Speaker 1 00:00:00 Private practice medicine is like running a small business. The people who are in private practice medicine by necessity, have to be somewhat entrepreneurial. And if we lose that to big institutional employment models, then we're losing a lot of the potential of medicine.

Speaker 2 00:00:29 Welcome to Off the Chart: A Business of Medicine Podcast featuring lively and informative conversations with health care experts, opinion leaders and practicing physicians about the challenges facing doctors and medical practices. I'm your host, Austin Littrell. This episode features a conversation between medical Economics senior editor Richard Payerchin and Dr. Paul Berggreen, president of the American Independent Medical Practice Association, or AIMPA. They're discussing where we're at with private practice, in addition to some findings from the American Medical Association's Physician Practice Benchmark survey. Now on to the episode.

Speaker 3 00:01:10 I'm Richard Payerchin, reporting for Medical Economics. With me today is Dr. Paul Berggreen, a gastroenterologist and president of the American Independent Medical Practice Association, or AIMPA. Dr. Berggreen, thank you for joining us today.

Speaker 1 00:01:25 Happy to be here.

Speaker 3 00:01:27 Today we're going to talk a little bit about the American Medical Association Physician Practice Benchmark Survey.

Speaker 3 00:01:33 Just to be perfectly clear, was APA involved with that survey at all?

Speaker 1 00:01:37 We were not. I read the survey. It is. You know, it's an interesting survey. It's been going on now for probably over a dozen years. And they do it biennial survey of various physician practices. And they're and they're tracking trends over time. So it's interesting to listen and read and see what what physicians feel is happening, what they're reporting is happening, and then match that up against other sources of data to get a get a comprehensive picture of really what is the landscape of physician employment in the country?

Speaker 3 00:02:09 One of the main findings that really came out in that survey was the percentage of physicians in private practice, at 42.2% overall for 2024. Some people might say that's unreasonably low. Some people might be surprised to find out it's it's that high. Were you surprised at that percentage?

Speaker 1 00:02:29 I'm I'm not surprised at the trend. So the trend shows a significant trend downward in the number of physicians who identify themselves as being in private practice.

Speaker 1 00:02:38 The numbers that we actually have seen, that we've that we've just done, some investigations do show that it's lower than that. and that sort of points to the survey methodology of the AMA study. you know, I think the survey rightly points out that models are changing. Physician employment models have have evolved. And quite honestly, sometimes physicians who are in complicated financial structures with hospital systems, insurance companies, private equity firms, managed services organizations, etc. they may not fully understand what type of model they're practicing in, and that that gives some, some pause to survey type data. Having said that, the the trend is actually what I think is more important than the actual percentage and the trend is worrisome.

Speaker 3 00:03:28 One of the things that caught my eye about that was that since the start of the year, more than a couple of people that I've spoken with had used the figure of about, I want to say about 20%, of doctors remained independent, that like, you know, the rate had grown up to 80% being employed and that so that to be at 42.2% to me was frankly a little surprising.

Speaker 1 00:03:50 Right? The number, the numbers that I think we're seeing in that are more widely quoted are that about 55% of physicians in this country are employed by hospital systems. Another 10% of physicians in the country are employed by a single insurance company. That's UnitedHealthCare and their Optum physician services arm. So so that gives you 65% right there that are no longer in private practice. So again, I think points to the to the, problems with methodology with, with the survey function versus actual analysis of physician ownership in various practice models, which is very hard to do. so I don't fault the AMA for, for any, you know, variations in data. it is it is worrisome, though, and our numbers do point to a lower number in private practice.

Speaker 3 00:04:41 We talked about that percentage and the trend. And we're going to come back to some of those figures and some of the trends I wanted to get into the reasons behind the trend. And there was a finding that said that inadequate payment rates, costly resources, and burdensome regulatory and administrative requirements are some of the factors driving that change.

Speaker 3 00:05:01 Do you agree with that? And can you talk a little bit about your own experience with those?

