Private Practices Continue to Shrink in Numbers

By George W. Chapman

The number of physicians in private practice continues to decline. According to an AMA survey of 3,500 physicians, 49% responded they were in private practice. This is down from 54% in 2018. It is the first time the number has fallen below 50% and the trend will most likely continue. Younger physicians and recent grads show a preference or proclivity for employment, eschewing private practice altogether throughout their careers. Employment options for physicians are numerous, including: hospital systems, federally sponsored clinics, independent urgent care practices and national chains like CVS, Walgreens and Walmart expanding into primary care. Baby boomer physicians, at or approaching retirement, are more apt to sell their practices to hospitals systems as their exit strategy because younger physicians show little interest in buying into private practice. Competition from better financed large hospital systems and corporations, increasing overhead costs and ever-changing reimbursement and regulations, have contributed to the virtual surrender of private practice.

Drug Ads: $147 Million in April

While hospital and physician prices are established and controlled by Medicare and commercial insurers, drug costs are not. Specialty drug costs are especially out of control, now accounting for 52% of overall drug costs. Drug companies spent a combined $147 million in just April on the top 10 specialty drugs which generate huge profits. Anyone, who watches even a minimal amount of TV, will recall these top seven ubiquitous ads ranked by spending: No. 1 Humira for Crohn’s disease; No. 2 Dupixent for inflammation; No. 3 Rybelsus for diabetes; No. 4 Trulicity for diabetes; No. 5  Rinvoq for rheumatoid arthritis; No. 6 Skyrizi for psoriasis; and No. 7 Tremfya for psoriasis.

Biden’s Healthcare Priorities

1. Let CMS finally negotiate drug prices which would save us billions a year. 2. Lower the deductible for insurance plans sold on the exchanges. Families struggling to make ends meet often delay getting care due to high out-of-pocket expenses. 3. Invest more money in research and development to cure cancer, Alzheimer’s and diabetes development. Priorities No. 2 and No. 3 are easily paid for by the billions saved by priority No. 1. But with Washington gridlocked by partisan politics, seemingly nothing gets done.

Mergers, Acquisitions and Anti-trust

Hospitals mergers have often resulted in sole provider of care in a market. Consequently they are under Department of Justice scrutiny. The fear is, without competition, prices will begin to rise ultimately costing consumers. But in many of these cases, without merging, several smaller hospitals in underserved areas would close. It is a case of survival versus anti-trust. Because hospital reimbursement is virtually set by both government and commercial insurers, there is negligible profit in the hospital business. It is an entirely different situation when highly profitable commercial insurers begin to gobble up the competition. It is rarely, if ever, a question of survival. The American Anti-trust Institute is urging the DOJ to disapprove insurance giant United Health Group’s $13 billion acquisition of data analytic company Change Healthcare. UHG already owns data analytic company Optum. Both the AAI and the AHA fear the untoward impact of the massive consolidation of healthcare data under one company.

Hospital Rating System Overhauled

CMS has employed a five-star rating system for both hospitals and nursing homes. Stakeholders (providers, consumers and payers) have criticized the logic, methodology and predictability of the five star system. Consequently, CMS has overhauled the system to make it less complex, easier to understand and more useful. Five basic measures now form the foundation: mortality, safety, readmissions, overall patient experience and timeliness/effectiveness of treatment. The AHA said it is happy with the changes, but more needs to be done. There are 4,580 eligible hospitals for the rating system. Of those rated, 14% received five stars; 29% received four stars; 30% received three stars; 21% received two stars; and 6% received just one. 26% of the 4,580 eligible hospitals were unrated.

Hospital Pricing Transparency

There was a PSA aired during the recent Oscars broadcast advocating hospital price transparency. “Powerto” It is certainly well intentioned. But as discussed in my previous columns, the requirement for hospitals to post online their prices for 300 shoppable procedures is fraught with problems. There is no standardized reporting format, making it virtually impossible for consumers to navigate and make informed decisions. Some hospitals posted charges or prices while others posted negotiated insurance rates. Some hospitals did nothing. Consumers that are part of an organized healthcare system have little choice as to where they receive care so shopping around for prices is a fool’s errand. Consequently, CMS no longer requires hospitals to post negotiated prices with commercial Medicare Advantage plans. If nothing changes, this may be the harbinger of the end of the well intentioned pricing transparency requirement altogether.

Businesses Frustrated

Businesses have long preferred free market solutions to industry problems, but not so much when it comes to healthcare. They are frustrated with out-of-control costs and pouring more money into our fragmented and inefficient healthcare system. A recent survey of more than 300 businesses, jointly sponsored by the Kaiser Family Foundation and the Purchaser Business Group, revealed an astounding 85% want the government to increase its role in managing costs and coverage during the next 10 years. 92% want the DOJ to step up its anti-trust activities as mergers and acquisition have tended to reduce competition and increase prices.

George W. Chapman is a healthcare business consultant who works exclusively with physicians, hospitals and healthcare organizations. He operates GW Chapman Consulting based in Syracuse. Email him at