Reports of the Death of Physician Private Practice Have Been Greatly Exaggerated

When it comes to the survivability of physician owned practices, is the Disease Management Care Blog being a naive, starry-eyed simpleton? After reading yesterday's DMCB linkfest, it'd be easy to think so.

Yet, the DMCB thinks it's being a contrarian realist about the 'death' of private practice and the rise of salaried physicians. Here's why.

At a past national meeting of the American College of Physicians, the DMCB ran into a elderly doc. Over libations, it mentioned how much things had changed for the worse. That wise doc disagreed. Things are always changing he said, and the profession and patients are better off for it.

That was 25 years ago.

The pace of change has increased, but the fact is that there are still plenty of smaller and physician-owned practices that also continue to adapt. The DMCB has run into these docs at countless meetings, seminars and meals. They are working very hard, are very cynical, are not happy with their current income levels compared to the past, but they're also far from walking away from their practices. The DMCB suspects the same is true in countless towns and cities across the U.S.

Anecdotes alone, however, don't tell the whole story. These 2008 data show the majority of U.S. physicians remain committed to their businesses and their patients and are not about to become salaried: 61% of docs are self-employed and only 21% work in "institutions." In fact, 59% work in settings with 9 or less physicians.

That being said, however, there is a trend away from physician owned practice settings that began decades ago. According to the AMA link above:

"....the proportion of patient care physicians who were owners fell from 75.8 percent to 57.7 percent between 1983 and 1994. Liebhaber and Grossman (2007) report a decline from 61.6 percent in 1996-1997 to 54.4 percent in 2004-2005 using data from the Center for Studying Health System Change’s Community Tracking Study Physician survey."

What accounts for this? Again, according to the AMA:

First, [younger] physicians tend to enter practice as employees. Also, older physicians ... started practice at a time when ownership was more common among all physicians regardless of age. Finally, the great influx of women into the profession of medicine over the past few decades also contributes to the observed age difference in ownership data.... Because women physicians are—at every age—more likely than men to be employees, this also drives the difference in ownership between the youngest and eldest age groups of physicians.

The DMCB interprets this to mean that while there's been a long term demographic trend away from small private practices, it's hardly been the wholesale stampede that's been portrayed in the media or apparently wished for by the Commonwealth Fund.

Last but not least, this downward trend could stablize to a new equilibrium. There are several reasons why:

1) the rise of the "concierge" private physician business model, where a hefty annual fee is charged in exchange for highly personalized care.

2) the persistent income gap between private practice and large academic group practices combined with opportunities for entrepreneurship.

3) the growth of larger yet still independent physician owned practices, especially in specialty areas.

4) the economic impact of the recently passed health reform legislation.

Based on these trends, it would appear the death of private practice has been greatly exaggerated.