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Clinical Reviews

Is private ObGyn practice on its way out?

Last year’s Patient Protection and Affordable Care Act was designed to nudge you out of private practice. The law isn’t the only pressure on ObGyns to change the way you practice, however, as Lucia DiVenere, ACOG’s Senior Director of Government Affairs, makes clear.

October 2011 · Vol. 23, No. 10




In the 18 months since the Patient Protection and Affordable Care Act—otherwise known as ACA, or health-care reform—was signed into law by President Barack Obama, the outlook for private practice, in any specialty, has dimmed. As a recent report on the ramifications of the ACA put it:

The imperative to care for more patients, to provide higher perceived quality, at less cost, with increased reporting and tracking demands, in an environment of high potential liability and problematic reimbursement, will put additional stress on physicians, particularly those in private practice.1

To explore the impact of these stresses on ObGyns specifically, the editors of OBG Management invited Lucia DiVenere, Senior Director of Government Affairs for the American Congress of Obstetricians and Gynecologists (ACOG), to talk about the outlook for private practice in the coming years. In the exchange, Ms. DiVenere discusses the short- and long-term effects of the ACA, the ways in which ObGyn practice is (or is not) evolving, the challenge of making the switch to electronic health records (EHRs), the reasons ACOG opposed the ACA, and other issues related to the current practice environment. In addition, two ObGyns in private practice describe the many challenges they face (see “The view from private practice,” pages 44 and 52).

What nonlegislative forces have affected private practice?

OBG Management: A recent report on the ramifications of the ACA argues that formal reform was inevitable. It also asserts that private practice was subject to many negative pressures long before health-care reform was passed.1 Do you agree?

Ms. DiVenere: Our nation’s health-care system is always evolving, and over the past decade, we’ve seen a clear trend toward system integration—that is, larger, physician-led group practices and hospital employment of physicians.

Looking at physicians as a whole, the percentage who practice solo or in two-physician practices fell from 40.7% in 1996–97 to 32.5% by 2004–05, according to a 2007 survey.2 And the American Medical Association (AMA) reported that the percentage of physicians “with an ownership stake in their practice declined from 61.6% to 54.4% as more physicians opted for employment. Both the trends away from solo and two-physician practices and toward employment were more pronounced for specialists and older physicians.”2

OBG Management: What has the trend been for ObGyns, specifically?

Ms. DiVenere: The ObGyn specialty employs the group practice model—health care delivered by three or more physicians—more frequently than other specialties do, largely because of the support it provides for 24–7 OB call schedules.

As for private practice, ObGyns have been moving away from it for 10 years or longer. Data from a 1991 ACOG survey shows that 77% of respondents were in private practice; by 2003, that percentage had fallen to 70%.3 In 2003, ObGyns in private practice tended to be older (median age: 47 years) than their salaried colleagues (median: 42 years) and were more likely to be male (87% vs 77%).3 The demographic change toward women ObGyns may add to this trend line.

OBG Management: What economic forces have shaped practice paradigms in ObGyn?

Ms. DiVenere: Median expenses for private practices have been steadily rising in relation to revenues—from 52% in 1990 to 71% in 2002—making it difficult for practices to remain solvent.4 In addition, a 2011 survey from Medscape reveals that ObGyns in solo practice earn $15,000 to $25,000 less annually than their employed colleagues.5

ObGyns who have made the switch from private to hospital practice, or who have become ObGyn hospitalists, often point to the difficulties of maintaining a solvent private practice, especially given the push toward electronic health records (EHRs) and increasing regulatory and administrative burdens. These and other issues contribute to rising practice costs and increasing demands on an ObGyn’s time and attention.

The view from private practice: Take #1

“I still love what I do”

I’ve been in solo ObGyn practice for 10 years. Before that, I worked 10 years for two medical groups—that makes 20 years of medical practice. I entered medicine late after teaching school for 10 years.

Most of my patients used to have union jobs and were employed by the steel mills in south Chicago and Northwest Indiana or in construction or manufacturing. One of the benefits of a union job was good insurance. As the economy began to sour, those mills changed hands and are now owned largely by foreign companies. Wages were cut dramatically, and insurance benefits are now “bare bones.” I continue to see my patients regardless of their circumstances.

Most maternity benefits require a hefty out-of-pocket expense. Around here, the doctor gets stuck with the deductible and, consequently, ends up doing lots of free deliveries. I haven’t figured it out yet, but I’m willing to bet that I lose money on OB.

Most patients realize that it’s tough to run a business on a declining revenue stream and are grateful that I take care of them. I’ve treated many of their family members, delivered their babies, provided primary care, done prolapse repairs on mom and grandmom. I know everybody by name—that’s the school teacher in me. I still feel honored to do what I do, but it isn’t easy. The other docs who cover for me on my rare days off, for CME, tell me I have “a nice practice.” That’s why I do it, for the good, salt-of-the-earth folks who would like to pay their bills if times were better.

Medicine is changing quickly. It has taken time to learn the electronic health record (EHR) at the local hospital. Every documentation takes longer. I now spend more time at the computer desk than with patients on hospital rounds. I have read about accountable care organizations and being “enabled,” but the next round of payment cuts will likely kill private practice.

