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Doctors Leaving Private Medical Practices Because of High Costs

The days of doctors running their own offices and starting practices are coming to an end. As this graph from today's Wall Street Journal shows, since 2005, more doctors are becoming employees of hospitals rather than owning their own medical practices.

The reasons are not that hard to understand.  Medicine has become a complex and difficult business.  Dealing with dozens of different insurance companies, Medicare, Medicaid and the hassles of being an employer are not what doctors are trained to do.  The days of the simple medical practice with a receptionist and a well-trained (smart and loyal) nurse at the doctor's side are long gone. 

Why don't doctors in the U.S. have electronic medical records, as does much of Europe and other developed countries?  They cannot afford to capitalize the technology or support the IT infrastructure. A hospital organization can!

In my medical community, only one of the recent Internal Medicine residents stayed in private practice.  And he joined his dad! The rest leave to work for Kaiser Permanente or be employed as hospitalists. The young doctors know they cannot survive with the insurance reimbursements for primary care. They are not established enough to set up concierge (retainer) practices so a steady paycheck with benefits, insurance coverage, cell-phone, electronic medical record, and time off for continuing medical education looks like a very nice deal. In fact, it looks like a nice deal for doctors that have been running their own practices, and they are leaving for employment in record numbers too.

Why do hospitals across the country want to employ physicians? Everyone knows that the doctor is the entry portal for patients. Even hospitals lose money on primary care services. But our insane reimbursement structures pay for procedures, imaging, tests, scans, days in beds,  and lots of stuff that generates billings. Primary Care becomes the loss leader.

Until we get a grip and place value on prevention and primary services for patients that pays for "thinking" rather than "doing," we will never get our financial house in order. There is nothing wrong with employment as long as it is designed to produce real benefits and improve quality for patients.  Aligning different specialties of physicians with hospitals to drive efficient quality care could lower costs and improve service. Time will tell if that is a direction that we are going.  Right now it is the same system with a different owner on the shingle.


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