Changing Practice Models & The Affordable Care Act

Posted by | February 25, 2014 | No Comments

Undoubtedly, one of the largest issues facing physicians today is the Patient Protection and Affordable Care Act, otherwise known as the ACA. The bill, which was passed on March 23rd, 2010, outlined comprehensive health care reform initiatives that will eventually change the landscape of physician practice as we currently know it. Although opinions on the Act and what it means for health care delivery are highly divided, one thing is for certain – the changes are here to stay, and many physician practices will be faced with difficult decisions over the coming years.

The primary goal of the current health care reform measures is to improve the quality of care provided, as well as increase access to patient care while reducing the associated costs. There are various incentives available to physicians who choose to comply fully with the mandates. For example, physicians may voluntarily participate in the Physician Quality Reporting Initiative (PQRI), which would provide them with an initial one percent Medicare incentive payment for the first year and 0.5 percent for the remaining years through 2014. However, physicians who fail to comply with the PQRI will see up to a 1.5% reduction in Medicare payments after 2015. (1)

The provisions of the ACA seek to reduce costs and increase quality by testing and implementing new healthcare delivery systems. One of these initiatives is the formation of Accountable Care Organizations which would provide participants with advantages being offered by the Medicare Shared Savings Program, which became effective in 2012. Unfortunately, all physicians are feeling the pressure to align themselves with hospitals, an ACO, or to consolidate with larger physician groups. This will mean fewer physician practices and (many physicians believe) lower quality of care, less access to care, and rising costs of care. Of the three, physicians are least likely to participate in an ACO (14%) but very likely to consolidate into a larger practice model (42%). (2)

In the U.S., hospital physician employment rose 32% from 2000 to 2010.(4) Beginning this year, the number of independent physicians will begin declining by 5% per year, according to a report by Accenture Health, as opposed to a 2% rate of the previous decade. (3) Additionally, hospitals are not the only ones actively recruiting physicians away from their independent practices. Health care plans are also in the market to purchase and consolidate practices, which they believe will lower their costs by reducing the utilization rates. Many physicians and consumers alike are concerned that for-profit hospitals will begin to accumulate the most highly sought after physicians, creating monopolies and infringing on antitrust laws. (4) Additionally, this type of situation gives the hospital considerable market power and could drive up the overall healthcare costs in the long run.

In addition to the statistics above, close to two-thirds of the physicians who entered into employment contracts in 2009were hospital arrangement….this includes half of all physicians leaving residency. (4) Many studies point out that many of the ‘best and brightest’ students who may have considered medicine as a career are now entering into fields with more long-term stability. According to a survey of physician members of The Doctors Company, only 11% of those surveyed would be likely to recommend the medical profession to their children or other family members. (2) Although these numbers seem bleak for the independent physician practice, there is significant evidence that these trends are not destined to last. Many older physicians are considering another option… early retirement. The Doctors Company survey found that 43% of physicians plan to retire in the next five years solely based upon health care reform. (2) This figure is staggering and likely to have a huge impact on the landscape of medicine. These physicians feel they have little choice due to declining reimbursements, loss of autonomy, and mandated changes expected to be implemented in the near future.

A large number of physicians are now working towards consolidating their current practice with larger, single, or multispecialty practices in an effort to reduce administrative costs. This particular model seemingly appears to have multiple benefits for the physician. They can maintain much of their autonomy and maintain their current treatment models, reduce time and money spent on overhead costs. In many cases these factors can also lower their malpractice premiums by allowing them to take advantage of premium discounts offered to large groups. With the uncertainty surrounding the ACA, this is the least risky option available to independent practice physicians.

Many studies agree that the market landscape under which the shift of employment is occurring is not a natural trend, as has been observed in the past, but is being driven by legislative policy and the fee-for-service reimbursement model set forth by Medicare. A change is necessary, but there is significant uncertainty as to whether or not the PPACA is the answer. For example, there is evidence that once a physician enters into a salaried contract arrangement, general productivity declines outright, as does the quality and intensity of care, in some cases. (4) It is important to stress that physicians should weigh their options carefully and consider the benefits versus the risks of changing their current practice model. Although there is significant negativity surrounding the ACA and the changes it will bring, physicians do have a voice in health care reform and a choice regarding their individual method of providing care.


  1. The Physicians Foundation White Paper; Merritt Hawkins, Health Reform and the Decline of Physician Private Practice. The Physicians Foundation, October 2010.
  2. The Doctors Company; Member Survey; The Future of Health Care; A National Survey of Physicians. The Doctors Company, February 2012.
  3. Accenture Health Survey; New Business Models for a New Era in Healthcare. Accenture Health; September 2012.
  4. Gottlieb, Scott. Health care consolidation and competition after PPACA. American Enterprise Institute Policy Studies, May 2012.
  5. Ter Matt, Sue. ACA tops list of 5 biggest physician concerns for 2013. American Medical News, December 2012.
Quality, cost-effective medical professional liability insurance for medical professionals. Get A Quote Now!