The Value Of Independent Practices Cannot Be Disputed

The independent practice is becoming an endangered species. The corporatization of medicine is depleting competition in the healthcare marketplace, leading to higher prices for patients and lower pay for physicians. Physicians know this, they live with the imbalance every day.

Facing financial strain, some independent physicians felt they had no choice but to close their practices and go to work for larger healthcare corporations.

But as large health systems seize an ever-growing share of the market, they accumulate more leverage to demand higher prices from patients and insurers. When a hospital acquires a physician practice, prices for healthcare services increase by more than 14%, according to research published in the Journal of Health Economics.

Those higher costs don’t translate to higher salaries for doctors. A recent Health Affairs study found that a physician’s salary actually decreases after his or her practice is acquired by a hospital. Doctors in some specialties experience average salary cuts of nearly $10,000 after a hospital takes over their practice.

There’s no evidence that higher prices lead to better care for patients. It’s no wonder patients report lower satisfaction rates when they receive hospital care in markets with higher levels of concentration.

Health systems are keeping much of those higher prices from consolidation for themselves. Studies indicate that a hospitals’ revenue jumps nearly 20% after it acquires a physician practice.


(1) Revenue Challenges

Negotiation for reimbursement for insurance-based practices is a process that is clearly stacked against independent practices.

What To Do About It

You need a detailed analysis of:

  • Your payer contracts and fee schedules.
  • Profitability of the top 90% of your billed services/procedures.
  • Your all-in operating costs of providing each major service/procedure.
  • Average collection percentage for patient out-of-pocket contribution.
  • Outstanding A/R lag time (insurance payments and patient payments).

Once you have your detailed financial analysis, you have decisions to make regarding your desired and preferred service/procedure mix.

If you don’t have a business mix plan based to at least a significant degree on profitability, you will struggle to retain your independence.

This analysis will also help you with insurance rate negotiations, pricing for non-insured services and other operating cost considerations and budgets.

(2) Declining Reimbursements

Over the past several years, physicians have seen their incomes gradually erode as insurance companies and Medicare decrease the amount they are willing to reimburse.

What To Do About It

As a medical practice grows, so does its value to insurance companies. Medical practices should not make the mistake of operating under the terms of their original contract. Instead, they should present a data-based case for the quality care they provide, such as a SWOT analysis, that shows how they provide value to the payer and better health for their patients. A well-put-together analysis allows the medical practice to negotiate for better reimbursement rates with confidence.

(3) Decreasing Patient Population Due To Out Of Network Status

Whether they plan to or not, a growing number of physicians no longer have contracts with some of the nation’s largest health insurance carriers. Either they choose to be “out of network,” dropping contracts with all insurers or with those that pay too little, or they’re dropped by the insurers when the carriers narrow their provider networks.

What To Do About It

Attract high-value patients with predictive analytics and targeted ads. Predictive analytics and AI technology can help providers identify high-value patients that will bring higher profit margins to the practice. Tapping into this predictive technology can help independent practices make the best use of their marketing dollars to grow their practice quickly.

Improve online visibility to get seen in search results. Patients turn to online search in increasing numbers to find medical care. They are used to finding what they need online. Improving their online visibility helps physicians get seen by the right patients at the right time, and it helps patients make informed decisions when they need to find a healthcare provider.

Focus on patient satisfaction. Patient satisfaction can drive business for independent practices in several ways:

  • Patients satisfied with their care will come back for more.
  • Happy patients leave great feedback when asked to leave a review, giving physicians a higher star rating.
  • Practices that gather feedback can make small improvements to care that make a big impact.

Focusing on patient satisfaction improves quality outcomes and is an important part of collecting great reviews that will attract new patients.

(4) Confusion

Confusion occurs when you have the information you need but it’s not organized in a useful sequence.

What To Do About It

Keep medical coders and billers up-to-date with frequent training opportunities. Coders and billers for independent practices need access to frequent training sessions to reduce initial coding errors. Physician-owned practices can also consider putting a system in place to track denials and follow through on patient collections. One of the best ways to boost revenue is to get fully compensated for work already completed.

(5) Physician Burnout

Burnout is increasingly common among physicians. Coping mechanisms deteriorate under constant stress over an extended period of time with no end in sight.

What To Do About It

The first few steps towards managing physician burnout are recognizing and measuring it, which include timely measuring physician well-being, proactively assessing and mitigating the regulatory burden on them. For example, delegate non-essential tasks that are contributing to burnout.

Once burnout is recognized and measured, it is essential to take the initiative in addressing it.

  • Change things up.
  • Rediscover your passion or discover a new passion related to your work.
  • Take more breaks.
  • Get more sleep.
  • Spend more time with the people in your life that you care about most.
  • Limit your contact with negative people.

Professional coaching to physicians is another significant way to prevent burnout. This method has long been used by executives in corporate businesses and is making its way into the medical profession.

Encourage physician group curriculum with discussion groups incorporating elements of mindfulness, reflection, shared experiences, and small group learning.

This will lead to developing a healthier generation of healthcare providers, better patient management and treatment outcomes, fewer errors and legal troubles, less financial burden, and an overall, a more efficient functioning in the healthcare sector.


Medical practices can safeguard their independence by taking steps to improve profit margins and use current technology to put an effective growth strategy in place, easing their administrative burden in the process. Doing so will allow them to not only survive but also thrive as a critical component to the success of the ever-growing healthcare industry.

Share this post: