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Why Small Medical Practices Are Doomed, Whether Doctors Like It or Not

A White House letter to physicians -- part of its overall offensive on healthcare reform -- has sparked controversy for daring to suggest that it's time for physicians to join larger groups. Perhaps the letter went too far by predicting that the end is near for small practices. But however physicians may feel about it, healthcare reform is going to rock their world.

As the Institute of Medicine noted a decade ago in its epochal tome Crossing The Quality Chasm, the fragmentation of U.S. medicine is a major reason for its inefficiency and high cost. A prime reason for that fragmentation has been the prevalence of small, independent medical practices. While large corporations and franchise chains increasingly dominated other industries, until recently the physician sector of healthcare remained a cottage industry, with doctors running their own small businesses.

This has changed somewhat in recent years. The percentage of doctors practicing solo dropped from 41 percent in 1983 to 25 percent in 2008, and the portion of physicians in groups of six or less fell from 53 percent in 1997 to 42 percent in 2005. More and more young physicians, in particular, are going to work for hospital-owned groups.

Still, that leaves a lot of physicians practicing the old-fashioned way. That probably accounts for the ire that the letter from the White House staffers aroused.

Published in the Annals of Internal Medicine, the leading publication for internists, the letter was co-written by Nancy-Ann DeParle, Director of the Office of Health Reform; Ezekiel Emanuel, special advisor for health policy in the Office of Management and Budget, and Robert Kocher, who until recently was on the National Economic Council.

Among other things, the authors suggested that certain provisions of the Affordable Care Act would accelerate the movement of physicians into larger groups. It read:

To realize the full benefits of the Affordable Care Act, physicians will need to embrace rather than resist change. The economic forces put in motion by the Act are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups. The most successful physicians will be those who most effectively collaborate with other providers to improve outcomes, care productivity, and patient experience.


The reaction from the medical establishment came swiftly. "We're not ready to write off the small practices," J. Fred Ralston Jr., president of the American College of Physicians (ACP), told Medscape Medical News. "We think there needs to be more than one delivery model."

M. Todd Williamson, a neurologist from Lawrenceville, Georgia, who is a past president of the Georgia Medical Society, agrees with Ralston. "America is not a one-size-fits-all country," he said.

The opposition is hardly surprising. Williamson represents a coalition of specialty societies opposed to the healthcare reform law, and the ACP itself represents internal medicine subspecialists as well as primary-care physicians. These specialists -- many of them in small practices -- are raking in big bucks, and they don't want anything to change (except for increases in Medicare reimbursements). But primary-care doctors are having an increasingly hard time making it in private practice -- one reason why so many of them are going to work for hospitals.

Later in their letter, the White House coauthors point out that, as the pressure to improve quality and the coordination of care forces more doctors into large organizations, they will have a choice between working for hospitals or joining independent physician groups. As I read it, that would include networks of small practices that are capable of delivered coordinated care. But the choice is still clear: hospitals or physicians can run healthcare, but hospitals will do it if doctors don't step up to the plate.

Perhaps that's what medical societies should be telling their members, rather than doing their best impression of King Canute ordering the tide not to come in.

Image supplied courtesy of Flickr.
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