How Big Medicine is Putting Small Practices Out of Business – MedPage Today – by John Machata, MD – Apr 2019
Recently, the CEO of a large health care network stated: “Market forces don’t apply to healthcare.”
What an idiotic statement! If this were true, CEOs wouldn’t be receiving astronomical salaries while their cost-cutting leaves everyone doing the real work broke.
These CEOs manipulate their corporations to generate the maximum profit (which is actually their job) and their calculations definitely depend on market forces to raise prices by eliminating competition.
Of course, economic and political forces apply to healthcare.
Big Medicine’s most powerful entities (insurers, hospitals, medical schools, pharmaceutical companies, pharmacies, and government agencies) formulate health care policy to enrich themselves at the expense of patients and small, independent medical practices.
As an independent family doctor, my practice’s existence is in jeopardy. Small physician practices are being devoured by big medical practices, a trend that improves large practices’ negotiating positions with insurers.
Hospitals buy practices to extend and defend turf.
Insurers reimburse small practices at lower rates than large groups.
These actions are driving small, independent medical practices out of business at an alarming rate.
The CEO went on to argue that limiting patient choice will decrease costs and improve quality.
But consolidation has not resulted in
- lower prices,
- higher quality, or
- better care experiences.
Yet these were the exact arguments made for privatizing healthcare. Anyone who believed such a ridiculous fantasy must have been extremely naive or ignorant or had vested interests themselves.
The main effect of consolidation is to increase market power, which is used to extract higher prices from payers and to prevent any efficiencies from being passed on to consumers.
Consolidation works for some industries, but not for others.
medicine is not a shopping emporium: Medicine is personal.
Large medical practices rarely offer patients the convenience, prompt service, and personalized approach they deserve.
Americans are worried that the trend toward Big Medicine will be costly and jeopardize their health. A 2018 survey showed that:
- 69% favor Congressional action to limit consolidation of healthcare
- 60% view purchasing of independent practices as a threat to affordable care
- 25% saw consolidation as a direct threat to their health
My practice’s costs per patient are low, and my quality metrics are excellent. But low costs and high quality offer no guarantee of success when faced with a system seemingly dedicated to get rid of small practices
If the number of patients in a quality measure is under 10, the practice earns only 25% of the money paid to a practice with 30 or more patients in a measure.
When I spoke with an insurer’s chief medical officer, she candidly admitted that the policy is intended to encourage small practices to join larger groups.
Small practices are better for patients.
Small practices provide a greater responsiveness to patient needs at a lower average cost per patient. Patients trust independent physicians more than employed doctors.
Small practices have deeper relationships with their patients. Doctors in small, independent practices are happier and report greater professional satisfaction.
Small practices are better for doctors
Small, independent practices will not survive without a profound shift in the regulatory climate. To ensure fair compensation, promote competition, and protect patient choice, policies must include:
- Primary care payment rates for small, independent practices at parity with large groups.
- Decreased regulatory burden.
- Investigation of hospitals who engage in coercive monopolies, forcing patients to use services within their system, thereby denying patient choice.
The only ones who benefit from consolidation are the corporations at the top of the food chain. These mergers are orchestrated by accountants and C-suite corporate officers whose job it is to maximize profit. How could anyone ever believe they were acting to “help” anyone except themselves?
Author: John Machata, MD, is a family physician.