Speaker 1 00:05:05 Yeah, I absolutely agree with that. So there's a very, telling graph that actually was put out by the AMA using data from Congressional Budget Office, etc., that shows that over the last 20 years, payments to non physician non-independent physician providers has basically roughly kept pace with inflation. you know, on the order of 70%, increase over the past 20 years. and that mirrors inflation, general inflation rate. But the payments to independent physicians based on the Medicare physician fee schedule has only gone up 10% in that same 20 year period, which translates in inflation adjusted dollars to a 30% decrease in service and payment for services that are identical to 20 years ago. So that's an unsustainable, trajectory, for physician practices and is unique to independent private practice, hospital systems, facilities, ASCs, etc. all those payments have kept pace with general inflation. The payments to physicians have not. we look at the the cost of running a practice, which is the Medicare economic index, and that typically outpaces general inflation by 1 or 2 percentage points per year.

Speaker 1 00:06:27 And that is increasing at a also an unsustainable rate. So in conjunction with declining reimbursements by Medicare, we're facing increased costs based on the Medicare economic Index. those two lines make staying in a small independent practice extremely challenging. and that is actually reflected in what has happened to the physician employment landscape in the last 20 years. Physicians are looking at these numbers and they're saying, this is not this is not doable. It's not sustainable. And we need to find some other mechanism to practice medicine, whether it is throwing in the towel and saying, I want to be employed by a hospital system or an insurance company, or whether it's saying, I'm going to join with other groups that have a managed services organization model, the MSO model, to remain independent. and so that's, I think, what you're seeing, and that's what's driving the marketplace regulatory burden has always been a problem in medicine. It's extraordinarily highly regulated. I would argue the most regulated industry in the country, it is so amazingly difficult to keep up with those regulations to not run afoul of any of the hundreds of thousands of regulatory requirements.

Speaker 1 00:07:50 that quite honestly, no physician is ever going to read or even be aware of until there's a problem. and the addition of the electronic health record on top of that, with all the cybersecurity challenges, etc., and that that has really amplified the entire ecosystem of regulatory burden. So yes, absolutely a problem. And quite honestly, if you ask this right now, what I've been talking about is in the in the federal payer market, right. So Medicare, Medicaid. But if you translate that into commercial payers, physicians in small practices have essentially no clout to, to negotiate with a, with a commercial payer. So they're typically given the rates that they are offered, or they accept the rates that they are offered and there's no real negotiation. Again, the trifecta of difficult to stay in private practice.

Speaker 4 00:08:47 Say, Keith, this is all well and good, but what if someone is looking for more clinical information? Oh.

Speaker 5 00:08:53 Then they want to check out our sister site, Patient Care Online, the leading clinical resource for primary care physicians.

Speaker 5 00:09:00 Again, that's patient care online. Com.

Speaker 3 00:09:07 There was the finding that 35.4% of physicians had an ownership stake in their practice in 2024. And then the next thing I had done was to ask about, can you explain the importance of physician ownership and what that means, both for doctors and patients?

Speaker 1 00:09:23 Yeah, the number is probably a little bit soft. No matter how you measure it. so but that's probably in the ballpark. Here's a problem. In medicine we are in regardless of physician employment model. We are seeing very worrisome levels of physician burnout. and, and that is a real problem for the longevity of a physician's career, for the physician workforce, for for job shortages and for access to patients. Because if there's not enough physicians, then there's not enough access. and, and the two main factors that are currently contributing to physician burnout are, number one, loss of autonomy. And number two, the electronic health record record and the burdens of documentation based on that. So I'll start with the one you asked about.

Speaker 1 00:10:19 And that is autonomy. Autonomy comes in lots of different forms. if you're in a little private practice like I was 30 years ago, and there's four of you, then you have 100% autonomy, right? You are doing everything that needs to be done to, number one, take care of your patients. And number two, run your small business. And so that's 100% autonomy. many physicians say that's fine, but I don't know that I want that level of autonomy. I'd rather not have to take care of the accounting and the legal and the compliance and the IT, etc., but the clinical autonomy is vital, right? And that's where we get into some, some areas that that we should explore a little bit. I'm in private practice. If I want a patient to see, the best colorectal. And I'm a gastroenterologist. Right. So if I want a patient to see the best colorectal surgeon because they need a colon resection, I can send them to whoever in the community I know is the best at that operation.

