Is there a doctor in the house? Economics driving local physicians into large group practices

“The challenges I face are still the same as somebody that owns any other business down the street.” photo by Jonathan Welch
“The challenges I face are still the same as somebody that owns any other business down the street.” photo by Jonathan Welch

When Dr. Robert Fields and Dr. Andy Runkle opened Vista Family Health in 2003, Mission Medical Associates wasn’t even a blip on the radar. For Fields, Vista represented the culmination of a long-held dream.

Growing up in a Puerto Rican family in the U.S., Fields longed to open a practice that could serve both Latinos and the community at large. So, while completing his residency in family medicine at Asheville’s Mountain Area Health Education Center, he worked closely with Runkle to create the practice they thought would best satisfy the need for primary care in south Asheville. To that end, Fields divided his time between clinical rotations with patients and meetings with a business consultant. By the time he graduated from MAHEC in 2003, he was ready.

“We decided to try it on our own, because it seemed like there was enough demand to make it work,” Fields explains. “We were hoping to recognize both demand and our desire to … structure our patient care in our environment in a specific sort of way that may have been different than other practices.”

But a slumping economy and far-reaching changes in the nation’s health-care infrastructure have increasingly put independent, small-scale practices at risk. Across the country, large-scale hospitals and health systems are buying up private practices as a way to expand outpatient care while achieving economies of scale.

So, last October, Vista decided to come under the umbrella of Mission Medical Associates, sacrificing some autonomy in the name of keeping the doors open and continuing to offer patients the kind of care they’d envisioned in starting the practice. An arm of Mission Health System, Mission Medical has 185 doctors.

“The challenges I face are still the same as somebody that owns any other business down the street,” notes Fields.

Feeling the squeeze

At first, the demand was there. About 100 new patients came through the doors each month, and after three years, the practice hired a third doctor. By 2010, Vista had expanded to include five physicians. In the meantime, however, the Great Recession had taken its toll.

“When the economy turned, our volume decreased,” says Fields. “The number of new patients didn't really decrease, but the visits per day decreased, and that really put us in a position where we were struggling financially, despite growth and despite new patients. It became an issue of cash flow.”

At that point, Fields and Runkle faced a tough choice. Finding that they could no longer serve their patients the way they wanted to, the partners opted to sell the practice to Mission Medical.

“Maybe [a medical practice] has a bigger impact, because it affects so many people in terms of the work we do,” Fields observes. “But it's still a business, and we still have to make decisions based on the monetary value of what we do.”

Joining Mission Medical has given Vista’s physicians more resources to support their patients’ health, Fields explains. For example, his office now has a clinical pharmacist available to educate patients about medications, which would have been unimaginable before. “There's very little reimbursement for that,” Fields explains. “It would have been another investment for no reimbursement, and that's the struggle for a small practice.”

A question of values

Dr. Joshua Bernstein understands that struggle all too well. Unlike Fields, however, Bernstein, who launched Asheville Medicine & Pediatrics in 2005, says he has no plans to team up with a big medical system.

After completing his residency at Harvard’s combined internal medicine and pediatrics program, Bernstein spent six years providing primary care at Cambridge Family Health in Cambridge, Mass. When Bernstein came on board, the practice had recently been acquired by a hospital.

“When we were just purchased, it was very similar to some of the models I see here, where the hospital buys the practice but it still functions as a private practice to some degree,” he explains. “But as each year went on, you saw erosion in the private-practice model.”

As a result, he says, everything became more regulated. When Bernstein wanted to give a patient a medication sample, for example, it had to be logged in a specific way. Items that hadn’t previously been under guard now resided in a locked cabinet. And if a nurse quit, the hospital sent over a new one the next day.

When Bernstein moved to Asheville in 2005, he knew he wanted something different — even if it meant taking a pay cut. So he rented office space, sent out fliers to prospective patients, and opened his private practice. One year later, Asheville Medicine & Pediatrics moved to its current location in Arden, and Bernstein acquired a partner, Dr. BouaSy Huneycutt. The next summer, they hired a third doctor, W. Victoria Morehouse.

But Bernstein still aimed to stay small. “I try to have each staff member who works here have more than one job: A front-desk receptionist may also be a referral person or do billing part time,” he explains. “Our practice manager does lots of different tasks that other practice managers may divvy out to other people.”

Keeping overhead relatively low has enabled the business to operate successfully despite declining Medicare and Medicaid reimbursement rates. “I think, in medicine, it's really important to have a low overhead,” he notes. “You only get paid a certain amount per patient in our current model of reimbursement, and it's hard to make those things change significantly.”

