Recently I asked a hospital chief financial officer why hospitals wanted to buy practices.
He pointed out that private-practice doctors who join a hospital can be tremendously valuable: They bring in patients to fill the beds and outpatient labs in that hospital. And that gives the hospital greater market share. The merger can also help lower hospital costs for drugs and devices. One hospital saved a million dollars when the staff doctors and the hospital agreed to use a single vendor for pacermakers and defibrillators, the hospital’s CFO told me. This sort of savings may or may not be passed on to patients.
Not all private practices sell themselves to hospitals because they are in a financial bind. Many, like mine, have difficulty transitioning to electronic medical records or traversing the maze of insurance company requirements. The greatest problem many physicians in private practice face is the uncertain future of health care. Each year doctors must grapple with threatened pay cuts brought on by Medicare’s sustainable growth rate formula, adopted by Congress in 1997 as a way to keep medical costs to the government from ratcheting ever higher. These cuts have always been restored with the so-called doc fix, but many private-practice physicians worry that these cuts may soon happen and put a huge financial strain on their practices.
And even though I’m not one of those who believe the cuts will occur, the back-and-forth wrangling over the doc fix is wearing. I’m tempted to have my small private practice join the hospital, giving me job security and better work-life balance as well. I see many younger colleagues, including those just completing their residencies, taking this route.
Joining the hospital may be a sound business decision for many, but my heart aches at the prospect of losing my autonomy. My wife, also a doctor in private practice, says, “I didn’t become a doctor to be told what to do by an administrator.” Yet she grumbles at the time expended on managing accounts and collections for her practice.
A surgeon friend tells me, “I may be the last man standing, but I am not going to be bought out by the hospitals.” Although pride and self-reliance run deep among private doctors, in the end, I suspect there will be only a few holdouts.
As for me, the sign with my name still hangs outside my office, but I am keeping my options open. The prognosis for a private practice looks grim.
Jain is an infectious-diseases doctor in Memphis who writes regularly for The Post.