Is Uncompensated Care Killing the Private Primary Care Practice?

As early as next year, an Accenture report claims, as few as one third of doctors will actually own their practice, down from nearly half in 2005.

Is the independent primary care doctor becoming extinct? Sure seems like it. But why?

First, let’s examine a tale of two generations: the new graduate and the baby boomer.

I can sympathize with the newly minted doctor. Fresh out of med school and saddled with massive debt, many of these graduates seek a regular paycheck out of the gate. Seems logical enough: Get in with a large commercial practice or work for ‘the man’ in a hospital.

In the past, many doctors saw this as temporary. Once they stabilized their finances, they planned to hang out their own shingles and become the doctors they dreamed of becoming when they opted for primary care.

But the economics of private primary care practice just don’t work for young docs today. Running a private practice means grappling with new regulations, diminishing insurance reimbursements, climbing drug costs and mounting business overhead.

As a result, many new doctors are reconsidering the dream permanently.

Their decision has a major impact on baby boomers in private practice, many of whom were counting on selling their practices to young doctors and retiring comfortably.

It’s a lot more difficult to find buyers now. Especially for practices struggling to stay profitable, as so many are—whether for the reasons mentioned previously, or because of the doctor or practice manager’s lack of business acumen.

The only alternative, then, for these boomers is to close up shop and complete their careers as employees alongside their younger peers.

The obvious result? Fewer independent practices now and in the future.

A bit of Business 101 would certainly help keep some private practices out of the red. But there’s one business challenge that’s so universal and so much a part of everyday office life, that its financial impact can be overlooked.

I’m talking about uncompensated care: the stuff doctors and their staff do all day long that isn’t reimbursed by insurers.

What stuff, you ask? Some, but not all, unpaid tasks include: Phone calls, replying to email, refilling prescriptions, interpreting lab, imaging and consultation reports—you get the picture.

For a detailed study of the subject, take a look at the research from Richard J. Baron, M.D. in his article titled What’s Keeping Us So Busy in Primary Care? A Snapshot from One PracticeIn the 5-doctor practice that Dr. Baron studied, each doctor was doing about 97 unpaid tasks every day.

Clearly, for the independent primary care practice to survive and thrive, the business model of the practice will have to change.

Last spring I was in Boston with my good friend Shahid Shah to give a talk at Health 2.0’s Spring Fling. We took a full 45 minutes to talk about the independent practice and uncompensated care (but you can listen to a condensed 8-minute version here). The enthusiastic response from the attendees indicated that we had struck a nerve.

I think we have a solution to the problem of uncompensated care. It certainly resonated with the talk’s attendees. Take a look at the Hello Health Electronic Health Revenue business model and tell me if you agree.

Or, if you’d rather, leave me a comment, I will be more than happy to chat.

About the Author
Steven Ferguson

Steven Ferguson is the Chief Operating Officer at Hello Health, the complete Cloud-Based EHR, Practice Management System and Patient Portal, that helps practices be more efficient and increase patient engagement.