Small and independent practices are struggling hard to maintain survival, despite offering better, cost-effective, and personalized care to the patients.

Small Independent Practices (SIPs) are always struggling to maintain their survival value. Their concerns range from low reimbursement rates to exclusion from networking. This is mainly why SIPs are disappearing at a startling rate, chiefly owing to the current healthcare environment. To add fuel to the fire, younger physicians aggravate the entrepreneurial challenges of a small practice. In contrast, bigger practices enjoy benefits such as economies of scale and scope and push SIPs down further.

Stats also illustrate compelling facts. 2016 Commonwealth Fund report indicates that the number of solo practices dropped from 41 percent to 17 percent during 1983-2014, with 25 or more practices quadrupled. According to the Annals of Family Medicine, hospital ownership of physicians increased from 24 percent of practices to 49 percent during 2004-2011[1].

However, despite the overall healthcare environment pushing physicians towards consolidation, many practices still prefer their autonomy. They are always on the hunt of exploring plausible strategies to maintain their survival value, from banding together in physician independent associations and consortiums to improving overall business strategies. That said, consolidation does not always work for everyone.

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Nevertheless, the trend toward Big Medicine is radically transforming the healthcare landscape. This is reflected in the highly bureaucratic, top-down management and regulatory systems imposed on SIPs, hospitals, and the entire healthcare industry. However, many Americans worry that this transformation will adversely impact their health and will be an expensive intervention. According to a survey conducted in 2018, 69 percent of Americans favored Congress’s action to limit healthcare consolidation, while 60 percent stated that purchasing independent practices was inherently a threat to affordable care. Interestingly, 25 percent of the respondent viewed consolidation as a direct threat to their health.

However, Big Medicine has only played a neutral role in the context of SIPs. It has neither improved the quality nor reduced the costs for practices. Neither have the patients experienced any better care. The only reasonable impact of consolidation is to increase market power, which is principally used to force the prices up and prevent any efficiencies from being passed on to the patients.

Even so, the roots of the problem go deep. The myopic institutionalized view of medicine, as imparted by healthcare giants, is another obstacle in the way of sustaining the survival of SIPs. For instance, medical students are not taught about independent practice management. Healthcare policies are not friendly towards solo practices. Influential medical entities make sure independent practices don’t enjoy a fair share of the market. And the list of problems is perhaps unexhaustive.

The situation has become even more glaring for SIPs in the wake of the COVID-19 pandemic. Primary care independent practices are particularly in turmoil, owing to the economic lockdown and bigger practices embracing new ways of practicing medicine during the public health emergency. Also, if the shutdown is prolonged, many independent practices will have to close permanently. According to a 2016 survey conducted by JPMorgan, an average small healthcare practice has 30 days of cash in reserve[2]. Today, six months into COVID-19, the impact of the crisis has multiplied manifold for SIPs.

Nevertheless, small practices are far better for the patients since they offer personalized services and are more responsive to patient needs. They cost the patients much less than larger practices, and the physician-patient relationship in a small practice enjoys higher trust levels. At the same time, it is equally beneficial for the physicians, with a higher level of autonomy, and reduced burnout rates.

The most pressing need in this context is a radical shift in the regulatory environment of small and independent practices. Policymakers must devise regulations that are precisely aimed at facilitating SIPS, ensuring fair compensation, and protecting patient choice. For instance, primary care payment rates for SIPs must be set at parity with those paid to larger practices. Similarly, the regulatory burden on SIPs must be reduced, and administrative relief must be offered to them as well.

The need of the hour perhaps is a change in the rules of the game.

[1] https://www.medicaleconomics.com/view/can-small-independent-practices-survive

[2] https://www.forbes.com/sites/theapothecary/2020/05/30/how-independent-primary-care-practices-can-survive-the-coronavirus-downturn/#5b873b0010e4