Experts' View

Impact of the ACA (Part II): Four reasons the ACA is threatening to wipe out small and solo practices

In a recent survey of our community, we asked physicians to detail the impact of the Affordable Care Act on their practices. From the 400+ responses, there was a striking difference in the impact the ACA was having on small and solo practices versus larger groups (see results here). Physicians from smaller practices were much more likely to report losing patient volume since the ACA was enacted, and we wanted to understand the drivers of change within this important segment. 
Therefore, from March 31 to April 5, 2015, we asked physicians to tell us in their own words how the ACA might be driving patients from small practices to large practices. No compensation was provided. While the responses varied, there were four very strong themes that emerged and they, and representative responses, are detailed below.

Reason 1:  Patients are being kept within closed networks that favor large hospitals, both through restrictive insurance and through limiting outside referrals

“I have no direct knowledge or numbers but hospital systems are increasingly aggressive with keeping patients and referrals within their sphere and away from independent physicians. This may account for some of the observed volumes, rather than the ACA directly.”
“Narrow networks and PCPs taken out of the market by large IDNs have significantly affected the referrals to independent specialist.”
“[Patients are] going to large hospitals. The hospitals can afford the staff, and they hire more physicians, and increasingly control referral patterns. They are immune to Stark anti-self-referral prohibitions, and the doctors in-network for these conglomerates self-refer back to their own diagnostic centers.  Very simple, really.  The ACA just justified this practice under the guise of assuring "quality" by keeping the accountability for the quality of such tests within one organization.”
“This is because all insurance plans purchased in conjunction with the ACA and through Health Care exchanges have a different provider panel than the parent insurance company developed for their regular commercial insurance plans with the same name.  So, BC/BS Anthem has a different provider panel than BC/BS Exchange purchased insurance plans.  When the insurance companies were able to craft these new Exchange Insurance plans, they could "narrow" their networks of providers, since this has historically be associated with less cost to the insurance company.  They have either narrowed their networks by only contracting with big groups, like ACO's who have employed doctors (unrelated to the physician quality, only that they are in the ACO) and/or they use historical profiling of past billing practices to "weed out" the expensive doctors…These "narrow networks" are killing us, and only large groups of doctors "protected" by large entities are given access to patients that we have taken care of for decades. The patients see that you are out of network, and away they go. The system is rigged to herd patients into large hospital centered ACO and medical home paradigms.”

Reason 2:  Higher copays and deductibles are forcing patients to delay or forgo treatment entirely

“The copays are very high for office visits and the deductibles are not affordable for the average family. Patients want to be treated over the phone or have prescriptions refilled without being seen. The quality of care is deteriorating.”
“[Patients] are seeking LESS elective treatment due to dramatically higher premiums, deductibles, and copays. We are linked with a number of [surgical centers] and this is across the board at all.”
“The answer is obvious, and patients have shared it with me.  Their deductibles are so high that they are avoiding care.  They want to come but can’t afford it.  Basically they have insurance only for catastrophic medical issues, but otherwise they have none.”

Reason 3:   New EMR implementations are placing a burden on small practices who do not have the high-end, automated systems that large practices can use to achieve efficiency

“The implementation of an EMR is associated with a 6 month decrease in productivity of about 33% with associated loss of revenue (not to mention the losses associated with the purchase of the EMR).” 
“The EHR takes more time, and you see less patients, and they take longer. The large group [practices have] a more expensive EHR that can push buttons automatically, not to improve care, but to fulfill criteria for payment. The notes are terrible. [Also,] reimbursements are down and, with EHR and ICD-10, small practices will be destroyed.”
“Practice volume is down because of the time burden of the EHR. We consistently would see 20 patients in 1/2 day prior to EHR, and now struggle to get 18 patients in. And more time is spent throughout the day and after hours finishing the record for all of the meaningless use requirements.”

Reason 4:  Small practices can’t make money from the new patients the ACA has added to the system

“[Large] systems can tolerate reduced reimbursement for services in exchange for getting patients in their panels so they can be encouraged to undergo a broad variety of services at additional charge.”
“Limited to only one service line, individual clinicians cannot take reduced reimbursement as a loss leader in a similar manner [to large practices and hospitals].”
“The hospital practices encourage Obamacare patients because they have the secondary gain of selling them hospital services above their deductibles and paid for by their insurer. Hence, these patients are profitable for them. Small practices lose these patients because of their high deductibles, lack of desire to pay their doctor, and habituation to receiving uncompensated care.”
“Patients insured thru ACA are more difficult to care for than patients with long term access to private insurance. They often have a number of chronic health problems, such as diabetes, which have never been appropriately treated or have caused secondary complications.  In addition, they are often unmotivated to change unhealthy behavior or to be compliant. These patients are difficult to manage in solo/small groups, which have fewer 'educators', compared to hospital-based practices.”

"Volume is not directly associated with revenue anymore due to high deductibles that folks do not pay, and uninsured "self pay" (read "no pay").  Bad debt is increasing significantly and practices not owned by hospitals need to figure out their business models in order to stay in business at all.  Also, hospital based groups can get significantly better reimbursement (+15%) than independent practices (that is why my group needed to join the hospital).”

51% of solo practice physicians in our survey (see Part I) reported no change in their patient or procedure volume due to the ACA, so the trends we are describing are not being felt universally. Still, many physicians believe that adaptation will be necessary to survive in the new environment:
“Patients are leaving small practices for the same reasons that Walgreens & CVS devoured Mom-Pop pharmacies: economies of scale. The large hospital systems and larger practices have sought new patients with aggressive advertising & marketing campaigns, as well as acquisitions of smaller practices.  Meanwhile the small shops have been busy moaning and groaning, but slow to adapt.”
In the upcoming Part III of our study of the ACA’s impact on physicians, we will uncover some of the adaptations physicians are making to work in this new environment. Look for it soon!

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