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Financial Leverage for Physicians: Collaboration is Key


With payer reimbursement often an uncertainty and the bigger picture financial landscape in flux, independent physicians will need partnerships to gain some leverage.

The large majority of people who go into the practice of medicine are not business-minded people. Even the ones who choose their field because they think they will have a comfortable life generally don’t know the ins and outs of running and growing a business; at least not to the same degree as most other businesses.

This became incredibly clear to me as I transitioned from being an employed physician to being a solo private practitioner. I turned to friends and colleagues for advice. I asked about payer contracts and rates. I asked about suppliers. I asked about regulations and compliance. And almost invariably I was told that they don’t know the answers. Nobody knew what they were getting paid for what. I was told to speak to their office managers about vendors and prices and such.

Now I don’t blame them. The payers make it very difficult to figure out what their rates are. They give you an example, but that isn’t necessarily what any particular physician will get. As a matter of fact, we have one insurance company that pays me more than my associate. We do the same thing and for the same codes, our rates are different. Of course, we only figured that out after the fact, after we received payments from them.

Not only do we not know ahead of time what we are going to get paid, once we are paid, if we don’t like it, well, that’s too bad. Most of us do not know how to negotiate a better rate. Most of us don’t have the power to do so anyway. Insurance companies don’t bother negotiating with an individual provider. We have no leverage. If we threaten to drop the plan, they don’t care. What’s one provider?

I recently attended a meeting where part of the discussion was the future of our local hospital’s medical staff. Can we work together to form a group of physicians who can do business as a group, improve communication among physicians and provide better care, yet maintain the independence of the individual providers? Excellent question.

While being an employed physician is becoming more attractive, especially for those coming out of residency, the majority of current private practitioners don’t want to be employed. They want to run their practices their way, hire their own staff, set their own policies. I know I do. On the other hand, being part of a larger group will give us the power to negotiate better payments from insurers, lower prices for supplies, lower rates for benefits such as malpractice insurance. So we agree that the theory is good. The question now is: “How?”  That is still to be determined.

With the upcoming changes in the healthcare system, everything is still up in the air. Fee-for-service will not survive much longer. Everything we have gotten used to over the last several years will change. How this affects the solo and small practices has yet to be seen.

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