3 Issues Pressuring the Independent Medical Practice

Health care delivery systems are changing across the nation. With new government and insurance industry regulations, as well as the challenges of running a medical business, the pace of change in the medical industry is increasing.  

Under these pressures, many doctors are giving up their independent practices to join larger groups or hospitals. Often the demise of a practice is due to outside factors beyond a practitioner’s control. These issues include:

Insurance Regulations

Having fewer insurance companies in a local market can mean problems for physicians. In the past, physicians could refuse to accept a health plan if they didn’t like the terms. But with consolidation leading to large blocks of patients, those groups cannot be ignored.

When only a few insurance companies dominate a local market, physicians are pressured to accept contract terms they may consider unfair. In this scenario, both doctors and patients can suffer. Lower insurance reimbursements may lead physicians to spend less time with patients.

Some practices are banding together through Accountable Care Organizations (ACO) or Independent Practice Associations (IPA) to negotiate contracts with large commercial payers.

Medical Regulations

Ongoing changes in government rules continue to make waves throughout the medical industry. Since 2015, we have seen many major changes. The ICD-10 transition arrived, and coding changed completely.  Physicians’ payments have been increasingly tied to higher-value care under the Affordable Care Act. Financial penalties are coming for practices that cannot attest to meaningful use. Going forward, physicians will need to start adapting to the new quality-of-care models as implementation of the Merit-Based Incentive Payment System (MIPS) begins.

The Physician Quality Reporting System (PQRS) is a Center for Medicare and Medicaid Services (CMS) quality reporting program. Since 2015, penalties have been assessed to providers who fail to report quality performance measures. All eligible professionals (EPs) participating in Medicare must submit data to avoid negative adjustments to their Medicare reimbursement.

These regulations are placing technology burdens on medical practices to keep up with the administrative burdens. More and more practices are moving toward cloud-based EHRs and billing systems to avoid the up-front cost of new computers and software.

Competition

Consolidation in the medical industry is hurting the viability of small practices. Competition and pricing is driving some into insolvency. For example, if doctors operate outside a network, hospital systems or other networks can expand and hire physicians to compete directly with those independent practices. They can afford up-front losses required to gain the patient base.

The trend continues towards consolidation and hospital employment for small practitioners. To avoid administrative burdens and competitive pressures, many will seek to join a hospital or larger network as an employee in the coming years.

Are You Feeling These Pressures?

These are just a few of the issues that private medical practitioners face. Many of these issues are why physician groups are becoming larger and more integrated in order to better market themselves.

If you’re feeling these pressures, it’s time to take action. Form alliances with others in your specialty, in your location. Join an Independent Physician Association. Negotiate a Professional Services Agreement with a local hospital – just for a little extra work while maintaining your practice. You can be successful as an independent. Stay informed, and stay connected.