HOW PHYSICIAN-OWNED PRACTICES CAN CONTRIBUTE TO THEIR OWN SUCCESS

There isn’t a day that goes by where I don’t read something about physician burnout. Corporate medicine and the health insurance companies are destroying healthcare delivery. Physician ownership allows you to control every aspect of how you practice medicine. That said, there’s a tremendous amount of doom and gloom when people talked about physician-owned practices.

I am an absolute no-nonsense realist. I would be lying to you if I didn’t acknowledge that there are physician ownership of a medical practice presents its own challenges. However, many small medical practices are thriving. 

There are several ways that a small, physician-owned practice can contribute to their own success.

Lean and Mean

For starters, size matters but perhaps not in the way that you would think. Bigger is not always better. One of the over-arching complaints associated with “corporate medicine” is the seemingly excessive number of administrators. A medical practice is in the business of taking care of patients—providing clinical care. As a small practice, you have complete control over your overhead. You decide where to spend money. Small practices can and should be run lean.

Innovation and Adaptability

I can’t stress how important this is as medicine’s landscape is ever-changing. For example, there are new regulations, changes in coding and new procedures that may or may not be covered by insurance companies. Now think about this--a large medical group with multiple administrators is the equivalent of a large tanker. A small private practice is akin to a sleek sailboat. Which do you think is easier to turn?

When the rules change, you need to be able to pivot easily. A small physician-owned practice is uniquely positioned to do exactly this. As an example, when the incentives for meaningful use were announced, it was very easy for my practice to implement the new requirements. I didn’t have layer upon layer of red tape to navigate through in order to make a decision. 

Insurance Contract Negotiations

Small physician-owned practices can, indeed, be at a disadvantage compared to bigger groups when it comes to negotiating insurance contracts. Let’s be real, whether a panel is open and what you are offered as the contracted rate is solely based on supply and demand. Insurance companies need to offer a wide enough range of physicians in different specialties to entice customers to enroll. As a result, a big group with multiple specialties is going to be more attractive to an insurance company than if they have to cobble together a bunch of smaller practices in order to meet their needs.

What can you do, as a small practice, to negotiate with the “big boys”? First, do you have a niche that you fulfill? Perhaps you are the only physician in your specialty that speaks a particular language. For example, one of the physicians I work with is one of the few Spanish-speaking pulmonologists in Houston. Because of Houston’s demographics, there’s high demand for Spanish-speaking physicians and, as a result, it’s easier to negotiate for higher contracted rates. But your niche doesn’t have to be language or specialty specific. It can be anything that makes you stand out relative to the other physicians in the insurance company’s panel.

Next, as I recently discussed during my podcast episode MIPS Primer, MIPS (Merit-based Incentive Payment System) can be used to your advantage. There is no reason that, with a little bit of effort, you cannot receive the incentives and added bonuses associated with MIPS. Aside from the fact that it will improve your Medicare reimbursement, you can the information to negotiate your contracts.

CMS is obligated to make your MIPS final scores and performance category scores publicly available every year. Once published, these scores can be used by both you and the insurance companies. In other words, if your scores are stellar then you can use them to negotiate with insurers.  Conversely, you can anticipate that if your MIPS scores are lackluster this will adversely affect your ability to garner better contracted rates.

Many of today’s EMR/Practice Management products are able to collect outcome data that may be beneficial. You will want to have an in-depth understanding of what outcomes your software can measure. Being able to provide the insurance companies with tangible proof that you are improving patient outcomes will offer you a position of strength in the negotiating process.

One of the questions I am frequently asked is, “Should I join an IPA?” The answer—it depends. An IPA is a group made up of independent physician (practices) that have banded together to negotiate as one. There are certainly circumstances under which the IPA is able to negotiate significantly better rates. That, however, is not always the case. And, sometimes, you end up with insurance products you don’t want to take but have to because the IPA agreed to it.

The Right Physicians

If you are starting or have recently started your own practice, then you are the right physician. But as your practice grows, you may want to bring on additional physicians to join you. As with any business, there will always be challenges. Competition, changes in reimbursement and new regulations have always been an issue. When you bring on a new physician, you will want to make sure that they are willing to invest their time and energy to help solve these issues.

To be successful regardless of the type of business, you have to be innovative, creative, and flexible. If you can’t embrace change and evolve, you will stagnate. The advantage goes to nimble physician owned practices.

Be sure to check out The Private Medical Practice Academy podcast and join my Facebook Group, The Private Medical Practice Academy to learn more about business of medicine. Sign up for The Practice Building MD newsletter to get the tools you need to build a successful and lucrative medical practice.