Decrying the end of the private physician practice? Not so fast!

by Peggy Salvatore

I spent the better part of a decade writing training about the healthcare system. I use the term “better part” literally, as it is fascinating to closely watch the ebb and flow of different payment and treatment options manipulated to keep people healthy and productive.

One of the trends over time has been the waning and near obliteration of private medical practice. A few years ago we pretty much rang the death knell for “mom and pop” practices. The reason is that volume-based payments forced physicians into group practices and eventually those group practices into health systems with hospitals and other providers along the care continuum. The integration of health providers into one system chased the economic model that volume drives down price. For a while, it seemed to make sense.

Volume-based practice developed because physicians were paid based on an algorithm that assumed certain procedures or interactions took a specific amount of time. Under these assumptions, physicians are paid to see a certain number of patients to reach their numbers. It is similar to a car mechanic’s fee schedule set by a dealership that pre-determines how long it takes to put in a new battery, for example. The only problem with this model is that humans are not machines and no such standard fee schedule encouraged physician behavior that served the best interest of patients.

Last month, I read an article that said accountable care organizations will make it financially feasible to bring back private medical practices because health plans will pay for outcomes. This concept really has to set you back on your heels because it is tantamount to admitting that volume-based payment didn’t get very good patient outcomes. Isn’t it?

The good news for patients and the physicians who care for them is that new payment structures encourage doctors to make sure their patients get better so they get paid. Most physicians didn’t really need the financial incentive. It’s just nice to think there won’t be perverse incentives built into the system to encourage the three-minute exam room handshake.

As if to put an exclamation point on this development, last month the local medical society dinner featured a speaker from a third party administrative firm encouraging physicians to consider once again the joys of entering private practice. The speaker said the tide is turning back toward incentivizing quality (as opposed to volume, not as opposed to negligent) care that pays for outcomes. The company was at the meeting to hawk its wares to take the bookwork out of private practice.

That fact alone, that a financial services company encouraged physicians to re-enter private practice again as a means to make a good living doing good, should be enough for both patients and physicians to be at least cautiously optimistic about the future health of the doctor-patient relationship in an intimate private practice setting.