In the past, it has always been the case that physicians were, for the most part, independent contractors who had working agreements with certain hospitals in their region. However, that is not the case anymore. Physicians are increasingly joining healthcare organizations because the costs of remaining autonomous are too strenuous. It does not matter that independent physicians, on average still make more than their group counterparts because there are too many advantages to joining a healthcare group. The primary advantage being the fact that the individual is no longer solely responsible for such tasks as billing and scheduling. Although joining a group may be advantageous in some ways, it is troubling in others. Patient care is sometimes lessened because, as with the government sponsored socialized medical practices that exist in other countries, the patient may have to wait longer for care and care is not guaranteed as a personal experience. Instead of having a primary physician, in many cases, the patient is assigned to a group of physicians and sees whichever is available at the time. The inconvenience to the patient are secondary to the expediency seen by the healthcare organizations though, so independent doctors are becoming artifacts. This paper examines in detail the history of independent physicians, the reasons why they are disappearing, the benefits and drawbacks of the group system, and whether there should be concern at the demise of this institution.
Physicians have been independent of hospitals, for the most part, forever. In the beginning, the doctors were the ones who started the hospitals, but that has long since been taken over by large nonprofit or for profit organizations. The oath that doctors took (to first do not harm) was the most important creed and the doctor was tasked with doing all he or she could to make sure that the patient received proper care. Large hospitals began taking over this function in the early part of the twentieth century (Figliuolo, Mango & McCormick), so doctors could associate themselves with the group, but did not have the stress of running the entire operation. Since that time, it has become common practice for healthcare entities to hire as many doctors as possible in their large groups, so that the group can more adequately control the care that its members receive.
The fact is that independent doctors are becoming an element of the past, just as doctors who made house calls before them, because in many ways the perks of joining a healthcare group outweigh the pull of entrepreneurship. Doctors are trained as physicians not businesspeople (Chufo), so many are happy to join a group that takes away the business pressures. However, there are many who enjoy the challenge of being autonomous, and became doctors partly because they wanted the thrill of owning their own business also (Biz Times). "Many of them [physicians] are more entrepreneurial and like to have their own say in their business. Others like to be able to decide their own hours or like the locations they are in. They feel they can better serve their patients by being in their own neighborhoods" (Biz Times). This feeling is being overwhelmed by the reality that an independent doctor just cannot survive in today's climate.
"The percentage of U.S. physicians who own their own practice has been declining at an annual rate of approximately 2% for at least the past 25 years" (Isaacs, Jellinick & Ray). The decline is due in part to the fact that there are fewer physicians as a whole when compared to the general growth of the population, but it can also be seen as these doctors discovering that independence is not worth the headaches anymore. One article states that independent doctors make more, in some cases much more, than their counterparts who work for groups. According to a report by Connie Helwick, the data from a survey conducted by the Medical Group Management Association found that:
the median total medical revenue for a multispecialty hospital-owned practice was 44% less than revenue for non-hospital/IDS-owned practices: $448,597 per full-time-equivalent (FTE) physician vs. $798,606 -- a $350,011 difference.
specialty care physicians working in multispecialty hospital/IDS-owned practices earned 19.85% less in total compensation than those employed in multispecialty non-hospital/IDS-owned practices (median, $294,984 vs. $353,549).
for primary care physicians, the situation was reversed: Those working in multispecialty hospital/IDS-owned practices reported median total compensation of $192,116, which was approximately $12,000 more than their colleagues working in independent practices, who earned $179,688. (Helwick).
This data reveals the raw numbers, but it does not tell the entire tale. First of all, even though many specialists earn almost double what their group colleagues earn, they have to account for administrative costs also. Some of this is mitigated because most independent physicians are partners in a larger practice (in which they continue to work independently, but share the business costs of a practice), but that still reduces the 44% that the survey talks about. The following two points show the decline in earnings as compared to like groups of physicians who have been employed by healthcare groups. The multispecialty group still maintains a margin of financial success, but the general practitioners actually lose money because they are independent. This is probably the reason why primary care physicians are the most likely of the three types to join a group.
Money aside, there are other issues that confront the independent physician that are not a worry for those who are employed by healthcare entities. The first is that antitrust laws make it difficult for the independents to protest when they believe that they have been unfairly treated by insurance companies.
"Current antitrust law prohibits collective action by independent doctors that is designed to raise the level of payment for their services or to force HMOs to accept certain contract terms. Such actions are generally characterized as price fixing or horizontal boycotts, which are illegal per se" (Berman).
It would seem that antitrust would protect the small business from the large, but in this reversal of logic, the opposite is true. Antitrust laws were designed to protect consumers from the anti-competitive actions of firms who controlled a large part of a market. They were not designed to stifle the ability of independent physicians from protesting the injustice of lower compensation for procedures than those paid to healthcare group doctors (Chufo). Berman goes on to say that this problem can be solved because "doctors may avoid these proscriptions by merging their medical practices into larger groups or by combining their practices to a lesser degree through Independent Practice Associations." Basically, by becoming a larger company that could have a healthcare monopoly in a certain area, the independent physicians are able to legally fight the injustice.
Another article points out that the antitrust laws actually protect the independent physicians as they are written, but that those laws are not being enforced by the Federal Trade Commission (FTC) (Powers). He says that
"The bargaining position of independent physicians is substantially weakened by the lack of significant enforcement of the antitrust laws by the Federal Trade Commission [hereinafter "FTC"] and the Department of Justice [hereinafter "DOJ"] against managed care and insurance companies. Even in the face of the considerable market dominance in many localities by a single HMO, the federal enforcement agencies charged with the enforcement of the antitrust laws seem reluctant to interfere with their growth"
One item he does not point out is that the federal government cannot involve itself in matters that are contained within a single state. So, if the HMO dominates a region that is within a single state, that state has to bring a suit against them. However, most insurance companies are far larger than that so the statement applies. But it seems that the argument of those opposed to collective bargaining by independent physicians has some merit.
"A principle argument of those opposed to such efforts seems to be that such a unionization of doctors would serve to stifle competition within the health care arena, fattening the pockets of already overpaid physicians and yet not significantly improving the quality of care provided to patients. Fear of striking physicians and the resulting unavailability of medical services, particularly emergency care, undoubtedly to greatly fuel the opposition. Accordingly, physicians' efforts to unite for collective bargaining purposes have been viciously attacked as violations of the antitrust laws" (Powers).
Because these physicians remain the dominant healthcare force in many regions (when it comes to primary care), it is a concern that may hold some weight. However, because of this stance, the insurance companies are able to maintain a hold on these providers which also stifles competition. Since the goal of the antitrust laws is to promote fair competition and protect consumers, it would seem logical that the government (federal and state) would decide for the independent physicians, but this is not the case.
Healthcare Group System
According to the difficulties that independent physicians face, it is…