Paperwork, 
costs push 
doctors out
 of practices

Doctors are leaving their small private practices to join larger hospitals so they can spend less time dealing with the administrative side of the business and more time with their patients.

Medical professionals say they are being forced out of business by declining reimbursement from Medicaid, Medicare and insurers; by increasing regulatory burdens and malpractice-insurance costs; and by the implementation of information technology.

As if the problem weren’t already bad enough, several medical professionals told a House panel that the Obama administration has made things worse with the Patient Protection and Affordable Care Act, among other health care reforms.

“Why would I be in private practice if I have to deal with a whole new slew of regulations?” asked Joseph M. Yasso Jr., medical director of Heritage Physicians Group, who testified last week before the Small Business Committee’s subcommittee on investigations, oversight and regulations on behalf of the American Osteopathic Association.

Doctors are finding it increasingly difficult to run private practices and are fleeing to hospitals. In 2000, 57 percent of all physicians ran their own practice, according to an Accenture study, but the number declined to 43 percent in 2009, and it’s projected to go down to 33 percent by next year.

The trend is likely to continue as doctors’ preferences have changed. According to a 2011 Merritt Hawkins survey, 60 percent of doctors preferred working at a hospital, compared to only 1 percent who’d rather work for themselves.

At last week’s hearing about the declining conditions for small private medical practices, both Republican and Democratic lawmakers seemed to sympathize with doctors who are being forced to give up their private practices.

“It was already tough,” said Rep. Mike Coffman, Colorado Republican and the subcommittee chairman. “This is just going to make it tougher.”

Lawmakers on both sides of the aisle appeared interested in solving the problems that plague medical professionals.

Rep. Kurt Schrader, Oregon Democrat, said he is “very concerned about the future of medicine from all walks of life.”

The medical professionals told lawmakers that the private-practice physician is an important part of a community and fills a role that hospitals don’t. When such practices merge with hospitals, they warned, patients will have less access to individualized health care and be treated more like numbers.

“The patient will be left on the sideline,” said Mark Smith, president of Merritt Hawkins, a physician search and consulting firm. “Those people, they’ll have a card that gives them insurance; what they will not have is access.”

The corporatization of medicine has other effects.

Doctors say they are not getting reimbursed enough for their services. The Merritt Hawkins study found that 68 percent of physicians say Medicaid pays them less than their cost of doing business, 43 percent said some HMO and PPO programs from private insurers do not cover their expenses, and 36 percent said Medicare does not cover their expenses.

To make matters worse, physicians are in for a 30 percent cut to their Medicare reimbursement rates in January.

“Physician practices are different from almost any other small businesses,” said Dr. Jerry Kennett, chairman of the American College of Cardiology Advocacy Steering Committee. “The payment for services performed is not controlled by free-market dynamics, but instead payment is tightly regulated by Medicare and Medicaid and private payers.”

Doctors also have to deal with more paperwork than previously. For physicians with small private practices, this means more administrative work, about which they often are untrained or unsavvy, and less time with their patients. Not content with that reality, many are leaving their businesses to join hospitals that take care of the paperwork for them.

Mr. Smith said doctors spend an average of 15 hours a week doing paperwork. It’s “alien to the mindset and makeup of many physicians,” who have never had business training, he said.

“It has been reported that the U.S. federal tax code runs to some 75,000 pages,” Mr. Smith explained, “whereas the Medicare regulatory code by which physicians must abide runs to 130,000 pages.”