Should Your Small or Solo Practice Join a Larger Group?

A growing trend among solo practitioners and small physician practices is joining larger practice groups or hospitals. Although there are many benefits to consolidation, there are also important tradeoffs to consider.

Over the past several years, mid-sized and large practices have become more of the norm. Plus, more recently, the Health Information Technology for Economic and Clinical Health (HITECH) Act and the Patient Protection and Affordable Care Act (ACA) have made consolidation an even more attractive option for solo providers and small practice groups.

The HITECH Act has led to increased costs for physicians who have had to implement electronic health records (EHR) systems and increase data security to protect patient information. The ACA has been increasing demand for health care, especially for primary care doctors. With this rise in demand comes more pressure to operate efficiently. As a result, the consolidation that has occurred in recent years is forecast to continue.

Cost sharing

Financial considerations are one of the main drivers of this trend.

The larger the group, the more you are able to divide expenses across a larger revenue base. Instead of carrying all the costs of support staff, professional fees, EHR systems, insurance, billing services, IT, office rent, etc., you can share the expenses with several other physicians. And with more purchasing power, a larger group is often able to negotiate group discounts on medical supplies and equipment as well as better health insurance rates for employees. All of these factors lead to an increase in profitability.

Other advantages to joining a large group include brand awareness. For example, an independent otolaryngologist who joins a 100-physician group that is well known in the community will benefit from increased brand recognition and better exposure than she would have been able to generate as a solo practitioner.

Some physicians consider consolidation because they simply don’t want to deal with the hassle of paperwork, fighting with insurance companies, marketing and other tasks that take them away from their patients. Medical practice management companies provide managed care support, human resources, bookkeeping and other services, essentially allowing physicians to outsource their back office.

Continue reading this physician practice article at Physician’sMoneyDigest.com.