More
Physicians Move to Group Model, Except, Maybe, Pathologists
Physicians
continue to migrate toward larger group practice settings. Consolidation
of physician group practices continues, although the pathology
specialty seems to be resisting this trend. The
American Medical Association reported in 2005 that about 40%
of physician groups had 3 or 4 physicians, but those groups employed
only about 11% of all group-practice positions. Conversely, only
1.4% of these groups had 100 or more doctors, but they represented
almost 32% of the 247,000 physicians in group practices. By contrast,
the predominant group practice model in pathology tends to be
four physicians or less.
This gradual migration of physicians away from one to three doctor
groups and into larger group practice settings has long term implications
for both clinical laboratories and community hospital-based pathology
groups. Larger physician groups refer greater volumes of specimens
and this larger volume can help a laboratory justify adding customized
services that add value to the referring clinicians.
For anatomic pathologists, in particular, consolidation of physician
groups into regional super-groups comes with an interesting downside.
Urology and gastroenterology groups, particularly those with eight
or more physicians, generally have enough specimen volume to profitably
internalize their biopsy referrals. That is why many of these
groups are establishing in-house anatomic pathology laboratories.
Because urology and GI group mergers were extensive during past
decade, supergroups in these specialties control a proportionally
larger volume of anatomic pathology case referrals. Thus, when
they build their own laboratory, the loss of business to pathology
labs can be significant.
Dark Daily observes that anatomic pathology groups are now seeing
some unpleasant consequences from the lack of group practice consolidation
in pathology during the 1990s. Even as their physician colleagues
in the local community were merging and creating larger groups
- primarily to gain leverage in managed care contracting - hospital-based
pathology groups resisted this trend. After all, they often had
patient access through their hospital’s managed care contracts.
During the 1990s, just a small number of regional pathology “super-practices”
emerged. Examples of these groups, with more than 20 pathologists,
are Bayless Pathmark Pathology in Cleveland, Ohio; ProPath
in Dallas, Texas; UniPath
in Denver, Colorado; and Pathology,
Inc in Torrance, California. However, these pathology groups
report greater success compared to their smaller peers. Their
size allows them to finance sales programs to increase specimen
volume and revenues, as well as to set up and offer new molecular
pathology tests. With more resources, these pathology supergroups
have tended to weather the healthcare storms with more stability.
Experts tend to believe that consolidation among physician groups
will continue. There are many economic forces which make such
mergers attractive. Not the least is the ability to spread the
cost of EMR (electronic medical record) and practice management
software systems across more doctors. The clinical laboratory
industry has already undergone extensive consolidation. That is
one reason why there are many competitive hospital laboratory
outreach programs in the market today. Multi-hospital health system
laboratories have more resources with which to develop an outreach
program.
The question mark is what will happen to the private pathology
group practice based in community hospitals. For the past 12 years,
“bigger is better” has been a major strategy by all
classes of providers and most medical specialties. How long will
the profession of anatomic pathology resist the same market forces
that motivated other physician specialties to merge and consolidate
as a strategy to protect income and access to patients?
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