The challenge of physician, practice independence in 2020 — 5 key insights

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"It's an incredible challenge to remain independent."

That's what Wendy Ann Pardee, PhD, CEO of the Children's Institute of Pittsburgh, told the Pittsburgh Post-Gazette in late 2019, when her organization revealed plans to shutter two outpatient centers.

With a number of deals already underway in the first weeks of 2020, Dr. Pardee's statement is still pertinent — especially for small practices and ASCs.

Here are five insights on why independence remains a challenge and what autonomy now looks like for physicians:

1. Hospitals and managed care plans have been acquiring physician practices over the past several years in an effort to boost referrals, according to the 2020 KPMG Healthcare and Life Sciences Investment Outlook survey. Meanwhile, independent physician management companies are focusing on building scale to support autonomous physician practices

2. Physicians who retire from small practices increasingly aren't replaced, as physicians new to medicine opt for hospital employment instead, according to new research. In small physician practices studied, one physician entered for every three who exited. 

3. Independent groups will be attractive targets for mergers, private equity investment and payer relationships over the next 10 years, according to S2g's 2019 Impact of Change forecast. This trend is due in part to high demand for ambulatory services.

4. Average annual compensation for physicians in solo practices was $366,967 in 2018, compared to $330,433 for those employed by hospitals, according to Doximity. The figure was $342,027 for physicians in health systems, accountable care organizations or integrated delivery networks.

5. Because of employment and ownership trends, there was little growth in the total number of Medicare-certified surgery centers from roughly 2010 to 2017, Becker's reported. Many independent physicians already owned a surgery center, and physicians employed by health systems couldn't invest in a surgery center.

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