Evidence-Based Medicine: Primary Care Practices May Become Extinct: "We Tried to Tell You It Was Bad."

We will now discuss in a little more detail the Struggle for Existence.

Charles Darwin (1809-1882), The Origin of the Species

The devil is in the details.

Popular Saying

March 20, 2012 - The evidence is there. Primary care may not survive health reform and other economic pressures. In a 2010 Physician Foundation survey of 60,000 physicians, 63% of whom were primary care physicians, 68% said health reform would diminish the financial viability of their practices while 28% characterized their practices as “a dinosaur about to go extinct,” 58% as “on shaky ground,” and only 14% as “relatively robust and viable.”

The Physicians Foundation titled itw survey white paper as Health Reform and the Decline of Physician Private Practice. The Foundation is now conducting an electronic survey of 650,000 physicians, slated to be published in late summer or early fall.

The results of the previous and current survey may surprise the general public, who tend to think of all physicians as affluent.

An article in the March 16 Wall Street Journal entitled “Why America’s Doctors Are Struggling to Survive” paints a different picture.

It describes in detail why many doctors are on the verge of extinction, even as they seek to improve their practices through more effort and resources to coordinating care, offering continuous attention to patients, and implementing and maintaining electronic medical records.

The problem comes down to falling revenues, rising expenses, and a shrinking bottom line. A physician in a 3 person medical practice in the Denver-area says their practice “is not sustainable under the current payment conditions. There simply is not enough money to provide the services we provide.”

The Evidence is in The Details

Here is the balance sheet evidence of the Denver practice.

Revenues

• $1,571, 773, salaries and benefits for 3 doctors and 22 staff.
• $243, 089, insurance company subsidies for “medical home” pilot project
• $222,763, Practice Association Medical Advantage Plan payment
• $33, 573, Grant to add a social worker
• $44,301, Government incentives

Total - $2, 115, 501

Expenses
• $1,731,600, Salaries and benefits for 3 doctors and 22 staff
• $171,666, Rent
• $141,015, Everything from tongue depressors to needles
• $5,196, Maintenance of electronic records
• $36,763, Marketing and outreach

Total, $2,086, 240
Total

Net Income, $29,261

Note that the practice received $543,726 from sources other than office visits, and without these payments, the practice would have a total net income loss of $514,465 rather than a net of $29, 261.

What is not apparent in these figures is that maintaining a medical home (continuous coordinated care, meticulous follow-up, and increased attention to patients inside and outside the office with electronic health record support and maintenance) costs a significant amount of money. While the medical home concept may be attractive ideologically, it is draining financially.

Officials from UnitedHealth Group, Wellpoint, and Aetna – the three insurance companies who supplied the $243,089 to support the pilot “medical home” project say they are moving rapidly to new payment options to keep primary clinics viable, but in the case of the Denver clinic, payments will stop in May 2012, with no guarantee that payments will resume.

Meanwhile, when primary care practices go broke, practitioners have these options - medical homes, concierge/direct payment practices, community health center employment, accountable care organizations, or hospital employment. Other options, of course, are to retire, switch careers, go locum tenens, or cease seeing 3rd party patients – Medicare, Medicaid, the health plan recipients.

Given these details, it is small wonder that 68% of primary care practitioners believe their practices will be financially nonviable under reform and other economic contraints, that less than 10% of medical students are choosing primary care careers, that a shortage of 50,000 of primary care physician exists, that hospitals own more than 50% of primary care practices, and that 86% of primary care physicians consider independent practice either dinosaurs, destined for extinction, or on shaky ground; and that many practices seek other revenue sources – biopsies, other procedures, lab, -x-ray, or imaging ownership.

Someday, remaining primary care clinicians will look back, and say, “We tried to tell you it was bad.”

Tweet: Rising expenses, failing revenues, required electronic records, and regulations, may push independent primary care practice to extinction.