The "New Rules" for Survival for Physicians in Private Practice (Part I)

The "New Rules" for Survival for Physicians in Private Practice (Part I)

Physicians are at the epicenter of one of the most dramatic periods of change in America's healthcare system. The rules and strategies for physician success are changing rapidly, and most physicians feel trapped and confused.

We now are faced with a "new normal" in many sectors in our economyhealthcare more than others, and it's happening at a time when physician satisfaction is at an all time low. Change is here and the old rules will not work in the future. The Obama Administration's Healthcare Reform spokespeople stated in a recent article in the Annals of Internal Medicine, "Physicians will need to embrace rather than resist change". The article, a must read for all physicians, outlines the changes your government expects from you as a physician.

We believe physicians are confronted now with a major career decision. Physicians will need to decide whether they go along with the Obama Administration's plan for their career, or if they will seize upon the opportunity system-wide change now presents to re-design their own practice path. Healthcare will not be the same as it was. Physicians cannot practice the same way as they have. The first step for survival is to understand the "New Rules" of our healthcare system.

This article is the first in a four-part series of blogs that will discuss these new rules on four dimensions of physician life:

Physician Compensation

Managing a Private Practice

Changing Patient Demographics and Attitudes

Physician Career Satisfaction

Physician Compensation

Old Rule: Physicians could earn a decent living by receiving their income from third-party (insurance carriers and government paid health care) reimbursement.

New Rule: Surviving on third party reimbursement will be increasingly difficult. You will either need to be absorbed by an integrated delivery system or diversify your income through ancillary services, lifestyle medicine, etc., much of it paid in cash directly by the patient.

Old Rule: Insurance carriers and government health plans offered fee-for-service arrangements

New Rule: There is still time to get on high reimbursement contracts, however, fee-for-service reimbursement will diminish over the next five years. Value-based, performance-based compensation will become the primary form of reimbursement from carriers and Medicare/Medicaid.

Old Rule: Physicians could make a good living without having much business sense; just being a "good doctor" was enough for practice success.

New Rule: Those days are gone. Change is the "new normal". Physicians will need to be astute observers of healthcare economic conditions and determine how they need to respond to change from a business practice standpoint.

Old Rule: Enough healthcare dollars were available to allow physicians to make their fair share of the pie.

New Rule: The per-patient healthcare dollar available will decline for the remainderm of today's physicians' careers. Smart physicians will find ways to gain more control of the healthcare dollar they produce.

Old Rule: Insurance carriers had few restrictions on raising their premiums to earn the profit they needed. (enabling most physicians to make adequate incomes)

New Rule: If you thought it was bad before, wait until carriers are limited in their ability to raise premiums. Physician reimbursements will be slashed. Smart physicians will look to alternative sources of income and prepare for changes in the fee-for-service reimbursement model.

Old Rule: Doctors believed that patients would not pay cash for healthcare and structured their practices accordingly. Physicians believed that third-party reimbursement was a "normal" way to do business.

New Rule: Patients are already paying high out-of-pocket amounts for physician services and even more for non-physician related healthcare products and services. This trend will increase dramatically over the next five years. Wise physicians will position themselves to be part of the "retail medicine" trend.

Old Rule: A doctor could make a good living by limiting his income to his basic professional service menu and refer ancillary products and services to others.

New Rule: Physicians need to realize they refer out more revenue than they make. (Ever wonder why the pharma and medical device rep drive a nicer car than you do??). To stay profitable, physicians will capture more control of the healthcare dollar spent by their patients, including DME, pharma, lab services, nutritional supplements, alternative treatments, etc.

Old Rule: You could go it alone and make it in the third-party reimbursement model of healthcare.

New Rule: To play in the third-party reimbursement world, you will need to become part of an integrated delivery system, joining forces with hospitals and other specialists, dependent upon each other for compensation. There are still some good third-party reimbursement contracts out there, however, to remain independent you will need to structure your services to capture patient, direct-pay revenue.

Summary

It is decision time for physicians. Will they continue to devote their practice to "reimbursement medicine" or will they diversify into "retail medicine" and ancillary income opportunities? Most every specialty has an opportunity to capture part of the retail and ancillary dollar spent by patients at other healthcare outlets and gradually wean themselves off ever-declining third-party reimbursements.

For more go to: http://www.hna-net.com and click on the blogs tab at top of page.

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