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Is there a future for smaller physician practices after health reform?

Bob Doherty
Policy
June 10, 2012
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The medical profession has always been marked by division: town versus gown, primary care versus specialty medicine, states versus national. But the real fault line today is not defined by specialty, geography, or teaching versus practice, but by size of practice.

Physicians in smaller practices, without regard to specialty or where they are located, are embattled and defensive—and therefore are more skeptical when someone tries to peddle the need for delivery system reform. This is a generalization, but my observation is that physicians in smaller practices see Accountable Care Organizations and Patient-Centered Medical Homes as a threat, and physicians in larger practices them more as an opportunity. Physicians in smaller practices prefer to keep fee-for-service, even as they complain that it doesn’t pay them fairly for their services, while physicians in larger practices (many of whom already are salaried or paid on a productivity + FFS model basis) are more likely to be willing to leave FFS behind.

There is evidence that physicians in smaller practices are also more likely to have a more anti-government, conservative political orientation than those in larger groups. The New York Times reported last year that “as more doctors move from business owner to shift worker, their historic alliance with the Republican Party is weakening from Maine as well as South Dakota, Arizona and Oregon, according to doctors’ advocates in those and other states.”

There also may be some self-selection bias at work: physicians who choose to own or work in smaller practices may be more individualistic by nature and therefore less trusting of being “managed”—by government, by health plans, or even by other physicians—and therefore are more conservative in their political leanings and more adversarial towards government.

Of course, even if this generally is true, there are many exceptions: I know very liberal doctors in solo or small practices, and very conservative ones in very large practices.

Sometimes, the practice-size divide is mirrored in specialty society politics. I am told that ophthalmologists and dermatologists tend to be in smaller practices, and their national medical specialty societies tend to be more conservative on their approach to health care and delivery system reforms.

Interestingly, though, a 2009 report by the well-respected Center for Studying Health System Change did not find much variation in reported career satisfaction associated with practice size, with more than 75 percent of all physicians reporting that they were “very satisfied” or “somewhat satisfied” with their careers in all categories of practice size (solo, 3-5, 6-50, 51 plus, HMO, and institutional practice).

Physicians in smaller practices also tend to be older—and that may also be correlated with a more conservative view of government. Two years ago, I provocatively asked in a blog post “Is it too late for small practices?” citing an AMA survey that found that “75.5 percent of physicians are office-based (61.1 percent owner, 14.4 percent office-based employee), and that this percentage increases with age, from 68.9 percent for physicians under 40 to 81.2 percent for physicians over 54.”

I concluded then, and still believe, that there is a future for smaller practices—but that they will need to adapt to be successful:

“I think that that the physician practices that do well in the future will be those that are able to demonstrate to buyers of health care that they are able to provide measurable “value” for the money being spent, defined as good or better outcomes at lower cost. With the right mix of supportive public policy and trusted advice and practical resources to help them succeed, I believe that the future for smaller practices may be much brighter than conventional wisdom suggests.”

Here’s the problem, though: telling a physician in a smaller practice that they need to adapt is about as popular as a teetotaler preaching abstinence in an Irish bar! Plus, “adapting” or “practice transformation” usually sounds like someone else telling them to spend money they don’t have, to invest in something that they don’t believe in (ACOs, PCMHs), in the (futile?) hope that someone will pay them at least enough to cover their costs—so they at best end up breaking even for all of the effort. So what’s the point?

And I can’t disagree with them—so far, the return on investment for medical homes and some of the other new models being rolled out are marginal and uncertain at best, although for the first time the government is beginning to put some real money on the table for medical homes in its Comprehensive Primary Care Initiative.

But here’s the rub: “adapting” or “transforming” is risky, but what is the alternative? The movement to more integration and bigger sized enterprises has affected every other part of the American economy—how many locally-owned “Mom and Pop” restaurants or pharmacies are there in your neighborhood? And the small businesses that do survive have had to adapt.

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There is a great, locally-owned book store in my neighborhood, Politics and Prose, that not only has survived the “big box” bookstores (even as a Borders less than a mile away went down with the rest of the chain), but is hanging on (so far) through the e-books onslaught. They have done it by great outreach to the community, by regularly hosting authors and poets for readings and discussion, and by helping you find any book you want, whether they carry it or not. Think of it as a Reader-Centered Literary Home! But they also have survived because they serve a small but prosperous niche market of readers (who still prefer real books).

The challenge for an advocacy organization like ACP is that we have members on both sides of the fault line. And no matter how effective our advocacy is for smaller practices (we’re always looking at proposed rules and laws from the standpoint of “How will they affect our members in smaller practices?” and “How can we help them succeed?”), we can’t turn back larger economic forces that have led just about every other cottage industry to either go out of business or find new strategies to adapt.

Bob Doherty is Senior Vice President of Governmental Affairs and Public Policy, American College of Physicians and blogs at The ACP Advocate Blog.

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Is there a future for smaller physician practices after health reform?
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