Family physician John Hale has been in practice for over 23 years. His group practice, Doctor's Clinic of Union City, located in rural northwest Tennessee, was known for being one of the best-run practices in the region. It did so well over the years that there were several offers to buy the practice and integrate it into a multi-specialty group or hospital corporation. The group always said "no, we're not selling," until two and a half years ago, when it sold out to Baptist Memorial Health Care Corporation, based in Memphis, Tenn.
What changed? The practice couldn't recruit new physicians anymore. It just couldn't compete with hospitals who often signed residents while they were still in medical school, luring them away with promises of stipends to pay for school loans. The practice was also struggling to pay for health insurance coverage for its staff, and needed an EHR system to replace an aging practice management system that it used for billing.
Many practices are struggling with the same issues as Hale's group. A significant factor in the struggle to stay solvent is the stagnant compensation environment. For those physicians who want to stay in practice, they will have to work smarter and leaner; seek out opportunities for collaboration and synergy with other groups; maximize technology use; and incorporate new compensation models like value-based reimbursement.
Who's doing well?
How has physician compensation changed over the last year? It appears that compensation is still flat — 42 percent of the 1,338 physicians who responded to Physicians Practice's 2014 Physician Compensation Survey say their personal income has not changed over last year. And 32 percent say they are slightly disappointed with their compensation.
Perhaps serving as a bellwether, Tommy Bohannon, divisional vice president for recruiting at physician staffing firm Merritt Hawkins, says that his company found compensation for internal medicine declined slightly over the last year. "This is the first time that I can remember that a primary-care specialty decreased a little bit. I really feel [the reason is] this push to change delivery models to provide care everywhere, and pushing this out into lower cost settings," like retail medicine or urgent care, he says.
Practice viability over the coming one year to three years is split, according to our survey; 35 percent of docs tell us their practice conditions are "mixed," but not growing significantly, while 32 percent say conditions are "robust." Fifty percent say they plan to continue practicing as they are, while 12 percent say they will retire, and 13 percent say they will seek employment by a larger health system.
* To review complete survey data, check out the Physicians Practice's 2014 Physician Compensation Survey.
Don't be afraid to negotiate
The trend toward employment by a large health system or group practice is still continuing. In our survey, the scale is tipping toward employed docs over those in independent practice; 40 percent say they are an owner/partner of a practice, while 60 percent say they are either employed by an independent practice or health system.
According to Merritt Hawkins' "2014 Review of Physician and Advanced Practitioner Recruiting Incentives," 90 percent of new jobs for physicians are employment-based at hospitals, medical groups, or community health centers.
Bohannon says, "We have seen the trending of our [recruitment] environment … mirror that of the broader market. … Just four short years [ago] … you still had 18 percent [of physicians] who were in a private practice environment, and that is down to less than 5 percent this year."
However, becoming an employed physician does not mean you have to sacrifice all control. As Hale, who is also president-elect of the Tennessee Medical Society, points out, his group took over a year to negotiate an agreement with Baptist. "We went into this certainly very leery of being bought out. We enjoyed our independence, but we realized that [the hospital] wanted us to be happy. They knew we'd be more productive … [and] we would be better parts of the corporate cog if we were happy," he says.
Our experts tell us it is possible to negotiate a contract that works specifically for you and your group. Partnering with a hospital can take many different paths. Marc Mertz, vice president of physician consulting firm The Camden Group, says "Hospitals know that they have to align with physicians in new and different ways. … And in some cases that means employment. Sometimes that means other partnerships, whether that means co-management, joint ventures, or clinically integrated networks."
Use what you've got
So what if you just can't stomach being an employed physician? Are there ways to bolster your practice's performance and revenue without breaking the bank? According to our experts, there is no magic formula, but you can maximize your efforts and work smarter.
"Life isn't getting any easier in private practice," says Mertz. "Costs keep going up, no one is paying you any more to do what you are doing. If the government isn't paying you more and the payers aren't paying you more, you've got to do more with less."
Here are seven easily implemented strategies you can use to boost your practice efficiency and revenue:
1. Make sure staff are working to the fullest level of their license.
It's clear to anyone who works in the medical industry, the practice of medicine has increasingly become paper bound. With pre-authorizations, medication approvals, and referrals to name a few, physicians can get caught devoting too much time to administrative tasks. Experts warn that's a big mistake. The only people who can treat patients are physicians and ancillary providers. They are the ones who drive revenue. For that reason, Mertz recommends offloading administrative tasks to medical assistants and RNs whenever possible.