For Bernstein, private practice is ultimately a better fit with his own nature. “I’m not counting on the fact that if I ever wanted to join the hospital, I’d be able to, because they may not be able to support me,” he explains. “But again, I try to be optimistic, and I think we provide a really good service.

“We keep people healthy, we keep people out of the hospital, we keep children safe and healthy, and we decrease ER visits. As long as society and the administration who helps our society run recognize that, then I think we’ll be valued as a specialty and should be OK.”

The end of an era?

Dr. William Hathaway of Asheville Cardiology Associates doesn’t share his colleague’s optimism. Asheville Cardiology was acquired by Mission Medical Associates last year, and Hathaway believes this is the wave of the future for most private practices.

Statistics seem to back him up. In 2005, two-thirds of all medical practices in the U.S. were physician-owned, according to data from the Medical Group Management Association, a Colorado-based professional organization. A mere three years later, however, physician ownership had dropped below 50 percent.

“The days of just being able to be completely out there on your own, except for a few specialties which can still do that, is going to be different. With declining reimbursement, you’re just not going to be able to float the boat on your own anymore,” Hathaway maintains.

Like Bernstein, Hathaway initially aimed for independence. Before moving to Asheville, he worked for a private practice in Wisconsin; when it could no longer function as a standalone, he moved here, joining Asheville Cardiology Associates in 1999. Little did he know the Asheville practice would eventually confront the same dilemma.

Some physicians, says Hathaway, were reluctant to join Mission Medical, questioning what it would mean for their autonomy and quality of care. Hathaway, however, says he had a change of heart.

“It’s what you bring to the alignment strategy, not what the alignment strategy brings to you,” he maintains. “And we have an obligation, as the people who are the immediate interface with the patients and are responsible for them, to bring a lot to that alignment.”

Opportunity knocks

Amid this uncertainty, some physicians are also wondering how the next generation of doctors will see things. Increasingly, today’s graduates are opting for employment rather than going out on their own, notes Dr. Blake Fagan, the director of MAHEC’s family-medicine residency program.

“In the last six to eight years, two new family-medicine practices were started by some of our graduates: One is Vista Family Health, and the other is North Buncombe Family Medicine,” Fagan reports. “But since then, we haven’t had any graduates that have started their own practice.” In a typical year, the program has about eight or nine graduates.

And though Fields launched his own private practice eight years ago, he doesn’t know how many of today’s grads share that desire.

“The entrepreneurial spirit that was maybe true 40 years ago is absolutely not there now for physicians, and for good reason,” Fields asserts. “They're smart folks, and they understand the pitfalls of small business in terms of stress, in terms of lifestyle. Most of them, across all specialties, are choosing lifestyle over business independence. By far, the trend is to be employed by, not necessarily a hospital, but by some practice,” he maintains.

Meanwhile, there’s a nationwide shortage of doctors that’s only expected to get worse as the population ages and more physicians retire. By 2025, the U.S. will face a shortfall of some 124,000 to 159,000 physicians, the Association of American Medical Colleges estimates.

“I think the reality is that medicine is not as fun as it used to be for prospective college students,” Bernstein notes. “They know they’re not going to make as much money as doctors used to make; they work long hours, have to be on call, and you could be sued at any time. I love my job, but I wonder if my kids would be happier doing something else that’s less stressful.”

Even as the medical profession continues to evolve, however, Hathaway finds comfort in a conversation he had with a health-care consultant a few years back.

“I asked him, ‘Why are you still doing this, and how long are you going to keep it up?’

“He said: ‘What do you mean? This is the best time ever. There is so much change; there is so much opportunity to make things better. This is not something to be lamented — it’s an opportunity.’”

After a pause, Hathaway adds: “We have challenges. We’ll always have challenges, but we have to be masters of our own destiny in that regard and take advantage of what we can.”

— UNCA senior Caitlin Byrd is new-media editor for The Blue Banner, the campus paper.

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2 thoughts on “Is there a doctor in the house? Economics driving local physicians into large group practices

  1. Organic

    That, my friend, is called communism. And the current President would like nothing better than send us in that direction. I trust my friends who actually lived under Communism and left their countries (Russia, Hungry, and Romania) to live in the free West. Basically, they said it sucked and the common demnominator health care too. What you do not understand is that economic success and its fruits are important motivation to people who have enough intelligence to complete medical school.

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