Where Have All the Private Practices Gone?

The structure of public healthcare systems has gone through a drastic transformation over the last three decades. In particular, there has been a momentous shift from physicians running solo practices to working exclusively in hospital settings.

In 1983, 76.1 percent of physicians ran their own solo practice. In 2014, that percentage had dropped to 50.8. That number continues to dwindle, and as of 2016, only 47.1 percent of physicians own a practice. In 2004, only 11 percent of physicians were hospital employees, and in 2012, that figure rose to 65 percent. Ronald G. Wheeland, MD, a writer for DermatologyTimes said that by 2019, 75 percent of freshly hired physicians will be working in hospitals. According to an American Medical Association report, the number of independent contractor physicians is growing in tandem with these changes, from 5 percent in 2012 to 5.9 in 2016.

Long gone are the days when a patient could walk down to street and knock on the door of their neighborhood doctor. Wheeland attributes the immense decrease in private practices and the shift towards larger clinic settings to the Medicare Access and CHIP Reauthorization Act of 2015, the Merit-Based Incentive Payment System (MIPS), and CMS quality.

These new measures increased paperwork and other administrative responsibilities for practices. They also added additional costs in order to manage and report this data. “From all of these increased governmental regulations it would seem apparent that these requirements might be better managed from a group practice setting with its economies of scale rather than from a solo practice,” Wheeland said.

For dermatologists looking to raise patient revenue, Wheeland recommends hiring a mid-level physician or establishing a “boutique” medical practice for patients who can afford to pay out-of-pocket, that is if you’re based somewhere with a high median household income. “In these types of practices an annual fee ensures same day service, 24/7 telephone access to the physician and enhanced appointments of longer duration,” he said.