Attractions of larger groups
Older doctors – those 55 years and up – were significantly more likely to work in small practices than those younger than 40, the 2020 survey found. Results showed 40.9% of doctors under 40 worked in practices of 10 or fewer colleagues, compared with 61.4% of those age 55 and older.
The large difference between age groups suggests that attrition is one reason for the shift in practice size. Retiring doctors who leave small practices are not being replaced on a one-for-one basis by younger doctors, AMA said. The same reason also appears to be a factor in the shift in practice ownership to larger systems.
Doctors in larger group practices can count on a stable business model, with a better ability to survive disruptive market trends, including those of a more extreme nature, like COVID-19, said Fred Horton, president of AMGA Consulting.
AMGA Consulting is a wholly-owned subsidiary of AMGA, formerly called American Medical Group Association. Its more than 400 members include well-known multispecialty groups and health care systems such as the Mayo Clinic, Cleveland Clinic, Geisinger, the Permanente Medical Group, and Intermountain Healthcare as well as many smaller physician practices.
Mr. Horton, who holds a master’s degree in health administration, said some doctors may want to participate in alternative payment programs offered by insurers, who are seeking to shift away from the fee-for-service model
“Larger organizations can dedicate more resources to continuous quality improvement,” Mr. Horton said. “This is especially important for physicians who are taking on risk-based contracts, as quality can directly impact how much they earn.”
For one oncologist, it was turning to alternative payment methods that helped him keep his private practice afloat.
Kashyap Patel, MD, chief executive of the Carolina Blood and Cancer Care Associates in Rock Hill, S.C., said he maintained the independence of his practice amid pressure from a large health system, which had been buying medical groups in the area. That began to interfere with referrals of patients from other doctors, which are key for cancer specialists, said Dr. Patel, who also is president of the Community Oncology Alliance.
In response, Dr. Patel worked with Blue Cross Blue Shield of South Carolina on an arrangement where his practice sought certifications from the National Committee for Quality Assurance to get better rates.
The effort has allowed Dr. Patel’s clinic to focus more on preventing hospitalizations and visits to the emergency room he said.
In Dr. Patel’s view, his patients benefit from his efforts to remain in independent practice. A switch to ownership by a large health care organization would have put them at risk for higher medical bills, jeopardizing their access to treatment, he said. The reason? Hospitals can charge more for services provided by doctors they employ.
“Nothing would change. I would be the same. The building would be the same, but the cost would go up,” Dr. Patel said.
For its part, the AHA has repeatedly challenged arguments that acquisitions and mergers result in higher costs for patients.
Instead, the AHA has raised alarms about consolidation of health insurers, a concern it shares with AMA. In a 2020 report examining competition among insurers, AMA noted doctors working in small practices can be put at a disadvantage if mergers and acquisitions leave an insurer with too much market power.
“Under antitrust law, independent physicians cannot negotiate collectively with health
Insurers,” the AMA said in the report. “This imbalance in relative size leaves most physicians with a weak bargaining position relative to commercial payers.”
AMA’s research on the effects of insurers’ wielding significant market clout has been used in effort to thwart mergers in this industry.