I have Indiana University medical students come and rotate with me, and I try to be as upbeat as I can. The students tell me that my office is the one everyone wants to rotate through. I used to hope that someone might come back and join me here—but maybe the young people have it right. They won’t live with a pager all the time. They won’t do call. To them, medicine will be a job. They will be “providers.”

I may not have practiced in the golden age of medicine, but at least I feel that I had an impact on the lives of the families I have been honored to serve. I still love what I do—it’s just getting harder to justify doing it.

—Mary Vanko, MD
Munster, Ind.

What are the short-term effects of formal reform?

OBG Management: What effect has health-care reform had so far?

Ms. DiVenere: In 2010, twice as many physician practices were bought by hospitals and health systems as in 2009. We can’t conclude that the 2010 law is responsible for these changes, but we know that the architects of health reform were aware of this trend, believed it was beneficial, and looked for ways to encourage it, including through development of accountable care organizations (ACOs), which give hospitals a new and potentially lucrative reason to purchase private practices.

OBG Management: What exactly is an ACO?

Ms. DiVenere: An ACO consists of aligned providers—most likely, large multispecialty groups, often affiliated with the same hospital—who agree to manage patients for a set fee, sharing the risk and potential profit. ACOs are required to have shared governance, which gives them the authority to impose standards for practice, reporting, and compensation—including rewards and penalties—across a group of physicians.

Each ACO must sign a 3-year contract with the US Department of Health and Human Services (HHS) and include a sufficient number of primary care professionals to care for at least 5,000 beneficiaries. ACOs will be evaluated by quality-performance measures to be determined by the Secretary of HHS.

What aspects of ACA will have the biggest impact?

OBG Management: What provision of the new law will have the most direct impact on ObGyns in private practice?

Ms. DiVenere: All ObGyns may benefit from the guarantee of insurance coverage for our patients for maternity and preventive care. And all ObGyns should join ACOG’s fight to repeal the Independent Payment Advisory Board, which may hold enormous power to cut physician reimbursement.

Here’s the quote all ObGyns—especially those in private practice—should read, from an article written by President Obama’s health-reform deputies:

To realize the full benefits of the Affordable Care Act, physicians will need to embrace rather than resist change. The economic forces put in motion by the Act are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups. The most successful physicians will be those who most effectively collaborate with other providers to improve outcomes, care productivity, and patient experience.6

OBG Management: Do these health-reform deputies offer any concrete vision of how this change will be achieved?

Ms. DiVenere: They detail what physicians need to do, and how they should change the way they practice, under the Act. For example, to meet the increasing demand for health care, they recommend that practices:

  • “Redesign care to include a team of nonphysician providers, such as nurse practitioners, physician assistants, care coordinators, and dieticians”
  • “Develop approaches to engage and monitor patients outside of the office.”6

And to meet the requirements for payment reform, information transparency, and quality, they suggest that practices:

  • “Focus care around exceptional patient experience and shared clinical outcome goals”
  • “Engage in shared decision-making discussions regarding treatment goals and approaches”
  • “Proactively manage preventive care”
  • “Establish teams to take part in bundled payments and incentive programs”
  • “Expand use of electronic health records”
  • “Collaborate with hospitals to dramatically reduce readmissions and hospital-acquired infections”
  • “Incorporate patient-centered outcomes research to tailor care.”6

To capture value, the authors recommend that practices “redesign medical office processes to capture savings from administrative simplification.”6

OBG Management: Do they propose any method for implementing these changes?

Ms. DiVenere: The White House is hoping that ACOs can lead. Medicare ACOs will attempt to accomplish these changes by managing hospital and physician services, prompting physicians and hospitals to change how they are both clinically organized and paid for services—this change, in particular, is considered by some to be essential to improving the quality and efficiency of health care.

The new Centers for Medicaid and Medicare Services (CMS) Innovation Center, created by the ACA, is given broad authority to test, evaluate, and adopt systems that foster patient-centered care, improve quality, and contain the costs of Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). The law specifically guides the Innovation Center to look for ways to encourage physicians to transition from fee-for-service to salary-based payment.

We can safely assume that the experts behind these provisions believe that large, hospital-centered systems or large, physician-led groups can better serve the needs of patients and our health-care system in general than can small private practices. Today, 24% of ObGyns run solo practices, and 27% are in single-specialty practices. Health-care reform can mean big changes for them.

Is the EHR a realistic goal for private practices?

OBG Management: How does the push for EHRs affect physicians in private practice?

Ms. DiVenere: Very profoundly. From the point of view of an ObGyn in private practice, EHRs offer a number of benefits. They can:

  • help make sense of our increasingly fragmented health-care system
  • improve patient safety
  • increase efficiency
  • reduce paperwork.

In addition, insurers may save by reducing unnecessary tests, and patients can certainly benefit from better coordination and documentation of care. These advantages don’t necessarily translate into savings or revenue for physician practices, however. Many ObGyns—especially those in solo or small practices—don’t feel confident making such a large capital investment. In fact, only about one third of ObGyn practices have an EHR.

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