Doctors trading independent practices for hospitals, large groups

Norman Rockwell prints hang on the walls of Dr. Douglas Gerard’s office, and the New Hartford primary care doctor says his practice would fit into that era.

Gerard is the only medical provider in the office, so he’s the one who takes patients’ vital signs and medical histories. His files are all on paper, and he’s not planning to replace them with an electronic system because he thinks it will distract from the face-to-face encounters with patients.

“It’s a dinosaur,” he said of his practice. “Nobody’s going to do this when I leave.”

Small, independent medical practices have long dominated Connecticut’s medical landscape. But increasingly, doctors are giving up their independence to join larger groups or hospital systems, often getting help with back-office functions like billing and insurance negotiations while staying in their old offices and seeing the same patients.

And like Gerard, many people in the health care system think the days of Connecticut’s independent, solo or small medical practices are numbered.

“If I had to predict, 10 years from now, I think it will be very rare to find a practice that has no affiliation with any larger entity,” said Dr. Robert Nordgren, CEO of Northeast Medical Group, a physician group affiliated with Yale-New Haven Health system that has added more than 100 doctors in the past 18 months.

It’s a change brought on by demographics, technology and changes in the way health care is delivered and paid for, and part of a broader move toward consolidation in health care that includes mergers and affiliations among hospitals.

The average age of doctors in Connecticut is 55, and few young doctors emerging from training are interested in running their own businesses the way their predecessors did. The demands for costly electronic record systems and emerging payment models that encourage coordination between health care providers are expected to make it harder for those who remain on their own. Being part of a larger organization can bring access to the resources necessary to buy electronic medical records or to hire nurses to coordinate care or part-time pharmacists to help patients with medications.

Meanwhile, hospital systems and larger physician groups are eager to join forces with community doctors, creating a recruiting environment one person involved likened to the Wild West.

But are there ways for small practices to remain independent as the nation’s health care system transforms? Should there be? And what will it mean for patients?

“I just don’t think there’s been enough evidence generated yet to show us whether this is a good thing or a bad thing,” said Victoria Veltri, the state’s healthcare advocate, who called the rate of acceleration in practices being acquired “incredible.”

“I will say on the price side, it seems to be affecting consumers in a way that is taking a bigger dent out of their wallets,” she said.

Fierce competition for doctors

It’s no secret that it’s gotten harder to run a small medical practice. Reimbursement rates from insurers aren’t rising much, if at all, while the costs, including health insurance for employees, increase. Doctors who don’t use electronic medical records will soon start getting their Medicare pay docked. It can take years to recruit a new doctor to replace one who retires.

Hospitals are also facing changes that make having fixed arrangements with doctors important. While health care providers currently get paid for each service provided, the medical system is expected to move toward one that pays for managing patients’ health, rewarding those who keep them healthier. To do that, hospital systems need a cadre of primary care doctors. And in the existing payment system, patients or their insurers can sometimes be charged more for services performed in hospital-owned practices than in ones owned by doctors.

It’s often the physicians who initiate discussions about partnerships, people involved in recruiting say. But once they do, the competition can be fierce.

“The recruiting environment is extremely tough right now,” said Jim Thibeault, director, strategy and planning at the UConn Health Center, which includes John Dempsey Hospital. “We’re going to see a shortage of doctors like we’ve probably never seen in history in the next three to five years.”

“It’s just crazy out there,” said Douglas Arnold, the CEO of MPS, an independent practice association that includes more than 400 Connecticut doctors. 

One small practice Arnold used to work with got eight offers when its doctors considered affiliating with a larger organization — five from hospitals and three from larger physician practices.

Thibeault helps broker arrangements with doctors that range from full employment — where the health center takes over the property and employs the doctor and office staff — to more limited affiliations in which the health center provides an electrocardiogram or blood draw station for the physicians’ office.

While some older physicians want to join an organization where their patients can continue receiving care when they retire, there’s often also trepidation.

“They’ve been on their own for 30, 35 years,” Thibeault said. “Now they’re going to be working for somebody. That’s a little scary sometimes. They want to know, ‘Am I getting some office manager who’s going to be like 23 years old and think they’re my new boss?’”

Losing the hassles, and autonomy

Doctors considering joining another organization must weigh the value of independence against the efficiencies and security larger systems can provide, said Dr. Robert McLean, a New Haven internist and rheumatologist and a member of the American College of Physicians’ board of regents.

You no longer have to negotiate with insurers. But if you’re not the one negotiating on your behalf, some doctors note, who’s to say you’ll get the best deal?

“You lose a lot of headaches in terms of the overhead,” McLean said. “But you lose some autonomy, and in a given situation, is it worth that?”

McLean understands the thought process. He’s part of a group of 25 physicians that was independent until last fall. A key reason for changing, he said, was the need for a new electronic medical record system.

