Stripped of Negotiating Clout
Scattered in separate practices, most physicians have no clout when negotiating with insurers, said Jeffrey M. Kagan, MD, an internist in Newington, Connecticut. "Doctors never got organized enough to stand up to managed care," he said, adding that other professions didn't let insurers limit what they could charge patients. Dentists, for example, are still free to balance-bill the patient whatever amount insurance doesn't pay, Dr. Kagan said.
A major payer commands so many patients that physicians can't afford to walk away from them, he said. Insurers have been consolidating, reaching overwhelming market dominance. In 2012, the American Medical Association (AMA) found a significant absence of competition among health insurers in 70% of the metropolitan areas it studied.
Lack of negotiating clout is forcing physicians to abandon small practices, said Steven T. Kmucha, MD, an otolaryngologist in a 4-member group in Daly City, California. This year he expects to leave his small group and find work in a larger organization. "Physicians are becoming more and more frustrated with trying to stay solo or in small groups," he said.
The AMA has tracked a 22-point decline in the percentage of physicians in solo practices over the past 30 years, from 40.5% in 1983 to 18.4% in 2012. "In the past, reports of the death of small practices were 'greatly exaggerated,' to quote Mark Twain, but it may be time now," Dr. Kmucha said. Many agree. In a 2012 poll cosponsored by Sermo, an online physician discussion board, 81% of physicians said they did not see a viable future for independent practice, a 19-point increase over 2011.
Dr. Goldsmith said physicians can find refuge in larger groups that have real negotiating clout, such as Atrius Health in Massachusettsand Hill Physicians in California"Doctors can keep some degree of independence within the larger group," he said.
Another approach is to drop insurance contracts and open a concierge practice, charging patients a monthly fee. According to a 2012 survey for the Physicians Foundation, 9.6% of practice owners were planning to convert to concierge practices in the next 3 years. Concierge practices, which often are solo or partnerships, could rejuvenate the small practice.
Turned Into Captives of the Insurance Industry
Rob Lamberts, MD, an internist in Martinez, Georgia, cut his insurers loose and opened a solo concierge practice in 2012; looking back, he wishes he had done it sooner. "Doctors have been turned into tools of the insurance industry," Dr. Lamberts said. "You always work for whoever pays you. When you work for an insurer, you are constantly under pressure to do a lot of things that don't improve the care of the patient."
According to Dr. Kagan, one key way insurers exert their control over physicians is by requiring prior authorizations for certain therapies. These requirements often wear physicians down, and they'll stop asking, the Connecticut internist said. He says he has to continually request prior authorizations for every MRI and CT scan, even though 99% are approved.
Sometimes the insurer requires him to have a peer-to-peer discussion with one of its physicians. "It ties me up and costs me money," Dr. Kagan said, adding that he thinks insurers should have to pay physicians for the extra time they have to spend. In a recent study in the Journal of the American Board of Family Medicine, researchers estimated that the mean annual cost of prior authorizations ranges from $2161 to $3430 per physician.
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