Speaker 1 00:11:20 and has the best outcomes. I don't have to ask anybody for that patient to see that doctor. and if I want that patient to get in quickly, I'll pick up my phone and text that doctor and say, can you get this patient in tomorrow? And typically the answer is yes, of course. Send them on over. if I'm working in a very large hospital system, that is not necessarily what happens. I'm not saying always, but I'm saying in a lot of times what the physician will have to do is go to the EHR and find a list of colorectal surgeons and find the one that they want. And if they find it, that's great. But if they don't, then that patient, that that physician is not on the list of approved physicians for that health system. So then they have to actually type in the name. Doctor Jones, why do you want the patient to see Doctor Jones? Well. Because he's the best of this type of operation. What happens to that request? It goes to the referral coordinator.

Speaker 1 00:12:16 The referral order says, sorry, doctor Jones is out of our network. What happens then? The doctor has to go to the medical director of that medical group and say, hey, I really want this patient to see Doctor Jones. And then there's a review, and then their request may or may not be granted, and that may take a couple of days, or it might take a week or more. Meanwhile, this patient is waiting for a colon surgery, and the patients asking for questions from their doctor saying, what's going on? I'm trying to get approval for this. Well, so that's a very concrete example of the loss of autonomy. Right. And I can give you dozens of examples of similar problems where the physicians don't really have control over the way that they're practicing medicine. They have to practice medicine within the strictures of a large organization. And those strictures are governed by business relationships, insurance concerns, strategic concerns, etc.. So so that's a real issue. And I think physicians are saying I'm having to deal with this.

Speaker 1 00:13:23 It is not the way that I thought I was going to be practicing medicine. And what and what. The problem, of course, is there's no way out of it, right? Unless you leave that hospital system, you have to deal with their system. And so physicians get frustrated and then you're dealing with a loss of autonomy. Therefore frustration levels go up and physicians start saying, gosh, is this really the way I thought I was going to be practicing medicine? So so that is a loss of autonomy and a very real world example. There are there are lots of those types of examples.

Speaker 3 00:13:53 I told somebody even this week in like literally every interview, there's a couple questions that make it in now. And that one deals with technology and very specifically artificial intelligence and large language models and that computing power. I'm curious about your thoughts. Will those have an effect on business conditions that help independent medical practices? Or the flip side, and you touched on this a moment ago because those technologies also come with a cost.

Speaker 3 00:14:19 Is that going to be just like you said, maybe another financial burden that is even more difficult for smaller and independent practices?

Speaker 1 00:14:27 Yeah. The answer, it's a great question. And the answer is yes to all of the above. Right. So so AI tools are already out there. There in medicine. And many of them have already been adopted, including my in my group. So we've adopted several AI tools, primarily right now focused around documentation. So easing the documentation burden of a physician, and workflow issues. So again, taking some of the complexities of workflow in a medical practice, that have developed over many years, just as a response to getting things done and, and making those much more, streamlined with a, with an algorithm and an artificial intelligence tool that can respond to those. So really what you're talking about is point solutions. So AI solutions that, that solve a certain problem. I don't see any big picture AI solutions that have been adopted or vetted yet as far as medical practice.

Speaker 1 00:15:28 But but it's just a question of time. I do think that there is definitely the, the capability of those tools to improve the financial picture and the operational picture of a practice, if implemented correctly, and if adopted for the right reason. In other words, if you want a nice new shiny toy, which is an AI model, let's make sure that we're adopting it, because number one, it provides benefit to the patient and the practice. but also maybe that it pays for itself. That would be beneficial. An example. So the artificial intelligence scribes, right. There's a bunch of programs on the market right now that that basically you install you you install on your computer and you bring your computer into the exam room with the patient, and instead of sitting in front of the patient and typing your note and notes into the computer while you're talking to the patient and trying to make eye contact, you basically put this thing on the shelf. You put. You click record. It actually records and transcribes and summarizes in real time your conversation with that patient.

