How Big Medicine is hurting patients and putting small practices out of business
Recently the CEO of a large health care network stated: “Market forces don’t apply to health care.”
Of course, economic and political forces apply to health care. Big Medicine’s most powerful entities (insurers, hospitals, medical schools, pharmaceutical companies, pharmacies, and government agencies) formulate health care policy to enrich themselves at the expense of patients and small, independent medical practices.
As an independent family doctor, my practice’s existence is in jeopardy. Small physician practices are being devoured by big medical practices, a trend that improves large practices’ negotiating positions with insurers. Hospitals buy practices to extend and defend turf. Insurers reimburse small practices at lower rates than large groups. These actions are driving small, independent medical practices out of business at an alarming rate.
The CEO went on to argue that limiting patient choice will decrease costs and improve quality. But consolidation has not resulted in lower prices, higher quality, or better care experiences. The main effect of consolidation is to increase market power, which is used to extract higher prices from payers and to prevent any efficiencies from being passed on to consumers.
Consolidation works for some industries, but not for others. Amazon has succeeded by offering selection, convenience, and prompt delivery (though at the cost of putting many local Mom and Pop stores out of business). But medicine is not a shopping emporium: Medicine is personal. Large medical practices rarely offer patients the convenience, prompt service, and personalized approach they deserve.
Americans are worried that the trend toward Big Medicine will be costly and jeopardize their health. A 2018 survey showed that:
- 69 percent favor Congressional action to limit consolidation of health care.
- 60 percent view purchasing of independent practices as a threat to affordable care.
- 25 percent saw consolidation as a direct threat to their health.
My practice’s costs per patient are low, and my quality metrics are excellent. But low costs and high quality offer no guarantee of success when faced with a system seemingly dedicated to get rid of small practices. Medicare’s soon-to-be implemented value-based reimbursement program will penalize 87 percent of solo practices whereas most large practices will be rewarded.
In a “Robin Hood in reverse” move, a large insurer makes quality incentive payments based on the number of members meeting goals with a big caveat. If the number of patients in a quality measure is under 10, the practice earns only 25 percent of the money paid to a practice with 30 or more patients in a measure! This discriminatory program costs family doctors and small practices hundreds of thousands of dollars annually. When I spoke with an insurer’s chief medical officer, she candidly admitted that the policy is intended to encourage small practices to join larger groups.
Small practices are better for patients. A 2014 study showed that patients of small practice physicians have a lower rate of preventable hospital re-admissions. Small practices provide a greater responsiveness to patient needs at a lower average cost per patient. Patients trust independent physicians more than employed doctors.
Small practices are better for doctors. Independent physicians are less likely to experience burnout. Small practices have deeper relationships with their patients. Doctors in small, independent practices are happier and report greater professional satisfaction.
Small, independent practices will not survive without a profound shift in the regulatory climate. To ensure fair compensation, promote competition, and protect patient choice, policies must include:
1. Primary care payment rates for small, independent practices at parity with large groups.
2. Decreased regulatory burden.
3. Investigation of hospitals who engage in coercive monopolies, forcing patients to use services within their system, thereby denying patient choice.
Small, independent practices offer patients cost-effective, high-quality, and personalized health care. If the choice of personal medical care offered by small, independent practices is to be preserved, the rules of the game must change.
John Machata is a family physician.