One consequence of the recent federal healthcare reform initiative has been the purchase of physician-owned private practices and specialty clinics by hospitals (see: Physician Private Practice Declines; the Last Barrier to Emergence of "Big Medicine"; Health Systems Use Their Regional Dominance to Muscle Insurance Companies). I have attributed this trend to the greater access to capital by hospitals, the increasing paperwork required from accountable care organizations (ACOs) (see: Hospital Executives Search for the Formula for an Accountable Care Organization), and the interest of hospitals in beefing-up their ambulatory care programs. Below is an excerpt from a blog written by a physician commenting on the purchase of physician practices (see: Dr. Manoj Jain: Hospitals taking over from private practices):
So why all these [healthcare reform] changes, and ultimately what will it mean for patients? For one, providing health care is becoming increasingly complex. Keeping up with innumerable regulations from private insurers and the government, transitioning to electronic medical records (EMR) and caring for a growing population of chronically ill patients make it nearly impossible for a full-time practicing doctor to manage patients and a practice. For example, last year, I invested $15,000 in an EMR only to scrap it because it did not connect efficiently with hospital computer records. There is another more significant reason for the demise of physician-owned practices. Two years ago, a cardiologist educated me over a coffee at Starbucks about the way Medicare was changing its payments. For the technical component of an echocardiogram, a hospital-outpatient department receives $450, while a physician-owned cardiology office gets $180. "It doesn't make sense. We are going to go out of business." According to rumors, that's what was happening with many large private practices that had invested heavily in technology and diagnostic equipment. With the cuts, the practices were not sustainable. So why did Medicare cut payment to doctors for office procedures? Many studies have found that if doctors have medical equipment in their offices, they tend to overuse it. One study showed that doctors who have an MRI machine in their office tend to order three times more MRI scans per 1,000 office visits compared to other physicians. For a cardiologist it was 2.6 times more cardiac echoes, according to a 2009 Medicare Payment Advisory Commission's report. Overuse of imaging studies is a major factor contributing to skyrocketing health care costs.
According to the author of this piece, the government has been reducing technical component (TC) reimbursement in order to discourage office-based diagnostic procedures, which are said to be frequently over-ordered to generate more income. This causes private practice to be less remunerative. In addition and according to him, the governmental initiative to "encourage" the deployment of office EMRs results in a large capital expenditure that is being imposed on private office practices. Finally, any state or federal governmental initiative is always loaded with reporting requirements to ensure that the new regulations are being adhered to. I also personally believe that governmental agencies are always more comfortable interacting with large, bureaucratic organizations that mirror themselves. By and large, most of our larger hospitals meet this requirement. I believe that much of private practice, as we now know it, is doomed.