Obamacare Expected to Increase Loss of Doctor-Owned Practices

Obamacare Expected to Increase Loss of Doctor-Owned Practices

Thomas Cheplick

Thomas Cheplick, a freelance reporter for the Heartland Institute, writes from Cambridge,... (read full bio)

More American doctors are leaving individual practice and instead accepting salaried positions at hospitals and large health care systems across the nation, a trend which researchers predict could be accelerated by President Obama’s recent health care reforms.

Regulations within the national health care reform legislation constrain future growth of physician-owned hospitals, prohibiting those hospitals from expanding surgical and procedural rooms without jumping through a series of bureaucratic hoops.

Numerous Restrictions

According to the Medical Group Management Association, in 2005 two-thirds of all medical practices were doctor-owned, but the number is now below 50 percent. Under the new law, a physician-owned hospital must apply for approval from the Department of Health and Human Services, wait out a community approval period, and be in an area where certain population measures are met.

Ed Haislmaier, a health care researcher at the Heritage Foundation in Washington, DC, said Obamacare will accelerate the decline in doctor-owned private practices because more doctors will only accept patients who can pay in cash, leading to fewer clients and fewer private practices.

“I think we are going to see primary care doctors increasingly moving to a cash-only arrangement, where they opt out of insurance rules,” Haislmaier said. “Primary care specialists, those on salary, will increase versus those who are in effect independent contractors, assuming these reforms actually happen and are not altered or repealed.”

The new reforms also require the inpatient admissions of physician-owned hospitals to match or exceed the average admissions in all other county hospitals, have a bed occupancy rate greater than the state average, and be located in states where bed capacity is below the national average.

“Clinical practice doctors are moving toward positions of those in research and management—all those same divisions—so you will see some shift to those things,” said Haislmaier. “Make no mistake, some doctors who are in private practice are going to start to do something else or go somewhere else if Obamacare is not altered.”

Eliminating Entrepreneurship

Diana Furchtgott-Roth, a health policy analyst at the Hudson Institute in Washington, DC, says these requirements will further reduce the number of doctor-owned medical practices in the country and encourage doctor unionization.

“They have set up the system to fail, and to eliminate entrepeneurial approaches to medicine,” Furchtgott-Roth said. “Step one is to get more and more people into the Medicaid program, and private practice doctors do not want to take Medicaid. So federal or state governments are going to have to hire many doctors to cope with all the new demand, and those doctors are going to be unionized.” 

Driving Out Private Practice

John Graham, director of the health care studies program at the Pacific Research Institute in San Francisco, California, says the trend away from doctor-owned private medical practices was going to happen with or without Obamacare.

“The regulatory cost, the cost of malpractice insurance, the cost of navigating the health care system—they are high for small, doctor-owned practices. Some of these costs are artificially imposed by government, but I would not say that is the sole reason for the trend away from doctor-owned practices,” Graham said. “Medicine is highly specialized now, and even if we had a free-market health care system, you would see innovation in practice, in small group practices, in sole practices evolving into larger groups.”

Graham agrees Obamacare will likely lead to a higher level of unionization among doctors, expanding unions and associations as political entities while discouraging private practice and physicians hospitals.

“The long-term goal of many of the people who have imposed Obamacare is to put the provider side of health care in the public sector,” Graham said. “It is putting medical providers in hospitals, nursing homes, and other areas under government control, and having them deliver their service according to a very centralized system. That system will probably demand a high level of unionization or quasi-unionization and drive out private practice.”

Thomas Cheplick (thomascheplick@yahoo.com) writes from Cambridge, Massachusetts.

 

Thomas Cheplick

Thomas Cheplick, a freelance reporter for the Heartland Institute, writes from Cambridge,... (read full bio)