Why One Provider Primary Care Practices Are Dying

Primary care is not dying. Solo primary care is dying. Doctors who remain solo will continue to have a hard time at a viable practice going forward. This may be a bit striking, especially for me to say since I went into solo practice. I started my practice initially as part time June 2018, then transitioned to full time October 2018. The difference is that even though I am currently a solo physician practice, I share space with 2 other doctors. Without cutting costs, making a profit early on would have been much more difficult if I did were 100% solo.

 

Even as my practice grows, it is financially clear that remaining solo will sooner or later equal the death of my practice. The relative low reimbursement rates for primary care intermixed with patients wanting care now makes it hard to compete. Solo doctors will find it very hard to exist in the new market going forward. All is not lost though, some practices such as concierge medicine may continue to thrive with a micropractice going forward.

 

Fixed Costs Of A Solo Doctor

I’ll use my fixed shareable costs as an example:

  • Rent: $4,600/month for 1200 sq ft. ***Yes, the Austin property market is insane
  • Copy Machine: $460/month
  • Phone lines: $125/month
  • Liability Insurance $145/month (Not malpractice insurance. I’m referring to if someone slips and falls in my clinic)
  • Clinic Supplies: $500/month
  • Advertising: $800/month
  • Employee Costs: ~$6,000

 

Total fixed monthly costs that can be shared: $12,630

 

Without sharing these overhead costs, that is $151,560 per year in overhead that needs to be met before any potential profit can be had.

 

Adding another provider can automatically split the shared overhead in half, yielding a $75,780 boost to each doctors paycheck.

 

 

Terrible Insurance Reimbursements

 

I’ve been solo for only a year. Once I added another doctors to the insurance credentialing, I threatened to drop some of the low payers. You see, when you are solo the insurance companies will not negotiate with primary care doctors. They have a take it or leave it attitude. Excluding our most predominant payer in my neighborhood, private insurance companies average about 85% medicare reimbursement rate.

You read that right. Most private insurance companies will offer you 15% below medicare rates for primary care if you are solo. Since margins on vaccines are already hair thin, this meant that for some patients I had to stop offering vaccines to them and had to send them to a pharmacy to get their vaccines filled. I was literally losing $5 or more for every vaccine I was giving for some of my lowest payers.

Once I added another doctor and threatened to drop them, many of the insurance plans increased their rates to 100% medicare or near medicare. This helped me now be able to provide vaccines to all of my patients that are interested.

The smaller you are, the worse reimbursement rates you are going to get. Staying solo and deciding to take insurance is going to be a lose-lose financial situation. This is why many solo doctors are now turning to concierge medicine or direct primary care.

 

Online Booking Systems Can Taking Patients Away From Your Clinic

Patients want appointments at their convenience. With the rise of urgent cares, telemedicine, phone visits for birth control or ED med refills directly marketed to patients, the idea of scheduling appointments weeks out for many is a thing of the past.

There are applications online such that are wonderful platforms to find patients.  One such platform is ZocDoc. However, I would be cautious about relying on these methods to fully build your practice. I would be extremely cautions about putting their booking software on your website. As a doctor, you are paying them a monthly advertising fee. By placing their booking software on your website, you did the hardest part. You got the patient on your website to want an appointment and you are willingly feed that patient into their system that you you are paying a monthly fee for.

Once a patient books through that portal, the barrier for them to go online and book with another doctor who has a more convenient time for them is as low as 1 or 2 clicks away. In my clinic I see quite a few patients who jump from doctor to doctor and only go off of time that works for them.

Never put a third party scheduling application on your website and keep it in house or in your select EMR.

Solo practices will have a hard time with patient loyalty going forward with so many ways to contact a doctor. If you do not offer near 24 hour availability, then your clinic will have a very hard time existing in the next 5 to 10 years. Offering 24/7 availability through various means for many solo practices is simply not possible and will lead to another constraint on solo practices.

 

The Rise Of Midlivel Providers

Nurse practitioners provide helpful and meaningful care to many patients. The advent of online only nurse practitioner degree programs mixed with higher pay for nurse practitioners has lead to a huge increase in numbers in the past 10 years. There is no slowdown in sight. In some states, midlevels can practice independently.

In areas where independent practices are not allowed, there is a new trend of having a physician listed as a medical director but the physician almost never being on site. Where I am located, 3 of these types of clinics have opened in the past 1 year within a 10 mile radius of where I live.

The rise of midlevel providers who are competing with outpatient clinics is adding more competition to solo providers, making it harder and harder to compete. Especially since many of these midlevel practices are not going solo and teaming up with other nurse practitioners to share costs.

 

 

Student Debt

Hard to convenience a new medical graduate who might have half a million dollars in student loans to take a financial risk and start up their own clinic. Student loans after graduation are already in repayment or about to be in repayment soon.

Most new doctors are looking for student loan forgiveness either through government programs or employer sponsored programs.

Almost all physicians spend a decade in training, delayed gratification can be hard to get past. Taking a guaranteed salary job takes a lot of worry off of the new doctors back especially when they can plan their budget accordingly.

I would argue that this is the biggest factors for why most new graduates to not enter private practice and why many doctors will not attempt solo practice going forward.

 

Putting Your License On The Line For No Pay

Online electronic medical records have bridged the gap between patients and physician. However, many of these visits can not be billed for.

Enjoying some craft brews in New Jersey

The average primary care doctor in my network tells me that they get about 20-60 messages a day from patients electronically. These messages are fielded by nurses or the doctor and need to be answered. There currently is no way to bill for these visits and many doctors have grown frustrated by the messaging software since patients will try to avoid a visit and instead send messages to the doctor.

In my own clinic I get about 25 messages a day from patients, all of which I answer. Each message is a documented communication that puts my license on the line for no reimbursement.

It is a hard sell for solo practices to be overlooking all these messages without a nurse or midlevel to triage these messages. Most solo practices only have 2 or maybe 3 other employees. Often times these employees are not capable of giving any medical advise based on their education background.

My lawyer bills me for every text, email, phone call but I can not bill for any phone call, text message, or secure message. Only face to face visits and video visits can be billed for.

This level of availability without reimbursement is a hard sell for many potential solo practices and pushing many doctors to consider hospitalist or locums work when when your shift is over, you are 100% done.

 

Final Thoughts

I do believe that there is hope going forward for doctors who want to remain solo. Some states allow for ACO’s or other organizations to argue for higher reimbursement from insurance companies.

Other clinics have started to charge a yearly membership as a hybrid model. If you need frequent after hours visits to physicians, then you can pay to have that access.

I think that the future may lie with a “WeWork” type of environment.  A company has clinic space, you can create your own company and rent a room from this company. That way if you are a surgeon and only need to be in house 2 half days a week, you can only pay for time that you need.

Communal sharing office space is most likely going to come sooner or later and help the smaller more independent practice. Come to think of it, maybe this is something I should start offering to solo doctors in my area.

I hope for insurance change but the only change that has been occurring in the past decade has been lower reimbursement with more and more requirements for doctors to jump through.

 

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