Change in who owns office-based physician groups is a trend which can create new winners and losers among the nation’s independent medical laboratories

Physicians today are more willing to practice medicine as employees than as partners or owners of their medical group. This signals a significant shift in the market for clinical laboratory testing and anatomic pathology services.

This new development will require that all medical laboratory organizations to rethink how they serve office-based physicians. New strategies will be required, both to better meet the clinical service needs of these employee-physicians, as well as to redirect sales and marketing programs to the new decision makers.

List of Physician Concerns Regarding Independent Practice

The trend toward physicians-as-employees is confirmed by multiple studies and sources. For example, information released on October 31, 2012, confirms that the number of doctors who operate independently is declining, noted a story published in Amednews.com.

Data collected by consulting firm Accenture, which included a survey of 204 physicians and analysis of data from the American Medical Association (AMA) and MGMA-ACMPE indicates that only 36% of practicing physicians will hold a practice ownership stake by the end of 2013. That compares with 57% in 2000.

According to the Accenture survey, top concerns about independent practice cited by physicians include:

• business expenses, 87%;

• managed care, 61%;

electronic health record (EHR) requirements, 53%;

• problems associated with managing staff, 53%; and,

• number of patients needed to break even, 39%.

“What’s getting paid for a[n office] visit is not growing, but the complexity of running a practice is,” observed Kaveh Safavi, M.D., JD, health industry lead for North America at Accenture. Only about one in three physicians is expected to hold a practice ownership stake in 2013.

Gen X, Gen Y, Baby Boomer Physicians Move to Employee Models

Safavi also observed that both younger and older physicians increasingly opt for employment. The new data reveals why Gen Y and Gen X doctors are more interested in employee practice opportunities. It also explains why baby boomer docs—nearing retirement—see selling their medical group and finishing their careers as employee-physicians as an acceptable option.

Shown above is a chart presented in the New England Journal of Medicine in 2011 that shows the change in the percent of primary care physicians and specialist physicians who are employed by hospitals. The trend in since 2000 is unmistakable and the data show that the proportion of physicians who are employed continues to increase. Clinical laboratories and anatomic pathology group practices will need strategies to respond to this important trend. (Graphic copyright New England Journal of Medicine.)

Shown above is a chart presented in the New England Journal of Medicine in 2011 that shows the change in the percent of primary care physicians and specialist physicians who are employed by hospitals. The trend in since 2000 is unmistakable and the data show that the proportion of physicians who are employed continues to increase. Clinical laboratories and anatomic pathology group practices will need strategies to respond to this important trend. (Graphic copyright New England Journal of Medicine.)

“Younger physicians are more comfortable not owning their own practice, and mid-career or older physicians are trying to figure out what the end of their practice is going to look like and what will give them a soft landing for retirement,” Safavi stated in the story.

In an earlier e-briefing, Dark Daily reported on a survey of 302 physician residents at the end of their training, which was conducted by the physician recruitment firm of Merritt Hawkins 2011 survey. (See Dark Daily, “Generation Y Physicians—Including Young Pathologists—Bring Different Goals and Values to their Practice of Medicine,” published October 3, 2012.) The survey suggested that younger doctors might not be as interested in buying into a physician-owned practice as some of their predecessors.

Shift in Ownership of Office-based Physician Groups

Two events confirm the trend away from physicians as entrepreneurs to physicians as employees. First, as reported by Amednews.com, the AMA recently approved a policy to address physician autonomy in employment situations. The policy dictates that physicians act autonomously in questions of patient interests versus employer interests.

Second, the office-based physician group ownership issue received high emphasis at the 2012 Executive War College in New Orleans. This is because of the significant impact for independent clinical laboratories used to marketing to physician owners.

During his presentation, conference producer and editor-in-chief of The Dark Report and Dark Daily, Robert Michel, had this to say: “The era of physicians as owners of their business is ending, and the transition is rapid! This is a major threat to the existing independent clinical laboratory company business model.”

Pathologists and clinical laboratory managers should understand that, with more physicians practicing medicine as employees, it will increasingly be hospitals, health systems, and insurance companies who will decide which medical laboratory to use. Michel’s advice: “Independent laboratories will need to develop a strategy to retain the lab test referrals from these office-based physicians.” (See The Dark Report, “Executive War College Looks At Threats to Lab Industry”.)

—Pamela Scherer McLeod

Related Information:

Doctors describe pressures driving them from independent practice

Merritt Hawkins Survey: 2011 Survey of Final-Year Medical Residents

Generation Y Physicians—Including Young Pathologists—Bring Different Goals and Values to their Practice of Medicine

Today’s Physicians Prefer Employment; Days of Pathologists as Partners in Private Group Practices Are Numbered

Independent medical practices find it harder to stay that way

The Dark Report, “Executive War College Looks At Threats to Lab Industry”

2013 Executive War College Information

 

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