This is part 1 of a three-part series on the importance of independent specialty practices in America. This part explains why physician practice consolidation is not the promised cure-all solution; part 2 describes the challenges associated with running practices to meet the expectations of modern healthcare, and part 3 explains why the right partner can make all the difference.
Independent specialty medical practices are at the core of the American healthcare system. Unfortunately, market pressures are pushing for more consolidation. Physician practice consolidation has been touted as a cure-all solution promising increased efficiency and cost savings. Still, the reality is that it is negatively impacting patients, providers, employers, and healthcare as a whole.
Maintaining specialty practice independence has become increasingly difficult in the face of modern healthcare challenges.
However, there is hope, as these practices are at the heart of our healthcare system and are needed to support the future of American healthcare.
Consolidation is often touted as a benefit to the community that generates efficiencies and improves care coordination. But is this true? The evidence is unclear.
As physician practice consolidation continues, these larger entities have more market power and less competition, resulting in higher prices compared to independent practices. That, coupled with healthcare antitrust laws, favors large health systems to have much more power in negotiations over payers and providers. They can negotiate self-favorable rates that push for their own profits but ultimately drive up costs across the industry.
These increases in costs are not improving the overall quality of care. Even though the US spends 20% of the GDP on healthcare, which is more than any other developed country, our health system ranks the worst among eleven high-income nations, with affordability of care cited as a key issue.
Physician practice consolidation sounds like it should be a cure-all based on its theoretical improvements in efficiency, but the real-world results show that it costs more, has worse patient outcomes, and burns out staff. Burnout increased during the pandemic and is slowing, but it still dramatically impacts healthcare operations. Clinician turnover remains a significant problem for an already drowning healthcare system.
Doctors are concerned about the future of healthcare, with 86% worried about how they will
care for an aging population.
Patients also shoulder much of the burden of healthcare consolidation, grappling with rising deductibles and out-of-pocket costs as payers absorb the higher prices negotiated by large health systems. Physician practice consolidation frequently channels care into networks driven by profits rather than patient well-being, restricting access and disproportionately impacting vulnerable populations. By 2018, 95% of U.S. metropolitan areas had highly concentrated hospital markets—a trend that continues to worsen.
Research from Harvard found that physician services delivered within health systems cost 12%
to 26% more than independent practices, and system-based hospital services cost 31% more on
average than care provided by independent hospitals.
Second, patients in rural areas face limited access to care, with one in five physicians planning to retire or leave clinical practice in the next two years and one in three aiming to reduce their hours. This exacerbates existing healthcare shortages in rural communities. Patients are left with longer wait times, fewer care options, and declining quality of services, placing an even greater strain on already overburdened healthcare systems that these communities depend on.
Patients rely on these independent specialty practices for care access and lower prices. These specialists can dedicate the time required to provide exceptional care rather than just hitting corporate numbers.
43% of adults have reported that they or a family member put off or postponed needed
healthcare due to cost.
Physicians, obviously, also deal with the repercussions of physician practice consolidation. Under most consolidated models, they must see more patients each day to hit key corporate metric numbers. Then, after engaging with exclusive hospital-based PE contracts, they often negotiate a less-than-favorable per-case rate.
On the flip side, independent specialty clinicians have significantly more autonomy. These docs have significantly higher job satisfaction scores and lower rates of burnout, which all equate to more happiness overall. Many independent physicians list autonomy as the factor they enjoy most about being self-employed. Maintaining control over your practice and career has significant benefits.
60% of doctors who went from being self-employed to working as employees claimed to be
unsatisfied with that decision.
Clinicians can make caring for their patients their top priority without succumbing to corporate pressures. Many have even noted that making medical decisions based on what is best for the patient — rather than other corporate pressures – is a massive benefit of independence that makes their jobs more rewarding. They can dedicate the time required to care for their patients, improve their doctor-patient relationships, and even improve their referral networks, as they’re not limited to just the specialists or services available within a consolidated system.
And, of course, self-employed physicians report making more money.
Self-employed physicians can earn upwards of $150-175k more per year compared to their
employed peers.
Employers must also deal directly and indirectly with industry-wide increases in healthcare costs associated with physician practice consolidation.
Directly, whether using self-insured or fully insured programs, employers must pay for those higher premiums driven by consolidation. Indirectly, higher healthcare costs drive up cost-of-living expenses. As a result, employees will continue to demand higher salaries to keep up with basic needs, including healthcare costs not covered by insurance.
For the 158 million Americans with employment-based coverage, hospital prices are an average of 8.3% higher in the highly consolidated markets that cover half the country.
The future of healthcare may seem doom and gloom. Whether succumbing to a buyout from private equity or a larger health system, there seem to be few options. Legislation and market demands are not really supporting the needs of specialty independent practices, and consolidation is presented as the magic cure-all solution.
The reality is that it is super complex. The corporatized system will continue to push services and money into the larger systems.
It won’t. This corporatized system will only continue to drive money into the pockets of large healthcare monopolies and push essential healthcare clinicians out of the workforce with profit-driven metrics. This will all result in:
We must work to protect the practice of specialty independent medicine.