Independent medical practices find it harder to stay that way

The age of the traditional doctor's office is ending. Powerful forces are pushing independent doctors to merge with major medical systems.

Some health care business experts say we could see a new wave of consolidation in the next several years, as costs rise and government and private health plans cut payments.

Maplewood cardiologist Lyle Swenson's eyes light up when he talks about the freedom his independent cardiology practice affords him.

"If a patient comes in for a 20-minute visit and has a 60-minute problem, I can give him 60 minutes because I've built that flexibility into my schedule," said Swenson.

But like the treadmill tests he administers to his patients, Swenson's and other independent physician practices are undergoing their own stress tests. The cost of running private practices grows steeper every year, while fewer dollars flow in from government and insurance payments.

"Our reimbursement for Medicare has been continually ratcheted down," he said. "For services like ... a stress echocardiogram, the reimbursement for all those ultrasound services in one year was decreased by 40 percent, and it's a routine integral part of what we do."

Physicians and hospital surveys strongly suggest the days of the independent physician practice are waning. Medical systems are increasingly hiring doctors as employees.

The trend is even more pronounced in Minnesota, where doctors say the traditional private practice model is becoming increasingly unsustainable.

For cardiologists, the trends are particularly advanced. The American College of Cardiology's Minnesota Chapter estimates that only 5 percent of cardiologists in the state are independent like Swenson. About 35 percent have some kind of contractual relationship with a major medical system, and about 60 percent have fully integrated -- they've become medical center employees.

That was the case for Twin Cities cardiologist Thomas Johnson, who practiced 17 years at what was the last large independent cardiology group in Minnesota, the St. Paul Heart Clinic. Last fall, he and the group's nearly three dozen cardiologists dissolved their practice.

"When we looked at where we would be in the next five years, given all these challenges from an economic standpoint, we didn't feel like we could compete for new outstanding physicians," said Johnson. "We also would have trouble retaining some of our outstanding physicians just because of compensation and reimbursement issues."

Johnson now works for HealthEast.

There are other factors looming that are pushing physicians into the arms of big health systems. The need to invest in electronic medical records systems, and the advent of Accountable Care Organizations or ACOs envisioned under the federal health care overhaul.

The current system generally pays doctors and medical centers by the number of procedures they perform. But in an ACO, doctors and hospitals would get lump sums based on the patient.

If a patient does well, the providers would get to keep any money left over. If a patient does poorly -- for example, has to go back to the hospital because the doctor failed to perform followup care, the providers could be on the hook for the excess cost.

Maplewood pediatrician Thomas Siefferman, who is part of an independent practice, says that's a bad idea.

"If you want to make a system that will bankrupt medicine and put practices out of business and force them into corporate style of medicine, that's the way to do it," said Siefferman. "The only way to survive then is having big pockets behind you, and that's joining a hospital or joining an insurance company."

Siefferman vows to remain independent, difficult though he says it may be. He says the main issue is who controls patient care.

"Very few physicians emerging from training want to work for private practices ... that's a dying industry out there."

"We don't want to sit there and have some suit basically come up and say, 'You're not seeing enough patients; you're seeing too many,'" he siad.

Cardiologist Thomas Johnson agrees that's a legitimate concern. He says physician control varies widely by medical system.

As the Heart Care medical director for HealthEast, Johnson says he has some control. Some of his colleagues from the St. Paul Heart Clinic also hold leadership positions with their new employer.

"We do have input into all the decisions that involve HealthEast Heart Care," Johnson said. "[That's] not to say that we have complete control; we're not an independent group. But we do have a fair amount of input, and we're actually quite happy about that."

However, a survey of 100,000 doctors in the summer of 2010, conducted by the Physicians Foundation, found that doctors believe "the independent, private physician practice model will be largely ... replaced."

The survey found the majority of physicians see change in their future, according to Dr. Ripley Hollister, a Foundation board member and a solo family practice physician in Colorado.

"A good portion of them are considering cutting back, retiring early, going into part-time practice," said Hollister. "I think there'll be a lot of doctors that leave their private practice and do one of those things, or be purchased by a larger entity such as a hospital or medical system."

Minneapolis attorney David Melloh sees a great migration underway, with physicians moving away from independent medical practices and aligning with major health systems. Melloh, who chairs Lindquist and Vennum's health law practice, says Minnesota is ahead of other parts of the country in physicians integrating -- working for larger medical systems.

He points to some of the major medical system in the Twin Cities as examples, including Park Nicollet Clinic, "which is a physician-driven organization but which has hospitals, so it delivers inpatient care as well as outpatient care."

Two other large medical systems in the state, Allina and Fairview, are on a similar path. They both began as hospital organizations, but over the past decade or so they have been acquiring physician practices and increasing the number of doctors they hire as employees.

Dan Zismer, a former senior vice president of Duluth-based Essentia Health, agrees that Minnesota has been undergoing a consolidation trend in its health care system for many years. Essentia operates in Minnesota, Wisconsin, North Dakota, and Idaho.

Zismer, who is now the director of the Master in Healthcare Administration Program at the University of Minnesota, says the federal health care law's move toward Accountable Care Organizations is just another push in that direction.

"Very few physicians emerging from training want to work for private practices," said Zismer. "They're coming out [of medical school] with large debt loads, they're trained in organizations that are high tech, and they don't want to go in and buy into a small medical practice. That's a dying industry out there."

The portion of hospitals working with independent medical practices is declining nationwide. The American Hospital Association says that's happening at a faster pace in Minnesota since 2006.

Some of those independent physicians are trying to work together in an effort to remain independent as part of the Midwest Independent Practice Association, a loose federation of 54 primary care clinics and 46 specialty clinics in Minnesota and parts of western Wisconsin.

The organization's medical director, Dr. John English, a retired family practice physician, says the group is trying to start its own Accountable Care Organization to compete.

"Are all these requirements coming? Sure they are. But it's not like you should sit back passively and say, well, that's just the way it is," said English. "There's another way to do this rather than the current course that we're going down -- the course of increasing consolidation."

English says the independents will likely end up in the federation's camp one way or another, because there's nowhere else to go.

Gallery

Fullscreen SlideshowPrevious Slide

1 of 2

2 of 2

Next Slide