Obamacare Shoving Doctors Out of Private Practice


First went the dinosaurs, then the dodo. Are physicians in private practices next on the path to extinction? The trends show the numbers of physicians practicing privately are steadily dropping. Some blame Obamacare for pushing doctors out the door. Is this accusation based on fact or fantasy?

Survey says
A 2012 survey of physicians conducted by the Doctor Patient Medical Association, or DPMA, found that 90% of respondents thought the U.S. medical system was on the wrong track. 83% said that they were actually thinking about leaving the profession. 95% of physicians responding to the survey thought that private practices are losing out to corporate medicine.

Who's to blame? Nearly two-thirds said the government was the root of most of their problems. Even more identified the best solution as reducing government involvement in medicine.

Keep in mind a couple of things about this survey, though. First, faxes were sent to fewer than half of all active physicians in private practice. Only 4.3% of these surveys were returned. The responses don't necessarily accurately represent the opinions of physicians nationwide. Second, Obamacare wasn't specifically mentioned in the questions asked.

However, a 2013 physician survey by Deloitte that did use statistically valid sampling methods appears to confirm some of these concerns, albeit with lesser intensity. This survey found that 57% of physicians think that "the practice of medicine is in jeopardy." Only 31% gave the U.S. health care system a favorable grade. 62% said that more physicians will retire early because of how the practice of medicine is changing, with around 75% saying that fewer qualified individuals will pursue medicine as a career.

Regarding Obamacare, 44% of physicians think that the law is "a good start" compared to 38% who think that it is "a step in the wrong direction," with 18% undecided. 93% of physicians are concerned about being paid too little for services performed under episode-based bundled payments, which was promoted in Obamacare. More than half of physicians expect their incomes to fall dramatically over the next three years.

Doctors in the house
The reality is that, regardless of physicians' opinions about Obamacare, the law is contributing to more doctors moving away from private practices. Health care reform emphasized close collaboration between health care providers through Accountable Care Organizations, or ACOs, and bundled payments. Many expected private physician practices to be acquired with this focus -- and they were right.

A 2011 survey by the Medical Group Management Association showed almost 75% more doctors employed by hospitals since 2000. Less than half of all U.S. doctors now work in private practices. An article published in the New England Journal of Medicine attributed acceleration of this trend to Obamacare.

HCA Holdings , the nation's largest private hospital chain, embarked upon a major hiring campaign for physicians over the last few years. A key impetus behind this wave of bringing new doctors on board came from the ACO emphasis in Obamacare.

Hospitals aren't the only organizations scooping up physicians. Major insurers have also gotten into the act as they adapt to the new health care landscape created by Obamacare.

In 2011, UnitedHealth Group bought Monarch Health Group, a large physician group in Southern California. UnitedHealth's Optum business segment previously purchased two smaller physician groups in the region -- AppleCare Medical Group and Memorial HealthCare Independent Practice Association.

Humana acquired Metropolitan Health last year. Metropolitan Health operates a network of physicians and other clinical professionals who focus on providing care for Medicare beneficiaries. Humana also bought Concentra, with its 300 health clinics spread across 40 states, in 2010.

No-good goodbye?
Will this trend of doctors saying goodbye to their private practices be a good thing? Not necessarily.

According to one estimate, Medicare pays more than $1 billion per year than it would otherwise when doctors work for hospitals. That's largely because hospitals receive higher reimbursements from the government program for many specialty services than individual doctors would.

Another potential issue stems from the possibility that hospitals could push doctors in their employment to pump up numbers of admissions and tests. Health Management Associates is under investigation in several states for possible actions including the "medical necessity of emergency room tests and patient admissions." A 60 Minutes story in December focused on some of these alleged admissions issues. The company disputes these accusations.

Of course, if you own stock of hospitals that are hiring away physicians from private practices, the trend is probably quite welcome. In large part due to the impact of Obamacare, hospital stocks have soared. HCA shares are up more than 60% over the last year. HMA stock gained more than 130% during the same period.

The way of the dinosaur and dodo?
Physician private practices will almost certainly continue to decline, but they probably aren't headed for total extinction. Some doctors will resist the temptation to work for larger entities, even if their pay suffers as a result.

While the shift away from private practices was already under way prior to Obamacare, the legislation definitely threw gasoline on the fire. As a result, perhaps another federal action is now needed: adding physician private practices to the endangered species list.

Obamacare will undoubtedly have far-reaching effects. The Motley Fool's new free report, "Everything You Need to Know About Obamacare," lets you know how your health insurance, your taxes, and your portfolio will be affected. Click here to read more.

The article Obamacare Shoving Doctors Out of Private Practice originally appeared on Fool.com.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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