's Guide to Returning to Private Practice.
In fact, experts say, while private practice may never again dominate the healthcare landscape, it's likely to remain a small but permanent fixture, thanks to emerging new business models, cost-saving technological advancements, and the tenacity of physicians determined to practice medicine on their own terms.
Doctors Who Buck the Employment Trend
While most doctors are bound for employment—only 22% of medical residents surveyed by Medscape say they anticipate one day owning a stake in a practice, down from 26% from 2015—not every physician sees his or her future bound with that of a hospital or large system.
Richard May, MD, practices with Northeast Ohio Nephrology Associates, a nine-physician practice in Akron, Ohio, that has maintained its independence for 30 years. Although the practice has been approached by both of the city's major hospital systems, its physician partners are united in their desire to remain independent.
"We've opted to stay with this model because we control our lives," says Dr May, who joined the practice in 1997. "We know the cost of doing that is that we are probably not making as much as we could if we were with a system, but we get up every morning feeling good about how we practice medicine. We're happy answering to no one but ourselves and not feeling any pressure to meet patient-load quotas and hit monetary goals."
The perks that have compelled Dr May and his partners to buck the employment trend appear to be drawing a number of physicians to leave the security of employment. More than half (52%) of all self-employed doctors responding to Medscape's 2014 Employed Doctors Report say they were previously employed, and anecdotal reports suggest the share may be rising.
"About 3 years ago, we started noticing that a fair number of the valuations we were doing weren't for hospitals—they were going the other way," says Bauman. "We started tracking the trend and found that month over month, in 25%-30% of the valuations we are doing, the physicians are the ones doing the purchasing."
Doctors seeking the wide-open spaces of private practice are definitely in the minority. "Nobody is seeing a tsunami," Bauman says, "but there's a trend."
Mary Pat Whaley, who runs a practice management consulting business, estimates that she has helped launch about 50 practices since 2010.
"Groups get purchased by hospitals and large systems, and then physicians exit individually or in pairs," she says. "For some of them, hospital employment is just not happening."
The doctors turning to self-employment don't necessarily fit the stereotypes of the disgruntled older physician or, less commonly, the trend-bucking young entrepreneur eager to try his or her hand at running a practice.
Bauman describes working with a group of specialists in the Midwest. "They'd been employed by the hospital for years. Most of them had no experience with self-employment." But when the hospital sought to reduce their compensation by more than 20%, the doctors felt they had no alternative but to venture out on their own.
"It was a very risky proposition," Bauman says. "They had to borrow millions in capital, but they managed to do it. They went independent in the fall of 2015 and have paid down their debt and managed to stay friendly with the hospital that employed them."
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Cite this: Shelly Reese. Private Practice--Down but Far From Out - Medscape - Nov 01, 2017.