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Reimbursement, operational costs threaten independent physicians to sell practices


Though 73% of physicians say they prefer to keep their practices independent, 44% say they will likely sell their practices in the next 10 years.

An increase in operational costs and a decrease in reimbursements are causing independent physicians to sell their practices, according to a survey.

Though 73% of physicians say they prefer to keep their practices independent, 44% say they will likely sell their practices in the next 10 years.

The 2015 Independent Physician Outlook Survey by ProCare Systems, a medical management consultant company, surveyed 82 physicians, with 55% owning a practice with one to five practicing physicians. Nearly half of those surveyed say that decreases in reimbursement and an increase in operational costs are the most difficult aspects of owning an independent practice.

“Given the staggering majority of physicians that desire continued independence, the findings in this survey indicate that we cannot continue with ‘business as usual’ in our standard practice models,” says Fred Davis, MD, co-founder and president of ProCare Systems. “Physicians can thrive in their practices, rather than becoming employed by larger healthcare institutions, by embracing innovative business models designed to meet the increasing complexity of today’s healthcare environment while keeping small practices profitable.”

Almost 20% of physicians cite the inability to maintain referral streams as another reason to sell their practices. “As smaller practices compete with bigger systems, it is clear that the effects of that competition can vary across those surveyed. For some, maintaining a steady referral stream is one of the factors sustaining their independence. For others, its erosion is pressuring them into selling out to a bigger market player,” the survey’s authors say.

Most physicians surveyed (70%) say that being a specialist in their community enables them to sustain their business. “There is certainly a sense of security in being one of the only providers of very specific services within a market, especially when coupled with stable reimbursement, steady referral stream and efficient and sustainable cost factors,” the survey’s authors find, adding that specialization’s perks are “tenuous” considering that physicians are have problems maintaining other major factors that affect economic stability.

There is hope among the physicians surveyed: 88% predict that value-based pay is the future of healthcare and 91% feel that “whole person care” will play a significant role in practice management. Half of the doctors surveyed say they are already encountering alternative forms of payment outside of fee for service models.

Almost half of physicians say that independent practice associations (IPAs), strategic alliances run by physicians, would allow physicians to remain autonomous and economically viable in the future.

 The survey’s authors found that IPAs “offer a focus on increased size scale for negotiating with payors and larger organized systems of care. Physicians find this an attractive option when considered alongside the prior trend of moving to larger institutions to achieve those scale benefits.”


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