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The Top Challenges Independent Practices Are Facing in 2020


A new year brings new challenges.

Independent healthcare practices are the cornerstone of the American medical system, providing a higher volume of care at a lower cost and resulting in better outcomes for patients, as compared to hospitals or larger medical groups. They are the source from which most healthcare services are delivered. In fact, physician-owned practices see 990.8 million visits, or 3.1 visits per person in the U.S. each year. In contrast, hospital outpatient visits number 125.7 million visits per year, or .4 visits per person.1 Independent practices also have lower per-beneficiary costs and a lower 30-day readmission rate compared to hospitals,2 and they reduce avoidable hospitalizations by 33%.3 It’s not a reach to say that every American has a stake in keeping independent practices healthy. However, a study conducted by Kareo in 2019 points out some of the significant challenges facing independent provider-owned practices.

Based on a survey of nearly 800 independent practice providers in the U.S., the Kareo State of the Independent Practice Industry Report revealed that reducing the impact of administrative tasks to free up provider time is a challenge for virtually every independent practice. More than 70% of respondents agreed that increasing demands on provider time and the time demands of administrative challenges are impacting care delivery.

The survey found a high correlation between administrative time demands and physician burnout. Many of the administrative challenges facing healthcare providers began a decade ago when the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 was enacted. The HITECH Act aimed to drive the adoption of electronic health records (EHR) by offering monetary incentives to providers who demonstrated meaningful use of these systems.

This led to a market gold rush as the industry was inundated with over 700 EHR vendors looking to capitalize on these new government mandates. Many practices implemented EHR systems at that time to comply with requirements, however since then over the last several years, technology standards, regulations and consumer demands for EHR technology have swiftly advanced and many of these software providers have failed to keep up with the new requirements. As a result, many practices have been left with antiquated software that does not meet current standards criteria.  While the historical mandated use of technology has been a challenge for providers, 69% of those surveyed agreed that more progressive, integrated technology solutions are needed to improve the efficiency and profitability of their practices.

Providers are increasingly reliant on their EHRs to manage their day-to-day clinical operations and regulatory compliance. However, despite government mandates, penalties and incentives, only 64% of respondents are currently using an EHR. This low figure likely represents both the entry of newer practices that haven’t yet implemented an EHR platform and the fact that some practice specialties, such as mental health or physical therapy, are more likely to still be using paper-based records and haven’t made the switch to electronic records.

The drive toward EHR adoption, however, is significant. With 17% planning to acquire EHR technology for the first time this year and a quarter of practices looking to switch technology vendors, this means that more than 40% of independent practices are stating that they may be using new technology within the next 12 months. This is important, since to participate in MACRA and enjoy the significant financial benefits, practitioners must be using a 2015-certified EHR. For those who do, electronic health records systems not only simplify compliance with MIPS (Merit Based Incentive Payment Systems), but leading EHRs include a range of integrated features that help reduce workload across various roles in the practice and streamline the delivery of patient care.

Second only to care delivery, practices place a high importance on insurance reimbursement and patient collections – the two key factors in getting reimbursed for the services that the practice provides. Getting paid is becoming more challenging as practices see declining reimbursements from third-party payers (62% of respondents agreed) and increasing patient payment responsibility (63% agreed). They are also having difficulties navigating the complexities of the MIPS reimbursement program with only 53% participation.

Sixty-three percent of respondents said their patients are often paying for services out of pocket. Moreover, 68% of patients with statement balances of $500 or less failed to fully pay off medical bill balances in 2016. This number is expected to climb to 95% by 2020, and is up from 53% in 2015 and 49% in 2014.4 There is also a continued increase in value-based payments with 34% of total U.S. healthcare payments tied to alternative payment models (APMs) in 2017 – a steady increase from 23% two years ago.5

Practices want the most efficient means possible to discern what insurance will pay and what patients will then owe. They also need methods to collect those funds expeditiously. These highly prioritized requirements from independent practices provide a virtual roadmap for the development of technology solutions to aid the independent practice in competing in the healthcare environment (see Figure 1 below).

Over 80% of practices currently use or plan to soon implement some form of billing and/or practice management solution. In fact, the survey suggests that a significant number of practices are already onto a new generation of technology for this function, since 24% indicate that they plan to change billing/practice management solutions in 2019. This suggests that the move to greater integration and automation is underway in this important practice function.

When practices become overworked, one of the first things to deteriorate is patient communication and engagement. This can be detrimental to practices in an era of healthcare consumerization, where patients are paying more for healthcare services and want to see value for the additional monies spent. That’s why 79% of practices say improving patient engagement is important. While 62% of respondents agree that non-adherent patients are affecting their quality metrics, providers are slow to adopt technology processes that might improve patient engagement. Only 52% of respondents are currently using patient engagement software, but another 20% plan to acquire it this year.

While technology adoption for billing, EHR and patient engagement solutions is high, newer technology solutions such as mobile apps and telemedicine that enable better patient engagement are on the rise but are still experiencing relatively slow adoption. Interestingly, the practices expecting to grow this year were statistically more likely to add a mobile solution in the coming year. CMS has recently expanded their reimbursement to providers utilizing telemedicine services and the uptake of this technology continues to grow. Usage is currently at 22% among healthcare providers.

Independent practices are meeting the same big challenges as their hospital-based counterparts, but without the same level of administrative staff and IT support. Despite the dire warnings a few years ago about the potential demise of independent practices, these practitioners appear to be thriving. Sixty percent of those surveyed expect their practice to grow in the coming year, 29% expect it to remain the same, and only 11% thought their patient numbers would shrink. Technology purpose-built to the needs of the independent practice will continue to play a key role in driving this growth and equalizing the playing field between hospitals and provider-owned practices. The rapid evolution of healthcare technology, and statistics showing that both patients and physicians still prefer independent practices for healthcare delivery, provides optimism for the future of the independent practice.

Aaron Perreira is Director of Integrated Marketing for Kareo. More information can be found in Kareo’s State of the Independent Practice Industry Report, or at

1 CDC/National Center for Health Statistics: Ambulatory Care Use and Physician Office Visits

2 American Medical Association: Total Expenditures per Patient in Hospital-Owned and Physician-Owned Physician Organizations in California

3 Health Affairs: Small Primary Care Physician Practices Have Low Rates Of Preventable Hospital Admissions 

4 Patients May be the New Payers, But Two in Three Do Not Pay Their Hospital Bills in Full, TransUnion Healthcare, June 26, 2017

5 HCP-LAN, 2018 APM Measurement Effort, October 22, 2018

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