Big Problems for Small Practices (Blog Post)

Jump to navigation Jump to search

Blog Post
Title Big Problems for Small Practices (Blog Post)
Author Catherine Kirby
Content status Published
Publication date
©, 2016


This blog post discusses the negative effects the Affordable Care Act has had on doctors in private practices and the decrease in entrepreneurship that has resulted from the new policies.

Blog Post

In recent years, the advent of the Affordable Care Act has discouraged doctors from starting and running private practices. New requirements have led to doctors choosing employment at hospitals where they have less overhead, less administrative responsibilities, and better pay. A Physicians Foundation 2014 study found that among 20,000 U.S. doctors, only 35% described themselves as independent (Gottlieb wsj 1). This is a change from the 49% in 2012 and the 62% in 2008 (gottlieb wsj 1). The Affordable Care Act deters physicians from starting their own businesses by having differing reimbursement rates and unreasonable electronic medical record requirements, decreasing entrepreneurship in the health care field.

Reimbursement rates for Medicare actively discourage private practices because the government pays hospitals at a higher rate than independent offices for the same services. Figure 1 (see below) illustrates the major difference in the money that a hospital would receive compared to a private practice (Baltic 1). Medicare also pays more for procedures performed in a hospital outpatient clinic than it pays for a private office (Gottlieb wsj 1). There are a variety of other requirements for filing the bills that if not followed can lead in penalties that include deducted reimbursement rates as high as 6% (Wilson forbes 1).

The necessity to use electronic medical records and prove meaningful use measure and quality of care measures add an additional cost, increase administrative burdens and decrease the quality of patient care. The federal mandate to use electronic medical records (EMR) forces physicians to purchase electronic medical record systems, a system with an average cost of $163,765 for a single practice (O’Neill 1). As this is a fixed cost, it is cheaper to share the costs across multiple physicians, a benefit of working at hospitals or large practices. Furthermore, the new system requires “meaningful use” and “quality of care”. Compliance with requires doctors to spend a longer time completing paperwork or risk further reimbursement reductions. Physicians spend 27% of their time in offices seeing patients and 49.2% of time completing EMR paperwork; when in the exam room with patients, doctors spend 52.9% talking or examining patient and 37% of their time doing paperwork (forbes Lee 1). Requiring doctors to complete EMR records while with the patient means doctors spend less time actually talking or examining the patients. The strict requirements and high fixed cost that working with an EMR requires makes running a private practice to be continually less attractive to doctors.

The lack of incentive to operate an independent office must be remedied in the future. The U.S. government must find a way to preserve the entrepreneurial spirit of the health profession. Changing the reimbursement rates to be equal between hospitals and private practices would be a good start. Additionally, improving the requirements of meaningful use and quality of care measures so that they are less difficult to complete would aid private practices in not losing money. The requirements of the Affordable Care Act are not bad in theory, but they must be changed to allow the fostering of entrepreneurship in the health care community.