Solo Physicians Practices Melting Away as Costs Rise and Reimbursements Drop

As Dallas physician Darrel Jordan strode past his receptionist’s desk, he heard her tell a patient: “Yes, ma’am. This is the last day Dr. Jordan will be seeing patients.”

“That,” said the obstetrician and gynecologist, “put a knot in my stomach.”

Jordan closed his Forest Lane office July 31. He is becoming medical director for an organization he declined to identify that runs 21 North Texas family planning clinics.

Although Jordan said he was “eager about the new opportunity,” it was clear he simply has had enough of running a solo physician practice.

In a letter sent to his patients announcing the end of his practice, he wrote “… the changes by the Affordable Care Act (i.e., ObamaCare) are designed to add additional stressors and expenses to small-doctor practices. This will make small physician offices unlikely to remain open past 2015.”

Jordan said the economics of a solo physician practice simply do not work anymore. He said his reimbursement has declined 30-40 percent from three to five years ago as practice expenses continued to rise. He said two physicians in neighboring offices were quitting their practices as well.

“I am on the cutting edge of change for all of us (solo physicians),” he said. “We are in one of three stages: those of us who are changing our careers now, those planning to change their careers, or those who are in denial.”

The evidence backs up Jordan’s theory. Consider the following:

• According to a poll by Sermo, an online website for physicians, more than one out of four physicians admitted they had been forced to close or were considering closing their solo practice. They cited high overhead costs, high malpractice costs and low reimbursement rates.

• According to QuantiaMD, another website for physicians, more than one out of four primary-care physicians reported poor financial health. Among those feeling financial pressure, 81 percent saw profits fall in 2011, and nearly half had trouble covering costs. Like Jordan, most cited falling reimbursement and the rising costs of practice.

• One out of three physicians say they plan to quit their practice in the next decade, according to a survey by Atlanta-based physician recruiter Jackson Healthcare. Of those who said they plan to quit, a majority cited economic factors and health reform as major factors.

• More than 75 percent of newly hired physicians will be hospital employees within two years, compared with 11 percent eight years ago, according to Irving-based physician recruiter Merritt Hawkins. Of its 2,700 searchers in 2011 and early 2012, only 2 percent were to fill positions in solo practices, compared with 42 percent in 2004.

• The number of physicians who own their firms dropped from 57 percent in 2000 to 43 percent in 2009, and is expected to fall to 33 percent by 2013, according to Accenture..

Merritt Hawkins CEO Mark Smith testified before a U.S. House subcommittee in July on the demise of solo physician practices.

“Virtually no one wants to be Marcus Welby anymore,” he said. Smith said small physician practices face five major barriers: flat or declining reimbursement, increasing regulatory and administrative paperwork, increasing malpractice insurance costs, health information technology mandates, and the Affordable Care Act.

Merritt Hawkins senior vice president Travis Singleton said it is hard to finger one or two culprits for declining physician practices.

“It’s death by a thousand pin pricks,” he said. “It’s the movement to accountable care organizations and patient-centered medical homes. It’s the changes in the delivery of care. It’s compliance pressures. You have to hire consultants for electronic medical records (implementation). That costs money.”

Singleton said the pressures and difficult economics of solo physician practices foreclose that option for medical students, most of whom face large student-loan debts when they are looking for jobs.

“It’s easy to say they (medical students) don’t want to be a solo practitioner,” he said. “That’s not reality. They may like the autonomy and generational medicine. But they will never have the chance to do it. There are so many challenges facing that delivery model. And that’s a shame.”

Jordan agrees. He said he is abandoning his practice about two years ahead of when he thought he would, and he blames the Affordable Care Act for his hastened exit.

“I am very happy about my new endeavor, but I am absolutely sick about having to make this change now,” he said.

Steve Jacob is editor of D Healthcare Daily and author of the new book Health Care in 2020: Where Uncertain Reform, Bad Habits, Too Few Doctors and Skyrocketing Costs Are Taking Us. He can be reached at [email protected]

Posted in Dallas, News, Physicians.
  • Great article and eye opening for people not aware of the industry and the financial burden it places on doctors.