The Pendulum Is Swinging Back Towards Independence
Jan 24, 2024
This article originally ran January 5, 2023 in Medical Economics
Where Do You Want To Be?
It’s become somewhat of an annual tradition for healthcare market analysts and forecasters to assess the always tumultuous medical practice environment and predict trouble ahead for independent physicians. In recent years the tone has turned even more negative, amplified by pandemic practice closures, shrinking choices for doctors and ever-sharper increases in reports of career-destroying burnout. All signs may seem to point to further erosion of decades of autonomy and individual vision with a short list of options for physicians in 2023.
These include becoming employed by a healthcare system, payor organization or private equity firm, retiring early, leaving medicine altogether - or making a change to concierge medicine. I believe concierge medicine is a practice model that can paint a completely different picture of the future, in full vibrant color, by consistently delivering on its bold promise to transform the physician-patient relationship, enhance the sustainability of private practice, reduce healthcare costs, and improve physician work/life balance. Consider these factors as you ponder your prospects for 2023.
Further stagnation of the status quo is a certainty. Even the staunchest optimist can’t make a case for financial improvement in 2023 as physicians in traditional fee-for-service practices will continue to battle market forces that place them at a considerable disadvantage.
“Increases in overhead decrease revenue to the operation and the physicians who are already burned out are taking reduced pay.” 2022 MGMA Cost and Revenue Survey Report
Diminishing government, and commercial insurance payments, plus constantly rising overhead costs and unrelenting inflation equals an unsustainable business model. The facts are:
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The Medicare conversion factor used to calculate reimbursement was $36.69 in 1998, $34.61 in 2022, and is set to decline to $33.06 in 2023.
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The overhead required to run a private practice has increased by 40% in the last two decades, with rises in office rent, utilities, and office staff salaries due to inflation. According to the most recent MGMA survey, 90% of medical practices reported that their costs rose faster in 2022 than revenues, while only 10% said their revenues kept pace ahead of rising costs.
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Unlike other businesses, there is scant opportunity to reverse the financial decline with increased production. There are already not enough hours in the day for primary care physicians, most of whom are managing full practices with no capacity for more patients. In fact, recent research from the University of Chicago provided this eye-opening statistic: following national recommendation guidelines for preventive, chronic disease and acute care would take a primary care physician 26.7 hours per day to see an average number of patients.
A concierge medicine practice, with revenues primarily based on annual membership subscriptions, thrives without the need to depend on reimbursements or expanded patient panels. Throughout its 20-year history the model has proven to be robust and resilient in the face of economic downturns, high inflation, sweeping healthcare reform initiatives, and most recently, the pandemic.
“For years I rarely took time off because it affected our office’s cash flow. Eventually I realized I was running too hard and couldn't keep up that pace. Concierge medicine was just a much better way to do it.” – Concierge physician Dr. J.T.
The seismic shift to employment has not proved to be a panacea for physician burnout. Acceleration of a trend that had been growing for years was big news in 2022, when for the first time, less than half of U.S. doctors worked in physician-owned settings and were instead employed by hospitals and corporations. Yet physician burnout continued at an unacceptably high rate of 73% in the Medical Economics survey published later that year. Additionally, recent research from Jackson Physician Search and MGMA found that 40% of medical groups reported that a physician had retired early or left the organization due to burnout in 2022.
“Many of the baby boom cohort of practitioners chose employment as a bridge to retirement and the rising number of women entering medicine traded independence for work-life balance.Viewing employment as a solution to work-related stress and burnout has proven simplistic, and many of the clinicians seeking shelter from these problems have not found it.” – STAT, 10.22
The pendulum may well swing back from employed to independent in 2023. For many, including older physicians contemplating retirement from their stress-filled days and women doctors struggling to care well for patients and their own families, concierge medicine will provide a much-needed lifeline.
“Our change to a concierge medicine model has allowed me to continue practicing. I have plenty of energy and I look forward to coming into the office. It's a privilege to practice medicine in this way. And my only regret perhaps is, that we didn't do it five years earlier.” - Dr. C. B., concierge physician since 2020
While a great number of independent physicians in traditional, fee-for-service practices are committed to offering high quality care, continuing inadequate compensation will force change.
“Empirical evidence suggests that physician-owned private practices deliver quality that is equal to, or better than, practices owned by systems. These physicians care deeply about their practices and the roles they play in their communities. Some had a difficult time seeing a future for solo, small, and medium-sized physician-owned private practices…others were strategic in the way they managed change, adapting to new technologies, and new practice models.” – Mathematica/AMA study 10.22.21
The hard-working physicians who are already delivering concierge-like care in their traditional practice model are frequently the most frustrated, unable to glimpse any light at all at the end of their personal tunnel. In our experience, these physicians are also most likely to succeed when they make the change to concierge medicine, having built a sterling reputation and an unflaggingly loyal patient panel.
“We were facing not just the financial burdens of COVID and the fiscal realities of decrease in reimbursement, but tremendous burnout. There was always this feeling that you couldn't do enough, you were never finished. In the concierge medicine model, we can spend time with people. They do better, they appreciate that time, and the difference is really remarkable to me.”- Concierge physician Dr. B. B.
Final thoughts for the new year: most physicians aren’t formally trained in the business of medicine, having rightly focused on science and the art of healing. But if you’re reading this publication, you probably already realize that independent physicians need that kind of knowledge to avoid becoming another casualty of our broken healthcare system. If you are interested in making a change to concierge medicine, I encourage you not to go it alone. Explore, ask, research and find a trusted partner who can provide guidance and expertise and is fully committed to your success. The choices you make in 2023 will define not just your own path, but the future of patient care in the United States.
This is Tod, and this last paragraph affirms why our SimpliMD community has risen up—the need tremendous. As you know I am committed to The SimpliMD Mission:
To inform, inspire, and support physicians to flourish through micro-business competency, which in turn will empower them to thrive in their roles as both healers and entrepreneurs.
Starting your micro-corporation is a way of placing your foot in the ground proclaiming your independence from the marketplace that seeks to control you. Let’s start a conversation about how SimpliMD can help you do this—it will be $99 well spent for your own personal business consultation.
Owning a micro-corporation is a perfect fit for a concierge medical practice or direct medical care models—so if you are contemplating this option, reach out to me here and let me help you build it with right small business architecture.
