With new economic realities and the ever-changing healthcare reform, the trend of consolidation in health care has begun transforming the practice of medicine. According to estimates from Accenture, a consulting firm, the percentage of independent doctors nationwide now rests at 39 percent, down from 57 percent in 2000.
In a recent article by The New York Times, they spotlighted the “medical battleground” taking place in Boise, Idaho, where a little over half the doctors in southwestern Idaho were employed by two major hospitals in the area.
The article states, “Many of the independent doctors complain that both hospitals, but especially St. Luke’s, have too much power over every aspect of the medical pipeline, dictating which test and procedure to perform, how much to charge and which patients to admit.” They go on to mention doctors being pushed to ignore what is best for a patient, by pressure to refer them to doctors working for the same hospital.
The medical battleground is not only referring to the fight between hospitals and practices they are acquiring; Boise has seen fighting and lawsuits between hospitals, in a fight for power. This has forced federal and state officials to join the fray to investigate hospitals becoming too powerful, using newfound leverage to stifle the competition.
Boise’s experience reflects a growing national trend toward consolidation, and a recent interview with Florida Hospital President and CEO Lars Houmann, in the Orlando Business Journal, foreshadows a possible similar future for Central Florida.
Houmann denied that Florida Hospital was activity seeking out new deals. “We don’t have a long shopping list, and we’re not out there trying to get them,” when addressing the recent purchase of Florida Heart Group, which has 19 cardiologists and 125 employees.
The article notes the doctors are allowed to refer outside of Florida Hospital, but the referrals will be tracked and the hospital will want to know why a doctor is referring out of Florida Hospital – as a customer satisfaction issue.
Although Houmann claims that Florida Hospital will allow the practice to remain a physician practice and not be converted into another arm of the hospital, the similarities of consolidation in both articles are apparent.
Florida Hospital is not alone in Central Florida for the desire to purchase practices. Orlando Health recently acquired Physician Associates for $50 million. The same 90–physician practice was also reportedly targeted by Florida Hospital.
Orlando Health, the multihospital system that owns Orlando Regional Medical Center (ORMC) and eight other local hospitals, thought the sale of Physicians Associates was an essential move given the direction health care is going.
The physicians at Physicians Associates, who dominate the local primary-care market and care for about 340,000 patients, will go from being independent practitioners to hospital employees with the merger.
“Our goal is to move to a new payment model and reduce the costs of health care,” said Dr. Wayne Jenkins, who directs Orlando Health Physician Partners, in an article in the Orlando Sentinel. However, the nation is seeing just the opposite with these mergers – prices are going up and quality is not improving.
Critics of the merger are not buying the hospitals claims they are “not going into the dark side.” Instead they are predicting reduced access due to providers feeling obliged or required to refer patients exclusively to the hospital that employs them, and possible job loss.
Although consolidation seems inevitable, there are other options for privately owned practices that you may not know about.
According to Houmann “the totally independent private practice model we’ve all come to know since the ’70s and ‘80s is not going to carry the health care system in the future. It doesn’t mean the hospital employs and owns everyone. It means there are networks of care where physicians are an integral part of that network.”
We disagree. There is a definite need for private practices that are independent of hospital systems, and there are still ways for those practices to make a solid living and not sell out. If we continue down this path, Central Florida could end up with only two options for medical care. Florida Hospital and Orlando Health are outstanding medical providers, but there must be a marketplace where the independent practice can thrive.
For 30 years, we have helped physicians handle their most challenging practice management and medical billing needs. We understand practices are constantly under attack from new federal regulations and ever-changing insurance rules.
NCG stands ready to help physicians continue to thrive and find financial freedom. If you want to learn more, reach me directly at 407.788.1906
VP of Business Development