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Are Private Practice Doctors Doomed?

Private practice doctors have long been a cornerstone of the healthcare system, offering personalized care and building lasting relationships with their patients. However, the landscape of healthcare is evolving rapidly, leaving private practice doctors to face an uphill battle.

Here are some stats to prove it:

  • From 2018-2021 the number of private practice doctors dropped from 54% to 49%. This marked the largest change measured in the American Medical Associations' history of conducting their survey.

  • Nearly 3 of 4 physicians are now employed by hospitals, health systems, and other corporate entities such as private equity firms and health insurers.

  • 83,000 physicians have become employees of hospitals or other corporate entities since the start of the pandemic.

The declining number of doctors opting to work in private practices in recent years has sparked concerns and raised questions about the future of private practice doctors.

In the CareTalk episode, “Can Independent Physician Practices Survive?”, hosts, John Driscoll and David Williams discuss the recent decline in private practice doctors and how value-based care and AI technology can help private practice doctors survive healthcare’s consolidation trend.

The Current State of Private Practice Doctors

The current state of private practice doctors is characterized by significant challenges and changes in the healthcare landscape. Private practice doctors, once a prominent feature of the healthcare system, are facing increasing pressures that impact their operations and viability. As healthcare systems have grown larger and more consolidated, private practices have had to adapt to changes in the industry in order to remain competitive.

Between 2019 and 2021, 36,200 private practices were acquired. 4,800 by hospitals and 31,300 by corporate entities. With private practices being acquired on a regular basis by hospitals and corporate entities, it’s no wonder why the number of private practice doctors is on the decline.

Statistics on Private Practice Doctors

“The majority of doctors when we were growing up owned their own practices. You know, 60 to 70% of it. But I think since 2019, I think less than 50% of all doctors own their own practice. Again, that could be a mix of hospital and non-hospital purchasers, and more and more doctors are practicing in larger and larger practices.” – John (CareTalk).

Contributing Factors Behind the Decline of Private Practice Doctors

In recent years, the decline of private practice doctors can be attributed to a convergence of factors that have posed substantial challenges to their long-term viability. These factors encompass the mounting administrative burden, diminishing reimbursement rates, escalating technology and infrastructure costs, and the effects of market consolidation.

As a result, private practice doctors have found themselves operating in an increasingly difficult environment, prompting many to reconsider their commitment to independent practice

Private Practice Doctor stressed

Increasing Administrative Burden

The administrative burden faced by private practice doctors has grown significantly, affecting their ability to focus on patient care. The healthcare landscape has become more complex, with a multitude of regulations and requirements that doctors must navigate. Compliance with these regulations, along with meeting the demands of multiple insurance companies, necessitates meticulous documentation and adherence to guidelines.

The rise of electronic health records (EHRs) has further added to the administrative workload, requiring private practice doctors to invest time and resources in training and implementing these systems. Consequently, the administrative burden consumes a substantial amount of their time and energy, limiting their ability to devote themselves fully to patient care.

Declining Reimbursement Rates

Private practice doctors are grappling with declining reimbursement rates, affecting their financial viability. The rise of managed care and the increasing use of lower-cost generic drugs have led to reduced reimbursement rates for private practice doctors. Additionally, a decline in the number of patients who pay for their care out-of-pocket has further impacted the financial viability of private practices.

As reimbursement rates continue to decline, private practices find it increasingly challenging to cover their operational costs, invest in necessary resources and technology, and maintain sustainable financial stability. This financial strain has resulted in a concerning statistic, with studies indicating that a substantial proportion of private practices are operating at a loss.

Rising Technology and Infrastructure Costs

Private practices face mounting costs associated with acquiring and maintaining advanced technology and infrastructure. The healthcare industry has witnessed significant advancements in technology, and private practices are expected to keep pace with these developments. However, acquiring and maintaining the latest technologies, such as advanced diagnostic equipment or robust EHR systems, can be financially burdensome for private practices.

The cost of implementing such technologies ranges from hundreds of thousands to millions of dollars, straining the already limited resources of independent practitioners. As a result, private practices may face challenges in delivering the highest quality of care and remaining competitive in the ever-evolving healthcare landscape.

Market Consolidation

Market consolidation within the healthcare industry has been a significant obstacle for independent private practice doctors. In recent years, the healthcare industry has experienced a wave of consolidation, with larger healthcare organizations and hospital systems gaining dominance. These consolidated entities benefit from economies of scale, allowing them to negotiate lower prices with insurance companies and enjoy advantages in terms of resources and infrastructure.

Independent private practice doctors, lacking the same level of resources and bargaining power, struggle to compete in this consolidated market. This imbalance can lead to reduced patient access, increased healthcare costs, and a potential decline in the overall quality of care.

Private Practice Doctor's Office

How Can Private Practice Doctors Survive and Prosper?

Value-based care has emerged as a healthcare payment model that holds immense potential to ensure the survival and prosperity of private practice doctors. Firstly, Value-based care has the ability to enhance patient satisfaction. By focusing on preventive measures and keeping patients healthy, private practice doctors can cultivate a satisfied patient base. This, in turn, can foster patient loyalty and encourage referrals, ultimately boosting the growth and success of private practices.

Secondly, Value-based care can alleviate the administrative burden that often weighs down doctors. With a shift towards outcome-based care, doctors can spend less time on paperwork and documentation, allowing them to dedicate more attention to direct patient care. This streamlined approach not only enhances the quality of care but also improves overall patient satisfaction.

Additionally, Value-based care facilitates better coordination of care among different healthcare providers. By aligning efforts to achieve the shared objective of patient wellness, VBC promotes collaboration and seamless communication. This leads to improved patient outcomes and cost reduction, benefiting both private practice doctors and their patients.

On another front, the integration of technology and artificial intelligence (AI) can also contribute to the survival and prosperity of private practice doctors. There are various benefits of AI in healthcare, such as access to up-to-date medical information, which enables doctors to deliver more informed and effective care. Moreover, automation of administrative tasks like appointment scheduling and reminders frees up valuable time for doctors to focus on patient interactions and medical decision-making.

Furthermore, communication tools provided by technology, such as secure messaging and video conferencing, enable private practice doctors to maintain strong connections with patients and colleagues, facilitating efficient and timely collaboration. Additionally, technology allows doctors to personalize care by leveraging patient health data to gain valuable insights. This personalized approach enables early identification of health issues, leading to improved patient outcomes.

“I think that independent practices need to move quickly into coalitions that can, that can accelerate the attempt to get into value-based care. I mean, value-based care, healthcare and a budget are going to pay doctors to stay in business. patients generally like practices that are run by doctors.”- John (CareTalk)

The Future of Private Practice Doctors

While the road ahead may be challenging, private practice doctors are not necessarily doomed. Despite the challenges, the survival and prosperity of private practice doctors are still attainable by embracing value-based care models and leveraging technology and AI.

By adapting to the evolving healthcare landscape and prioritizing patient-centric approaches, private practice doctors can navigate the changing dynamics of the industry and continue to provide excellent care to their patients.

“This next six to 18 months is going to be an interesting window.”- David (CareTalk)



CareTalk is the only healthcare podcast that tells it like it is. Join hosts John Driscoll (President U.S. Healthcare and EVP, Walgreens Boots Alliance) and David Williams (President, Health Business Group) as they provide an incisive, no B.S. view of the US healthcare industry.



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