fool.com ^ | June 8, 2013 | Keith Speights
First went the dinosaurs, then the dodo. Are physicians in private practices
next on the path to extinction? The trends show the numbers of physicians
practicing privately are steadily dropping. Some blame Obamacare for pushing
doctors out the door. Is this accusation based on fact or fantasy?
Survey says A 2012 survey of physicians conducted by the Doctor Patient
Medical Association, or DPMA, found that 90% of respondents thought the U.S.
medical system was on the wrong track. 83% said that they were actually thinking
about leaving the profession. 95% of physicians responding to the survey thought
that private practices are losing out to corporate medicine.
Who's to blame? Nearly two-thirds said the government was the root of most of
their problems. Even more identified the best solution as reducing government
involvement in medicine.
Keep in mind a couple of things about this survey, though. First, faxes were
sent to fewer than half of all active physicians in private practice. Only 4.3%
of these surveys were returned. The responses don't necessarily accurately
represent the opinions of physicians nationwide. Second, Obamacare wasn't
specifically mentioned in the questions asked.
However, a 2013 physician survey by Deloitte that did use statistically valid
sampling methods appears to confirm some of these concerns, albeit with lesser
intensity. This survey found that 57% of physicians think that "the practice of
medicine is in jeopardy." Only 31% gave the U.S. health care system a favorable
grade. 62% said that more physicians will retire early because of how the
practice of medicine is changing, with around 75% saying that fewer qualified
individuals will pursue medicine as a career.
Regarding Obamacare, 44% of physicians think that the law is "a good start"
compared to 38% who think that it is "a step in the wrong direction," with 18%
undecided. 93% of physicians are concerned about being paid too little for
services performed under episode-based bundled payments, which was promoted in
Obamacare. More than half of physicians expect their incomes to fall
dramatically over the next three years.
Doctors in the house The reality is that, regardless of physicians' opinions
about Obamacare, the law is contributing to more doctors moving away from
private practices. Health care reform emphasized close collaboration between
health care providers through Accountable Care Organizations, or ACOs, and
bundled payments. Many expected private physician practices to be acquired with
this focus -- and they were right.
A 2011 survey by the Medical Group Management Association showed almost 75%
more doctors employed by hospitals since 2000. Less than half of all U.S.
doctors now work in private practices. An article published in the New England
Journal of Medicine attributed acceleration of this trend to Obamacare.
HCA Holdings (NYSE: HCA ) , the nation's largest private hospital chain,
embarked upon a major hiring campaign for physicians over the last few years. A
key impetus behind this wave of bringing new doctors on board came from the ACO
emphasis in Obamacare.
Hospitals aren't the only organizations scooping up physicians. Major
insurers have also gotten into the act as they adapt to the new health care
landscape created by Obamacare.
In 2011, UnitedHealth Group (NYSE: UNH ) bought Monarch Health Group, a large
physician group in Southern California. UnitedHealth's Optum business segment
previously purchased two smaller physician groups in the region -- AppleCare
Medical Group and Memorial HealthCare Independent Practice Association.
Humana (NYSE: HUM ) acquired Metropolitan Health last year. Metropolitan
Health operates a network of physicians and other clinical professionals who
focus on providing care for Medicare beneficiaries. Humana also bought
Concentra, with its 300 health clinics spread across 40 states, in 2010.
No-good goodbye? Will this trend of doctors saying goodbye to their private
practices be a good thing? Not necessarily.
According to one estimate, Medicare pays more than $1 billion per year than
it would otherwise when doctors work for hospitals. That's largely because
hospitals receive higher reimbursements from the government program for many
specialty services than individual doctors would.
Another potential issue stems from the possibility that hospitals could push
doctors in their employment to pump up numbers of admissions and tests. Health
Management Associates (NYSE: HMA ) is under investigation in several states for
possible actions including the "medical necessity of emergency room tests and
patient admissions." A 60 Minutes story in December focused on some of these
alleged admissions issues. The company disputes these accusations.
Of course, if you own stock of hospitals that are hiring away physicians from
private practices, the trend is probably quite welcome. In large part due to the
impact of Obamacare, hospital stocks have soared. HCA shares are up more than
60% over the last year. HMA stock gained more than 130% during the same period.
The way of the dinosaur and dodo? Physician private practices will almost
certainly continue to decline, but they probably aren't headed for total
extinction. Some doctors will resist the temptation to work for larger entities,
even if their pay suffers as a result.
While the shift away from private practices was already under way prior to
Obamacare, the legislation definitely threw gasoline on the fire. As a result,
perhaps another federal action is now needed: adding physician private practices
to the endangered species list.
DIOGENES invites you to pull up a chair on this fine day and read posts from around the world. The writing may lean to the right...but that's the way Diogenes wants it! You may leave your opinion, but Diogenes rarely changes his! WELCOME!
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