07/19/2013    Pam Thompson

Doctors Bail Out On Their Practices

I saw the article excerpt from the CNN article
RE: doctors bailing on private practice for
hospital employment. The PM News article
states, "Experts say the number of physicians
unloading their practices to hospitals has risen
to 40% in the last five years." The wording
appears to indicate that 40% of physicians have
sold or are trying to sell their practices to
hospitals. This is untrue. The CNN article says
that physician practice sales to hospitals are up
30 to 40% over the past five years, not that 40%
of physicians have sold out to hospitals.

In fact, according to a 2012 report from the AHA,
only 13% of 858,000 physicians in practice in the
U.S. are now hospital employees, although it is a
34% increase since 2000, a span of almost 14
years. The AHA also reported that in 2010,
roughly 211,000 physicians were hospital
employees, a seeming contradiction. Drilling down
the statistic reveals that 46% of the quoted
211,000 hospital employed physicians are
residents. In 2011 the Medical Group Management
Association (arguably the largest management
consulting group in the country) found that while
the number of its 250,000 physician members
practicing in hospital-owned groups has roughly
doubled since 2003, it represents only about 8%
of total membership. (Source: Jeff Goldsmith,
Ph.D. Associate Professor, Public Health
Sciences, University of Virginia. "The Future of
Medical Practice: Creating Options for Practicing
Physicians to Control Their Professional
Destiny." [2012]).

Media sources seem to be getting some of their
information from a 2012 Accenture Physician
Alignment Survey, which stated, "The proportion
of physicians who practice independently (defined
as practicing outside a hospital, clinic, or
large group) fell to 39% this year from 57% in
2000, according to the 2012 Accenture Physician
Alignment Survey. And by the end of next year
(2013), Accenture anticipates just 36% of the
market will be self-employed physicians."

The media then appears to have altered this to
indicate that Accenture's prediction that only
36% of physicians will be "independent" has
already occurred (it hasn't, not by a long
shot). People generally assume
that "independent" means "not employed by a
hospital". However, Accenture indicated that in
its survey, physicians in a large group were not
considered independent. This can certainly result
in a mis-leading "statistic" that only 39% of
practicing physicians are not employed by
hospitals. Not true!

This so-called rush to hospital employment may
sour sooner than later. Productivity drops by
some 30% under hospital employment; newly
employed hospital physicians lose hospitals about
$200,000 a year, for each of three years, on
average.

In addition to the revenue loss from newly
employed physicians, in 2012, 60% of hospitals
lost money with Medicare, and 30% lost money
overall. Last year CMS penalized 71% of
hospitals for excessive re-admissions. Adding
insult to injury, as a result of the 2013 fiscal
sequester, Medicare offset the 20+% cost
reduction stay for providers with an 11%
reduction levied on hospitals. Hospitals have a
lot to manage these days.

CMS recently indicated that they spent a billion
dollars more for care last year because they're
paying hospital rates to previously independent
physicians:
http://www.nytimes.com/2013/06/15/health/medicare-
panel-urges-cuts-to-hospital-payments-for-
services-doctors-offer-for-less.html.

Podiatrists are not high on the hospital
physician recruit list, so the option of hospital
employment may not be possible for many of them.
I hope that podiatric residents and students do
not assume out of hand that they will, as a
matter of course, be employed by a hospital at an
enviable salary, when they enter the job market.

There's no need to fear the apparent rush of PCPs
et al to hospital employment. It isn't really a
rush, and it may just turn the other way faster
than anyone believes.

Most importantly, in spite of the current
healthcare upheaval, Podiatrists can absolutely
increase profitability now through targeted cost
reduction and expansion strategies, and remain
profitable as changes to the healthcare
environment continue.

Pam Thompson, Thompson & Associates,
wealthbuilder@consultant.com

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07/22/2013    Joshua Kaye, DPM

Doctors Bail Out On Their Practices

I believe the big picture is being missed here.

Most podiatrists and other medical specialists
who I know went to medical school to learn how to
effectively and appropriately treat patients.
They did not sign up to learn how to play billing
games, do clerical work and become software
technicians. Unfortunately, the current trend
necessitates a modification of one’s time
allocation to spend more time, energy and money
in these secondary disciplines.

Most private practitioners don’t have the time or
money to accommodate these changes effectively.
They should be spending their energy in treating
patients and learning more skills through CME
programs, seminars and e-communications.

Additionally, if we look at the mandated changes
that are currently and increasingly present,
including EMR, e-Rx, ICD-10, PQRS and increased
radiology regulations, almost none of these are
actually for the benefit of the patient or
improve patient care. Non-compliance with these
requirements will result in further decrease of
insurance reimbursement.

At seminars, we are bombarded with the
opportunity to sell products in the office to
supplement the continual decreasing
reimbursements. A variety of technical devices
are offered, complete with the appropriate
billing codes and expected amount of
reimbursement as another method of increasing
office revenue.

Doctors are bailing out because many simply do
not want to practice in a manner in which they
were not initially trained. Most doctors also
enjoy the autonomy of private practice. Many are
willing to also give up that benefit and succumb
to a 9 to 5 “job” where they do not have to deal
with the undesirables of the current private
practice world.

The Costco model is working and will continue to
expand.

Joshua Kaye, DPM, Los Angeles, CA,
jk@joshuakaye.com