Patients unhappy with 'corporate medicine' will look to independent ASCs, physicians

Hospitals and corporate entities continue to snap up independent physician practices — a trend that has seen a significant spike because of the heightened economic challenges brought by the pandemic — but not all patients are happy with the level of care they receive by such corporate structures.

As of January 2022, almost 74 percent of physicians reported being employed by hospitals or corporate entities, up from 62.2 percent in January 2019, according to an April report from Avalere. That leaves just 26 percent of physicians in private practice.

It's no secret what's driving this trend. Practice overhead costs have increased because of the pandemic, the healthcare industry is plagued by a widespread staff shortage, and those seeking employment are looking for a higher rate of pay.

"The last decade or two we've seen reductions in reimbursements for professional services, while reimbursements have stayed high on the facility side," Ed Hellman, MD, president and interim CEO of Indianapolis-based OrthoIndy, told Becker's. "At the same time, overhead has gone up, such as malpractice insurance, information systems and compliance."

These factors significantly reduce the margins that independent practices operate under. 

Independent physicians say one of their biggest challenges in the current market is to maintain their autonomy. As large numbers of physician practices consolidate under national health organizations, independent providers could lose access to patients who will be directed to affiliated surgeons.

One critical factor independent providers have in their favor is their ability to provide care without any restrictions from a health system or corporate entity over their head — something patients may also be paying more attention to.

"The biggest trend I'm following is a corporate takeover of healthcare in America today," James Chappuis, MD, of Spine Center Atlanta, told Becker's. "I'm watching the care that the patients are getting in these types of institutions. We see so many patients that come to see us because they're not happy with that type of care."

In private practice, decision making rests in the hands of the physician partners rather than hospital leadership or a corporate entity with a controlling stake in the practice.

"Often, these companies are far removed from the physician-patient relationship and the communities where providers serve," according to Vincent Hayes, COO at Bradenton-based Florida Digestive Health Specialists. "The employment model is quite different from ours, and we've heard from physicians who are having second thoughts or experiencing burnout."

While there will always be economic risks and administrative challenges for independent practitioners, the biggest draws in private practice continue to be the opportunity for higher compensation and the advantages when it comes to delivering high-quality, unrestricted patient care.

"The corporate practice of medicine is not the solution to what ails our system. Patients over profits should always be the physician's mantra," said Brian Gantwerker, MD, of the Craniospinal Center of Los Angeles. "While it is tantalizing to partner up, go to expensive lunches and sign lucrative deals, it is not worth the sacrifice of autonomy and very likely, selling the soul of your business."

Smaller practices will continue to look for larger groups to share some of the financial risks, and strategic partnerships will better equip independent providers to offer value-based care in a market that is becoming increasingly consumerized.

"Going forward, as insurers gobble up providers and hospitals gobble up providers, I believe the biggest attraction to independent practice will be avoidance of moral hazard and autonomy," Eric Mehlberg, MD, of Golden, Colo.-based Comprehensive Pain Specialists, told Becker's. "These are the values we should be concerned about losing as medicine becomes 'Kaiserified.'"

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