How Formerly Independent Doctors Were Pushed Out of Business

Rules and regulations intended to reform health care are driving private practices out of business by overconfident design.


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Like many American physicians, my wife no longer works for herself. Under the same pressures that have forced many once-independent practices to consolidate, she was lucky enough to find a large health-care organization willing to purchase her practice and ensure continuity of care for her patients. "Is the independent doctor disappearing?" U.S. News & World Report asked earlier this summer. The answer is: yes—and to a significant extent, that's a result of deliberate policy.

Your doctors didn't jump out of business; they were pushed. And they were pushed by people way too convinced of their qualifications to redesign the world around them.

Just 33 percent of physicians "identify as independent practice owners or partners," the Physicians Foundation reported in its last last survey, conducted in 2016. That's down from 48.5 percent in 2012.

But while a majority of doctors now opt to work as employees, "most physicians, even many who are themselves employed by hospitals, do not believe hospital employment of physicians is a positive trend," the foundation reported. So, why are doctors going to work for large organizations when they seem so resistant to the idea?

Factors including "government insurance mandates and changes to health insurance design to new reporting requirements, escalating costs and the rise of urgent care clinics" feature in the U.S. News article, which also notes that "Unique for physicians are certain requirements surrounding electronic health records and new reporting requirements regarding patient visits as part of the Affordable Care Act."

"The factor cited most frequently by physicians as being least satisfying is 'regulatory/paperwork burdens' followed by 'erosion of clinical autonomy,'" the Physicians Foundation survey notes. "Medicare compliance rules and regulations alone running into the tens of thousands of pages" in addition to the miles of red tape contained in the Affordable Care Act.

The regulatory squeeze pushes doctors to sell their practices and consolidate compliance. And while a lot of pressures have simply accumulated over decades, that transformation is partially as intended.

"To realize the full benefits of the Affordable Care Act, physicians will need to embrace rather than resist change," Obama administration health care advisers, Nancy-Ann DeParle, Ezekiel Emanuel (brother of Rahm), and Robert Kocher wrote in a letter published by the Annals of Internal Medicine in 2010. "The economic forces put in motion by the Act are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups."

After the letter "sparked controversy for daring to suggest that it's time for physicians to join larger groups," as CBS News put it, the language was apparently slightly revised. But the old wording is still widely available in news reports from that year. Even revised, the letter boasts that Affordable Care Act "reforms will unleash forces that favor integration across the continuum of care…Only hospitals or health plans can afford to make the necessary investments in information technology and management skills."

Let's consider those "necessary investments in information technology."

One of the letter's key assertions about "reforms" promoted by the government includes "expanding the use of electronic health records with capacity for drug reconciliation, guidelines, alerts, and other decision support." The idea was that digitizing patients' medical data was such a good idea that, despite being an expensive and complicated endeavor, doctors should be threatened with reduced Medicare and Medicaid payments if they refuse.

While the burdens of switching to electronic health records at government command have certainly been proven–"the challenges have proved daunting, with a potential for mix-ups and confusion that can be frustrating, costly and even dangerous," The New York Times reported—the benefits don't always materialize. Many different electronic health records systems can't even speak to one another, which would seem to eliminate a big advantage of having data in digital form.

Using electronic records cost physicians an average extra 48 minutes per day, according to a 2014 report. "Surprisingly, a third (33.9%) reported that it took longer to find and review medical record data" with electronic records management than without it.

Only 11 percent of physicians said electronic health records improved their interactions with patients, while 60 percent said they "detracted from patient interaction," the Physicians Foundation noted in 2016.

It's not that electronic records are inherently bad. But if physicians are adopting them only under protest, that's an indication that the technology may not yet be ready to be used in the real world. If vendors had needed to improve their products to tempt customers, they might well have created electronic health records systems that improved life for doctors and patients alike. Instead, doctors were ordered to pick among existing products, or else.

The failure of electronic health records systems to live up to predictions offers a key insight into the hubris of scolding doctors that they "need to embrace rather than resist change" and smugly announcing that your favored policies "will unleash forces that favor integration across the continuum of care." When one of your much ballyhooed "reforms" turns out to be prone to making life worse for those whose work has been reformed, maybe you need to rethink your grand scheme. It could be that the whole health-system-in-a-bottle envisioned by government experts works a lot better in theory than it does once foisted on actual human beings.

But don't look for policymakers to admit that their vision for how the world should work might not play out properly in real life. If they were inclined to concede that people might be better off when left alone to arrange their own affairs, they probably wouldn't be policymakers.

So, as you watch formerly independent physicians reluctantly close up shop and go to work for larger organizations, keep in mind that this transformation of health care is largely by overconfident design.