Speaker 1 00:16:34 These tools are pretty darn remarkable. and at the end of your visit, you you click stop record. And within 10s, you have your note. Right. Now, that's a great benefit for the patient because now I'm talking to the patient. I'm making eye contact. I'm interactive. I'm not distracted by typing and correcting my typos, which I'm a terrible typist. but but also, you have a very accurate record of your visit. and and it saves you time because so much of the physician's time these days is spent on documentation and making that note hit all the points that it needs to make, needs to hit. And so that's a that's a real benefit. One of the downsides is these tools are expensive. so as the as they, as their wider adoption occurs, we're going to see prices coming down. In fact, we've already seen that. and so if we can get that to a price point where it makes a lot of sense to widely adopt it, it's going to be widely adopted.

Speaker 1 00:17:31 We've got, we've got modest adoption of that tool in my group right now, but it is increasing, as physicians say. Well, this is worth, you know, a little bit of extra money every month to pay for this tool because it makes my life so much better. My patients are simply happier. and I'm saving time. So I think that the answer is yes. Those tools are definitely on the way. and you're going to see in the next even in the next one year, I think you're going to see a dramatic adoption in these points solutions.

Speaker 3 00:18:03 You know, our main audience, of course, is is usually primary care physicians, internal medicine, a lot of family medicine and medical economics traditionally has catered to those physicians in independent practice. the AMA survey also, and we talk about kind of health care writ large. But under that umbrella, of course, there's many different medical specialties. And the AMA survey did break out some of those figures about independent practice by specialty Regarding those findings, was there anything surprising or noteworthy among those? Among the different specialties? And do you have any insights about some of the specialties that were not mentioned?

Speaker 1 00:18:40 So in general, as far as the as far as especially breakdown, I think primary care has been hit the hardest over the last 20 years.

Speaker 1 00:18:51 the payment pressures are most acute in primary care, surgical specialties, because they have ancillary sources of revenue have been less affected. But that has significantly changed in the last 5 to 10 years as well. I think some I was actually surprised I saw ophthalmology was still 70% private practice, completely independent. probably not surprising. but I also wonder how many of those, practices are actually accepting Medicare patients. I don't know the answer, but. But that's one way that practices have insulated themselves from price pressures. So, so in general and also then general surgeons. Right. Most general surgeons, very relatively small number of general surgeons that were in independent practice. Which is also not surprising because, they have a, a a difficult practice model right there sometimes in the office and in the hospital. their schedules sometimes are dictated by hospital, O.R. schedules, etc.. So time can be a time management can be a challenge for them. So that's pretty much the takeaway. not surprised that the primary care isn't having the hardest time of remaining independent.

Speaker 5 00:20:04 Oh, you say you're a practice leader or administrator. We've got just the thing. Our sister site, physicians practice your one stop shop for all the expert tips and tricks that will get your practice really humming again. That's physicians practice.

Speaker 3 00:20:20 You know, in in healthcare, kind of writ large. There's been a lot of there's been a lot of hand-wringing about the effects of private equity ownership on medical practices and what that could mean for possibly really degrading patient care. I think that there are examples of that happening, but I at least wanted to ask the question and, you know, have you review maybe a little bit about that amp of research that talks about private equity as possibly being also a helpful tool that could benefit independent practice?

Speaker 1 00:20:50 Yeah. Yeah. Great question. So I want to start out with the answer here to say there there are different types of private equity investments or should I say any financial entity investment in a healthcare entity. Right. So number one is and and let me be clear, APA is defending private practice not private equity.

Speaker 1 00:21:14 Right. So let's I just want to be very clear about that. But when we look at the investments of into things such as hospital systems or long term care facilities, that's a fundamentally different type of investment than a private equity group or financial entity. Investing in a medical practice through an MSO model, a management services organization model, which is essentially the business office of a medical practice. so when a when a, when a private equity firm buys a hospital system, they buy the whole thing. and they manage the whole thing. and then their typical timeframe is, you know, 4 or 6, seven years, to keep that investment and then and then sell it. And they want to optimize operations and profitability, etc., and they're going to do whatever it is they do. For a medical group, an investment by an outside financial entity is a means to remain independent. The physicians maintain ownership, in the in the entity, and they maintain 100% clinical autonomy. so so I think that's a really important distinction.

