Why the Affordable Care Act should not prevent Physicians from Opening a Medical Practice

March 23rd, 2014 marks the 4th anniversary of the marriage of America’s Healthcare System with the Patient Protection & Affordable Care Act PPACA.  This marriage has caused a chain reaction of assumptions and resultant, sometimes perceived, reactions.  These actions are interesting, at best.

3 Common Assumptions most providers have about the Affordable Care Act:

  1. A solo practitioner or small group of physicians will not be able to survive in private practice.
  2. To prevent the demise of the solo or small group practice, they must join a hospital.
  3. Hospitals are purchasing a large percentage of the practices.

If the facts are carefully reviewed, the vows made by this union included some critical promises that could very well serve to strengthen the ability for physicians to own their own practice, for the first time in recent history.

For those of you who presently own your own practice or have an entrepreneurial spirit and hope to someday open your own practice, a pleasant surprise was uncovered by the AMA 2012 Physician Practice Benchmark Survey.  At the end of 2012, 60.1% of practices were wholly owned by physicians.  71.8% of those practices were single specialty and 36.9% were multispecialty.  To top it off, the majority of practices is less than 10 physicians.

Now, we’ve all definitely seen a trend toward hospitals owning physician practices.  The question is why are hospitals buying practices?  It makes entirely good sense that they own practices to keep physicians in their geographic area and realize the community and financial benefits of that.  That is an age-old business strategy.

So, why the perceived rush for hospitals to own practices and physicians to feel the need to be owned?

There is absolutely nothing in the Patient Protection & Affordable Care Act requiring this reaction to assumptions being made.  In reality, it supports the notion that a physician, or small group of physicians, can create a very viable privately owned practice. Not only that, but the characteristics of this new model can contribute to the efforts to contain costs and improve the quality of care.

 Let’s look at how the Affordable Care Act can support Private Practice Physicians

  • Not only are the baby boomers hitting the healthcare system but there will be many more people covered by insurance, up to “tens of millions.”  These folks will now see their physician for non-emergent illnesses where they otherwise might have chosen the Emergency Room or no care at all.  This sends up a red flag as to whether there will be enough physicians.  The PPACA is making provisions for growing the workforce.
  • There will be free Medicare preventive services, free preventive care for women, and additional services for children and other groups that were not previously covered.  Once again, a much larger population of individuals needing a physician.
  • The new system is focused on preventive care and immunizations at no cost to keep people healthy and minimize costly chronic illnesses.   More people seeking care.
  •  Insurance company reform prevents excessive rate increases and requires a high percentage of the revenue to be devoted to care.

Insurers can no longer increase your premiums for profit (also known as “price gouging”). They must justify rate hikes over 10% to the state and then display them on their website (and .gov website) the same day. As of Sept 2012 this measure saved Americans $1 billion. However not all States are using this rule, causing large Premium increases in their respective States.

Insurance companies now have to tell their customers how their money is being spent. If they don’t spend at least 80% of the money on health care they have to give customers a rebate for the difference. The 80/20 rule has saved Americans $1.1 billion dollars via rebates.

  • Medicare will be preserved.
  •   Medicaid allowed amounts will be raised to the level of Medicare allowed amounts.

As Medicaid programs and providers prepare to cover more patients in 2013, the Affordable Care Act requires states to pay primary care physicians no less than 100 percent of Medicare payment rates in 2013 and 2014 for primary care services. The increase above current payment levels is fully funded by the federal government.

  • Increased access to more data to allow doctors and patients to make the decisions that work best for them.   Evidenced-based medicine will be widespread.
  • New models of care delivery are already taking form.  Accountable Care Organizations (ACO) and Patient Centered Medical Homes (PCMH) are two already launched.  The goals are the same, to cut costs and improve the quality of care.

Maybe, the last bullet could cause pause.  How would an individual provider create a PCMH?  It’s being done by hundreds, if not thousands of practices all over the country.  Many Electronic Medical Records provide functions to include the appropriate reporting capabilities for a PCMH.

So, what about the Accountable Care Organizations?

They are, without question, in their infancy.  Many hospitals form their own ACOS and work with community physicians, ones they own and ones they don’t own, to wrap everyone in to the fold of their ACO.

So, know that a physician is more likely to own their own practice than be hospital employed, an extraordinarily high number of patients are going to need your services, Medicaid might be a carrier to consider in the near future rather than to shy away from and insurance company reform is meant to protect the consumer and the provider.

So, be confident in opening your doors and keep your eyes open for ACO opportunities in your area, in case they offer a benefit to you in the future.  Last, but not least, celebrate the marriage between the PPACA and the American Healthcare System.

Resources & References: