Today I met with a doctor that owns his own successful medical practice and heard the same song I’ve been hearing throughout the year: The Patient Protection and Affordable Care Act (PPACA), commonly known as Obamacare, is inhibiting the success of private practices. As a practice management professional that works with local physicians it’s hard for me to say that these are not trying times; however, in the words of the late author Robert Collier:”In every adversity there lies the seed of an equivalent advantage. [...]“
The equivalent advantage in this case goes to the private practice that fully understands what is happening to the healthcare market and figures out exactly how they will ensure that their small medical business will succeed.
Large medical groups and hospital systems themselves are adapting to the legislative times by attempting to get more efficient vis-a-vis buyouts of local private practices and hiring of their own medical specialists. With these tactics, hospitals are bound to increase in size, or at least breadth of capabilities to serve patients. They’ll also surely end up profiting more because they’ll absorb the patients of the private practices and they’ll get specialized doctors on their own payroll.
Insurance companies aren’t making matters easier on private practices by reducing reimbursement percentages. Every penny counts for small businesses – so when it comes to private practices it’s the insurance companies that have negotiation leverage. Insurance companies will find it hard to bargain down their reimbursement with a medical practice or group that brings in sizable revenue – it all boils down to the bottom line. We can also expect more of the ‘performance-based’ type of insurance payments like the program established by UnitedHealth that will tie doctors’ payments to quality of care.
Further stress on private practices comes in the form of Electronic Health Record (EHR) legislation that mandates compliance with certain Centers for Medicare and Medicaid Services (CMS) guidelines for “meaningful use” of EHR systems as a condition to receiving full reimbursement payments from Medicare (as well as an EHR adoption incentive from CMS). EHR systems are certainly beneficial to any medical provider’s ability to serve patients effectively and efficiently; but, it’s easier said than done for small practices with limited time, knowledge, and resources.
There are some proactive adaptations though that doctors can take within the current environment to maintain a successful growth trajectory for their private medical practices. The following options go hand in hand with an understanding of the Patient Centered Medical Home (PCMH) model of healthcare delivery:
- Establish well-targeted local marketing and outreach efforts to absorb a larger percentage of the local market share
- Provide patients with a unique, high value experience by implementing PCMH principles at your own practice that can help you retain loyal patients, and their friends, for decades
- Merge with other private practices, reducing overall overhead by forming partnerships with other local doctors to establish a joint practice
- Diversify revenue streams by developing a flat-rate or concierge offering to cater to patients that are less likely to rely on insurance, providing them with high quality care at less cost