Small or Big: What is the future of small private practices?

Many experts and pundits are predicting that the downward pressure we are seeing in healthcare will claim small independent private physicians first. Those that are not affiliated or belong to a hospital or large healthcare network will not survive, say the pundits.

The argument is that these small practices will not be able to withstand the financial and administrative pressures of the new healthcare landscape.

Others very eloquently argue that if we don’t band together soon, and form larger groups, they will not have a seat at the table when the time comes, therefore forcing them to accept a deal that may not be in their best interest in the future.

It is like jumping on a large tanker to survive a huge storm or last longer at sea without returning to port. Which is a good strategy, I guess. If your goal is to cross the Atlantic back and forth, a small independent ship may not be the best strategy.

But to me, jumping on a larger vessels dismisses the fact that there are other destinations… destinations that can be reached far easier on a smaller boat.

Jumping on a big ship, you dismiss the opportunity to go up and down the coast, making lots of stops, go in and out of ports, explore new islands and have a say on where you want to go everyday. The large vessel, once it sets its course, it is set.

The big vessel does have many advantages, like protecting you better from a big storm. Nevertheless, that doesn’t mean that a smaller vessel can’t maneuver faster around the storm or find shelter in another port.

I do acknowledge that we are being squeezed in many ways, and I agree that many will eventually go out of business, fold or simply disappear; but I don’t believe there will be a massive small private independently own practice extinction.

If anything, I see this as a huge opportunity for those of us that are small, flexible and nimble to adapt to the new challenges of the healthcare industry.

Something to think about…

Amazon might have driven Borders out of business, but they haven’t put “writers” out of business. iTunes has changed how consumers buy music, thus crippleling the record labels’ business model, but iTunes hasn’t put artist out of business. If anything, they now have more distribution channels than ever.

The Internet is challenging the newspaper industry, but we don’t have a shortage of journalist.

McDonalds and Burger King mass produce hamburgers, but we all know of a place that sells the best burger in town.

Expedia and Travelocity might have driven travel agents out of business, but it has not bankrupt hotels, beach resorts, bed and breakfast and cruise lines.

There are going to be opportunities. It is just a matter of figuring out how the delivery of care will change.

Now, I’m not suggesting that becoming part of a larger entity is a bad strategy. But what I am suggesting is that it ought not to be the only strategy.

Personally, I believe that smaller practices will be positioned uniquely to transform the healthcare landscape. How we “deliver” medicine may change, but I believe that these larger groups cannot, and will not fulfill every single need.

And that is where some of us will jump in.

10 thoughts on “Small or Big: What is the future of small private practices?”

  1. Interesting article and encouraging for people like me who wants to grow on their own with the autonomy intact. Being a foreign doctor and after finishing the 5 year visa waiver in a small town of Mississippi i have gone thru more difficulties and hardships one can imagine. I may not have student loans but have spent a lot of money on lawyers to get myself settled here as an immigrant. Now moved to Dallas/Fort worth Metroplex area and working for a private group under the boss’ mood, the urge to start my own practice has intensified but hearing about all these healthcare changes oppose strongly to my impulses. Reading your article was refreshing.

    Starting my own little research again, if starting a solo Pediatric Practice in DFW area with no major assets on my back and a family of 3 kids is a good idea or bad?

    1. Deciding on whether or not to open up a business, regardless if it is a medical office or a dry cleaning business, is always difficult to advise on. A business is something personal and it depends largely on a persons motivation, priorities and willingness to sacrifice.

      On one hand, the task will be daunting, expensive, and scary, among other things. On the other hand, the personal and professional satisfaction may or may not outweigh the bad stuff. And that is the nut to crack.

      For me and my wife, the good outweighs the bad.

      My advice is to decide what you would like to do based on your personal goals and personal priorities. In other words, don’t let external influencers such as the economy, ObamaCare or a desire to be richer drive your motivation, but rather what you’d like to achieve professionally and personally.

      Actually, I’ve been asked this question a couple of times recently… I might just have to write a blog post. Stay tuned.

      Thanks for reading and I’m glad you found the article refreshing.

      Brandon

      PS – Oh, I almost forgot… if you are looking to start a practice, I would recommend joining SOAPM. It is free to join ’til the end of the year. Read about SOAPM here: http://pediatricinc.com/2010/09/30/join-soapm-and-thank-me-later/ and here: http://www.aap.org/sections/soapm/soapm_home.cfm and here: http://pediatricinc.com/2011/04/18/private-practice-pediatricians-what-if-i-told-you-there-was-a-place-online-where-you-can/

  2. I am a proponent of doctors banding together in larger group practices when it makes sense, which is most of the time. There are economies of scale, staffing, flexibility for time off, shifting management responsibilities, and so many other things you can do as a group that you cannot as an individual practicioner. I am wary of super large management firms and groups which tend to take away freedom and control. Maintaining ownership is the key to control.

    Still, there is definitely still a place for the solo doctor practice. Far flung locations with smaller populations may need one or two doctors, not ten or twenty. The high end, high service boutique practices will still be there. Also, some doctors simply don’t want to be super busy and overwhelmed, which is hard to avoid these days. They want a small town, slower paced, (perhaps less income generating) practice, and I admire that. Great Post.

    1. There is something to be said for economies of scale. And I also agree that under a larger health umbrella, if you will, the workload is democratized. But as I eluded in the piece, those benefits come with a price. And in my view, it is the prize of “autonomy.”

      Meanwhile, the notion of banning together to leverage economies of scale can be achieved in other ways, for example, GPOs.

      I find the topic fascinating and for obvious reasons, will keep a close eye on it.

      Thank you for commenting.

      @PediatricInc

  3. Well said. I loved your analogy.

    Our practice is on a small Caribbean island, that is also going through many changes in the health care sector. US policy does impact us as our health insurance framework is based on US system and a significant amount the tertiary care required by the population is obtained in the US, particularly Florida, based on proximity and Standards.

    1. Wow! Interesting to learn that you are also affected by US healthcare policy.

      Although hearing the words “our practice is on a small Caribbean island” doesn’t make me feel sorry for you. Especially when it is in the upper 30s here in Chicago.

      The grass is always greener on the other side….

      Thank you for your comments.

      @PediatricInc

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