INDUSTRY ANALYSIS

The Decreasing Number of Independent Practices and Top Concerns for Independent Practices

Independent Providers/Practice Facts

The number of independent practices and physicians in the US is decreasing. Top concerns for independent practices include decreasing the administrative burden, improving care delivery, and improving patient engagement. Most independent practices have been put in a precarious financial position due to the COVID-19 crisis.

Decline of Independent Healthcare Providers

  • There has been a steady decrease of independent healthcare practices in the US. In 1983, 76% of doctors in the US owned their own medical practice. By 2016, that number had decreased to only 47%.
  • This trend has been happening nationwide, with reports from doctors from Ohio to New York illustrating the trend.
  • Reasons for this decline include overall structural shifts within the healthcare system, specifically the consolidation of healthcare systems and private practices being purchased by larger hospitals. Much of this consolidation is due to higher administrative demands, increasing healthcare costs, and decreasing reimbursement rates from insurance and Medicaid.
  • Studies have shown that retiring independent providers are not being replaced, with some studies showing that “one physician entered for every three who exited.”

1. Decreasing Administrative Burden Key Focus

  • In the 2019 Kareo survey of independent practitioners in the US, over 70% noted that “increasing demands on provider time and the time demands of quality measures and EHR [Electronic Health Records] are impacting care delivery.”
  • As such, there is a major focus on utilizing technology to reduce the administrative burden on private practices.
  • This increase in administrative burden has come mainly from the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, which has increased the use of EHR. However, many EHR providers have not kept up with ever-increasing regulatory and privacy requirements, leading many practices attempting to utilize outdated, time-consuming software.
  • Slightly more than 70% of practices reported that “the time demands of EHR data entry detracts from the ability to deliver patient care.”

2. Improving Care Delivery a Major Priority

  • For independent practitioners, improving care delivery was a major priority for all practices, however, it was more important for practices in operation for 11 years or more.
  • Within this priority, providers wanted to focus on “streamlining [the] care delivery workflow, […] security and compliance, improving diagnostics, prescription management, managing labs and testing, improving treatment adherence, and point-of-care documentation.”
  • Overall, the delivery of care has become increasingly complex due to an increase in regulations and an increase in technological demands.

3. Focused on Improving Patient Engagement

  • 79% of private practices in the US agree that patient engagement is important, with practices that have been in operation for more than 11 years being more likely to say it is extremely or very important.
  • With the ever-increasing demands on private practices, patient communication can break down, which leads to missed appointments, a delayed response to patient questions, confusion over insurance, and other challenges. These in turn can lead to decreased revenue and poor reputation.
  • As consumers increasingly demand healthcare be convenient, timely and personalized, practices are looking to technology to help them improve patient engagement, including telehealth and mHealth.

Private Practices face COVID-19 Losses

  • Private practices in the US are facing devastating economic losses from the COVID-19 pandemic, as practices saw decreased patient volumes from 30-75%. Experts predict that until a vaccine is widely available, practices will only return to seeing 80-90% of their patient volumes.
  • In order to cope with the COVID-19 crisis, many private practices began offering telehealth, however, this was challenging for smaller practices to implement.
  • Many private practices only have 2-3 months of operating expenses saved, meaning that after that point they would need to reduce staff or reduce compensation to stay afloat.

Value-Based Care and the Indepdent Provider

Independent practices are transitioning to value-based care, however, this still presents a risk to private practices and doctors do have concerns. Private practices are experiencing challenges in making the transition to value-based care. The COVID-19 pandemic is expected to delay the transition to value-based care.

Increase in Value-Based Payments

  • Value-based payments represented 34% of total healthcare payments in 2017, an increase from 23% in 2015.
  • 20% of private practices “completely agreed” that value-based payment were an increasing part of how they were being reimbursed, while slightly more than 30% “somewhat agreed”, based on the 2019 Kareo survey of independent practitioners in the US.
  • As value-based payments increase, the focus of providers on improving care delivery and creating a patient-centered practice increases.

Value-Based Payment Presents Some Risk to Independent Providers

  • The increase in value-based payments does present some risk to independent providers due to the increased pressure this model places on practice engagement and population health management.
  • Value-based payment can be challenging to manage in a small practice, due to “the high costs associated with taking on seriously ill patients, [which] prevent small practices from engaging in high risk models.”
  • These challenges have led to some insurance companies, like Blue Cross Blue Shield, to modify the value-based model to make it easier for smaller practice to utilize, through changes such as funds to be used distinctly at the discretion of the independent physician and upside-risk provisions.

Concerns About Value Based Care

  • In a 2018 survey of physicians in the US, 61% of doctors expressed concerns that value-based care would be harmful to their practice.
  • 63% stated that the switch would negatively impact their earnings, and 49% believed value-based care would negatively impact patient care.
  • The main reasons for these concerns were “creating an additional stressor to already-falling claims reimbursement rates”, “spending more on services or partnerships to ensure quality performance success”, “adding to documentation and data collection requirements, which results in additional costs and strains on resources” and finally “causing physicians to consider a healthcare merger or acquisition.”

Implementation Challenges

  • One major challenge in transitioning to the value-based model for private practices is the increase in administrative tasks associated with the model, including “reporting tasks, monitor patient outcomes inside and outside of the practice, track financial outcomes, and more.”
  • Part of the reason for this is that practices are still using outdated EHR technologies, which do not easily transition to the reports and information necessary to the value-based care model.
  • These implementation challenges are driving some private practices to merge with larger healthcare organizations.

COVID-19 Pandemic Challenges Value-Based Care Shift

  • Due to the financial hardship being experienced by private practices in the US due to the COVID-19 pandemic, it was expected that “the coronavirus pandemic would deal a blow to the industry’s progress toward value-based care.”
  • In a survey conducted in April 2020, “56 percent of accountable care organizations (ACOs) in downside-risk value-based contracts through the Medicare Shared Savings Program (MSSP) said that coronavirus-related financial struggles might drive them out of the MSSP.”
  • However, other experiments in value-based care with primary practices have continued despite the pandemic, including Blue Cross NC’s Accelerate to Value program, which provides “financial support for practices as they move into value-based care,” and Geisinger Health Plan.
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