By Capital Flows, Contributor, Forbes, Guest commentary curated by Forbes Opinion.
Guest post written by Reed Wilson
Dr. Wilson is CEO of Private Practice Doctors, LLC, and a practicing cardiologist and internist in Beverly Hills.
There is a dangerous trend underway in American healthcare: The death of the private practice doctor’s office. This is a deliberate trend driven primarily by federal policymakers, and it does not bode well for either the cost of healthcare or the health of individual patients.
Policymakers in Washington, D.C. increasingly operate on the theory that large healthcare organizations are more data-driven, more efficient, and more effective than their small, private-practice counterparts. This mindset has guided the creation of many laws and regulations, most notably the Affordable Care Act. Shortly after the law’s passage in 2010, a senior Obama administration official told doctors that it would “lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups.”
I have watched this prediction come true from my position as a private practice doctor. Recent years have seen a stampede of my fellow physicians accepting buyout offers from hospitals and other large providers. The Physicians Foundation, which conducts surveys of America’s doctors, found that 62% of physicians were independent in 2008. By 2014 that number had dropped to 35%—a precipitous decline in such a short timeframe. A 2012 survey by the Doctor Patient Medical Association found that 95% of physicians see corporate medicine supplanting the traditional private practice.
The causes are many, but two factors under the Affordable Care Act are among the biggest causes of this transformation. The first are the financial incentives that favor consolidation over independence. The second is the law’s increased regulatory burden, which threatens to overwhelm private practices.
These two problems are often related. For example, the Affordable Care Act made mandatory a number of cost and health outcome reporting requirements for physicians who see Medicare patients, which is about 90% of us. Failure to comply results in slashed reimbursement rates that run as high as 6%. Yet the additional administrative burden of participating in these programs falls hardest on small private practices, which, perversely, are also subject to the stiffest penalties.