The practice already had electronic records, but the company that provided them got bought, and their system was going to be discontinued.

At the same time, the Yale-New Haven health system was offering its electronic medical record system at reduced costs to community doctors, whether they affiliated with Yale or not. McLean’s group took that deal, and after exploring multiple options, affiliated with Northeast Medical Group, which handles their back-office functions but doesn’t own the practice.

“It’s kind of like I can just be a doctor again,” McLean said.

Patients wary, and impressed

Patients, however, aren’t always as confident about the change, and billing problems can present particular frustrations, McLean said. While in the past, patients could address issues with the practice, they now deal with a different entity seemingly less connected to their doctors.

But patients are impressed, McLean said, when he shows them that he can easily access their records from a recent emergency room visit or lab work because he uses Yale-New Haven’s electronic records system.

Do patients gain from the consolidation?

Veltri, the healthcare advocate, said it’s too soon to tell.

“Some of the rationale that I have heard for doing so is centralizing care, coordinating care, higher quality care, but I don’t think that’s been borne out yet,” she said.

Veltri said she and other advocates have concerns about the concentration of bargaining power among a smaller number of health care providers, potentially raising prices. And if a hospital severs ties with an insurer because they can’t agree on contracts, Veltri said, that could mean a large number of local physicians would also be out of the insurer’s network.

Consolidation and integration of various health care providers were slower to arrive in Connecticut than many parts of the country, said Dr. Michael Grey, chief of medicine at The Hospital of Central Connecticut. Now, “we’re right in the middle of it,” he said, and predicted it will be a bumpy five years.

Grey thinks the changes will ultimately be beneficial.

“We have a very duplicative, fragmented and wasteful overall system of health care, so that we spend a lot more money than society can afford, and other priorities lose out as a result,” he said.

Going the way of blacksmiths?

Arnold, who runs the independent practice association, recently saw a presentation by a health care professional who likened unaffiliated doctors in solo practice to blacksmiths or chimney sweeps: Soon, they won’t exist.

But Arnold said organizations like his are trying to find a way to help independent doctors gain the benefits of being in a group without losing their autonomy.

“There’s still a lot of doctors that don’t want to become employed,” he said. “They want to remain independent.”

What models will make that possible? Some in health care point to “concierge” medicine, in which doctors take on a smaller group of patients who pay a fee up front. In exchange, they get increased access to the doctor. Some concierge practices don’t take insurance, leaving patients to pay cash and get reimbursement from their insurers.

Dr. Charles L.H. Staub, a Litchfield primary care doctor, thinks that in addition to that model, there will still be more traditional independent practices.

“It’s been around for two centuries, and people have been predicting the end of small practice for the last 20, 30 years,” he said. “I don’t think it’s going to go away. It will exist, but I think the main thrust of care in the state is going to move towards larger group settings.”

One of those larger settings is ProHealth Physicians, the state’s biggest group of primary care doctors and one of the active players in recruiting. Staub is its chairman.

The 16-year-old physician-owned organization now has 220 doctors and about 100 midlevel providers like nurse practitioners and physician assistants. It treats close to 10 percent of the state’s population.

In recruiting doctors, ProHealth leaders can pitch their values as more in line with those of primary care doctors, with the resources to handle the business side of medicine and improve patient care. The organization has a data warehouse, for example, that tracks all the patients with diabetes to ensure they’re receiving appropriate care.

Staub acknowledged that joining a larger organization requires giving up some of the autonomy independent doctors are used to. Decisions are made through a group process.

But he said the tradeoff brings doctors more professional autonomy, such as by giving them the leverage to get paid by insurers for types of practice they consider beneficial.

An independent network

Even Gerard, the New Hartford doctor, works in an arrangement that would have been foreign to the physicians Rockwell painted.

In the 1990s, as managed care took hold, hospitals were eager to buy up medical practices. Gerard had been in private practice, but decided to join a medical group financed by St. Francis Hospital and Medical Center called Collins Medical Associates. He became a salaried physician. “I just want to see patients and do my job,” was his thinking about the new set-up.

It lasted about two years.

The enterprise was losing money, employing some doctors just out of training who weren’t bringing in enough patients, he said. And like many other arrangements between medical practices and hospitals in the ’90s, it unraveled.

From there, Gerard and other doctors formed their own organization, keeping the Collins name. The hospital has one representative on its board, and the doctors are affiliated with St. Francis, but the doctors own it and are paid based on the amount of care they deliver. Collins handles the business expenses, like billing, collections and health benefits. Without it, Gerard figures he’d have to hire at least two people.

Some doctors still in private practice are interested in having the group handle their billing.

“They’re looking to get rid of some of the daily business overhead and just get back to clinical medicine,” he said.