The Entrepreneurial Small Practice Is Not Going Away

In the race to put together integrated networks, hospitals and large multi-specialty groups are acquiring small medical practices and turning physicians into employees. The solo or small practice, run by a physician with entrepreneurial skills, is said to be dying off. The pundits say physicians will now need economies of scale to survive.

I'm a believer in close alignment of physicians to the hospital to integrate care, but I don’t think entering large organizations will be the answer for all physicians. In fact, I think many small practices will not only survive, but thrive. Reports of their demise are greatly exaggerated.

I know of physicians in very small practices who are very busy and highly sought after. If I want to know which physicians people really want to see, I need only go down to the YMCA and ask around. Who's the best knee doctor? Who do you recommend for hearts? Quite often it's the small or solo practitioner, the one who continues to have personal relations with patients.

To me, these entrepreneurial physicians are the super doctors. Even as we go through some tough economic times — and tough times for medicine — my sense is these doctors will keep going strong. They didn’t join a large multi-specialty group because they knew they could make it on their own. They have sterling reputations. Their practices will thrive even if they don’t align with an accountable care organization. Because of continuing demand for their services, they could probably survive just fine as boutique practices.

Diverse models of healthcare will continue
The prognosticators want to define one model of healthcare for the future. They look to organizations like Geisinger or Mayo, with their legions of employed physicians working for a fully integrated system. But that's not the only model. In my community, the model is one that includes independent physicians who are not on the hospital payroll or in some large multispecialty group. On my medical staff, there are plenty of physicians in small practices who have no intention of joining a large organization.

Diversity is what made U.S. healthcare great, and I think it will continue to be this way. Because of the way independent medical practices function, these physicians think entrepreneurially. They have very direct relations with revenues and expenses. They are very adaptable to change in the environment in a way that is much more difficult for a large multispecialty group.

In a multispecialty group, physicians lose sight of these exigencies. The physician, now an employee, doesn't walk through the office, keeping an eye on things. It may be true that large groups are better at coding, but I wonder whether the large practice has lost a bit of agility. The secret in managing accounts receivable in a small practice involves knowing every patient as an individual and keeping things as simple as possible. Things can’t be that simple in a large group.

Working with physicians as partners
Small private practices are struggling to meet demands to install electronic medical record systems. But they will manage. It will be relatively easy for them to piggyback onto a hospital's EMR system and still preserve their independence. Hospitals may want to ask these physicians to join their network, but that may not be in anyone's best interest. When hospital systems employ physicians, accounts receivables escalate and subsidies rise.

Physicians are not just clones. They have to be partners and leaders. One of the members of my board counsels against letting doctors become "country club chefs." These are the chefs who no longer run their own restaurant and now work as an employee of the country club. There is less commitment to the enterprise. If it doesn’t work out, you can just move on. But when you are self-employed, you are bound to the community. I believe this applies to self-employed physicians, as well.   

Stephen F. Ronstrom has more than 25 years of hospital leadership experience, having served for the past 11 years as an executive in the Hospital Sisters Health System. He is currently president and CEO of the Hospital Sisters' Western Wisconsin division, which includes 344-bed Sacred Heart Hospital in Eau Claire, Wis. Learn more about Hospital Sisters Health System.

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