Wednesday, December 01, 2010

The Unspeakable Demise of Private Practice

Independent private medical practice is going the way of the family farm. The strength of the emotional attachment to it makes it politically hazardous to talk about it and scandalous to come out in favor of it, but changes in technology and the economy are making it unsustainable and obsolete and it is only a matter of time until it disappears altogether.

Two current developments are putting the handwriting on the wall. One is the growing consensus that any effective approach to cost control requires the abandonment of the fee-for-service method of financing. The other is the emerging popularity of Accountable Care Organizations; entities that assemble all the major components of care, including physicians, into a single structure capable of being held accountable for the safety, quality and cost of care.

Fee-for-service is the only practical way anybody can think of for financing private practice. Given health care’s unique economic arrangement in which a vendor of services (i.e., the doctor) plays a major role in purchasing decisions (i.e., ordering tests and prescribing treatment), any other financial arrangement inevitably involves some level of conflict of interest.

The concept of Accountable Care Organizations (ACOs) presents its own set of conundrums. How can a physician be a part of a larger organization in any meaningful sense and still claim independence? And how can bundled payments for patient care be divided among providers without making them financially related to one another?

The clumsiness involved in trying to square this circle without talking about it was vividly expressed on the front page of the November 21 Sunday New York Times. The article was titled “As health law spurs mergers, risks are seen.” The article examined in some detail a series of legal issues involved in creating ACOs, the unstated assumption being that the physicians involved would remain in private practice. Most of the issues would be neatly resolved by making the physicians ACO employees.

Actually, the number of physicians practicing as hospital employees is growing by leaps and bounds and the ACO movement will only accelerate the trend.

But nobody wants to say that.

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