Speaker 1 00:22:25 If we talk about the study. So the study was actually not done by the study was actually done by Avalere, which is a highly respected health care consulting firm. And that study was actually commissioned by APA because we had some some ideas about what was happening in the physician employment marketplace. and as it relates to cost, quality and access, but we didn't have any data that could show us actually what, what was happening. And so we approached Avalere and said, well, you guys do a study in Medicare patients, and, and try to help us understand this marketplace. And the answer was, yes, they would. But this was going to be a completely independent study, and the data were going to show what the data we're going to show. and so we we had them do that study and they, we studied five specialties. Right. We said gastroenterology, urology, cardiology, medical oncology and orthopedics. and we looked at cost and and quality in Medicare patients. And one of the big things that we were very interested in studying was what happens when an independent, completely unaffiliated practice joins one of the other practice models and one of the other practice models would have been an MSO with a financial partner, such as a private equity firm, an employed model in a corporation such as an insurance company, vertically integrated insurance company, i.e. Optum or a hospital system.

Speaker 1 00:23:56 Because that's what's happening in the marketplace, right? Those independent practices are joining one of those other three practice models. And so we looked at that in Medicare population. And we we chose those five specialties because they have a high representation of Medicare patients. and what we saw was in the first 12 months after a private unaffiliated practice joined a private equity affiliated MSO, per beneficiary costs went down over $900 in that first year, likely due to some significant efficiencies in the in the in the practice model. But when that same group joined a corporate entity, an insurance company controlled model costs went up $1,100. When that same group joined a hospital system, costs went up $1,326 in that first year. Which tells you something very important is that guys, again, not defending private equity, but private equity is not the problem here, right? We who have an MSO that may have a private equity partner are controlling costs. We're not increasing utilization. We are much more efficient. And because of the payment structures in the Medicare marketplace, We deliver higher quality care based in hospital inpatient days and E.R. visits at a lower cost than I just outlined.

Speaker 1 00:25:27 So people need to understand that what we're trying to do in private equity is good for the system and good for the patients, because remember those costs, they go to the system. But if it's a Medicare patient, 20% goes to the patient, right? So we're saving that patient money by a better practice model. And so I think that's very important. And it's also interesting to note that as of 2023, and I think that's when the data was from of all the practice models for physicians, those physicians that were in a model that had a private equity associated MSO, 6.5% of the entire physician marketplace, yet 55% of physicians are employed by hospital systems. That I just showed. You have a significantly higher cost per Medicare beneficiary than a private equity affiliated MSO. So let's let's reset what the questions are that we're asking. And the question is what is happening to the physician marketplace? What's happening to cost and quality based on practice model. And what that study showed is that the MSO model is beneficial for the system.

Speaker 1 00:26:40 So that's a long winded answer to a short question.

Speaker 3 00:26:44 We're still relatively early in the second term of President Trump, and his administration has begun the movement to make America healthy again. I know there's been a lot of debate about the science and the right way to monitor, maybe some of the science and those regulatory agencies at the federal level. Frankly, it sounds like a lot of doctors, though, have agreed, at least in principle, with the need to have better control over chronic conditions, patients with chronic conditions, chronic illnesses in our country. How would you explain the importance of independent medical practice ownership in the overall context of improving the health of the nation. Is there a place for independent practice in the Maha movement?

Speaker 1 00:27:26 Yeah, great. Great question. So I think a couple of questions a couple of answers there. Number one is if you have a problem with access to physicians, then you're going to have a problem with the delivery of health care. And that's going to result in longer wait times.

Speaker 1 00:27:43 and, and physicians or patients not being able to, to get into a physician to deal with an acute problem, more, utilization of emergency services rather than outpatient or specialty services or primary care services. and so if we're talking about global factors that are decreasing physician autonomy, increasing burnout among physicians, and having physicians looking for alternate practice options, or leaving practice or going part time or prematurely Retiring anything that's causing that dynamic to happen, we need to counter. We need to counter that. so I think maintaining autonomy, maintaining private practice as a healthy option for physicians practicing will help to maintain the supply of physicians. and that's a big deal right now because that is a huge pressure. so and again, you're talking about chronic disease management, right? So the burden of chronic diseases in this country is increasing remarkably and very it's very worrisome. And we need physicians to be engaged and active in coming up with novel solutions to help manage those patients. A lot of these solutions are are basically born in independent practice.

Speaker 1 00:29:04 And my example of that is a program that I started in my group, Arizona Digestive Health, almost ten years ago now, which was an inflammatory bowel disease. That's Crohn's disease and. Colitis and inflammatory bowel disease medical home that we actually built up over time to be managing over 230 very complicated patients remotely in addition to the physicians managing them. That was a cost that we took on ourselves. and we we did that because we knew it delivered better care. these programs have been done in academic centers, but on a limited basis. And quite honestly, they don't have longevity. my, my program has been going on for almost ten years now. We were able to scale that, with the with some creative use of outside vendors so that we're now managing 11,000 patients across the GI Alliance remotely in conjunction with their physician. would that have happened in a, in an employed setting? Sorted out it maybe, I don't know, I don't want to speak for every employed model out there, but I know that it happened in private practice and I know some of the other large private practice groups around the country that are doing a similar thing, because we all talk, that's an innovative therapy, that delivers, better longitudinal care to chronic disease patients.

Speaker 1 00:30:26 So again, another, another benefit of, of independent medicine, to the patient and to the system.

Speaker 3 00:30:36 One of the things I think, again, being still relatively new to medtech, but, you know. In the last few years, we've talked about when you talk about access and the numbers of physicians, I'm, I'm becoming more and more convinced. You know, for you, for the last couple of years, we've been writing about the projected shortage of physicians. It's no longer projected. We're in a good position.

Speaker 1 00:31:00 Yes, we are.

Speaker 3 00:31:02 You know, and so that innovation, I think, is going to become until we can get, frankly, just more and more people through med school and more, more doctors out there. Technology is going to make up for some of that, but certainly not all of it. And and innovation is going to be key to that as well. So that's really good to hear.

Speaker 1 00:31:19 Yeah, I think I think one of the important things that people don't put enough emphasis on is extending the physician's working life.

Speaker 1 00:31:28 Right. Extending that physician's career. So many physicians like me, when I came out of fellowship, I joined three other doctors. and and they were my mentors. You know, they were they were they had been in practice for a long time. they knew how to take care of patients, and they knew how to be efficient. They knew how to deliver care. and they were of huge value to me as a 30 something year old doctor that's just, you know, a little wet behind the ears. we cannot afford to lose those older physicians to early retirement. That's a that's a huge blow to the system. It's hard to quantify, but but let me tell you, it would be a massive loss.

Speaker 3 00:32:08 And I always like to throw this out there too, because sometimes if you look at the website, at first blush, you may notice a lot of physicians who are under various specialties. The association is open to internal medicine, family medicine, family practices. Those physicians are welcomed in the organization too.

Speaker 3 00:32:25 Is that correct?

Speaker 1 00:32:26 And are already members? Yes. Absolutely. We're we're open to any physician that likes private practice and even those that aspire to private practice.

Speaker 3 00:32:37 I'll tell you what. I'll let you get going for the rest of your day here. Certainly. Have a great weekend and hopefully we'll talk again real soon.

Speaker 1 00:32:43 Appreciate it. Richard, good to see you.

Speaker 3 00:32:44 Absolutely. You too. Thank you so much, doctor. Bye bye.

Speaker 6 00:32:47 Bye.

Speaker 2 00:33:03 Once again, that was a conversation between Medical Economics Senior Editor Richard Payerchin and Dr. Paul Berggreen, a gastroenterologist and the president of the American Independent Medical Practice Association, or AIMPA. My name is Austin Littrell, and on behalf of the whole Medical Economics and Physicians Practice teams, I'd like to thank you for listening to the show and ask that you please subscribe on Apple Podcasts, Spotify, or wherever you get your podcasts so you don't miss the next episode. Also, if you'd like the best stories that Medical Economics and Physicians Practice publish delivered straight to your email six days of the week, subscribe to our newsletters at MedicalEconomics.com and PhysiciansPractice.com.

Speaker 2 00:33:36 Off the Chart: A Business of Medicine Podcast, is executive produced by Chris Mazzolini and Keith Reynolds and produced by Austin Littrell. Medical Economics, Physicians Practice and Patient Care Online are all members of the MJH Life Sciences family. Thank you.