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Hospital Buying Power and the Extinction of the Autonomous Small Practice

Posted Apr 06 2013 10:07pm
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Throughout the last ten years the healthcare industry has been revolutionized as new technologies, innovations and best practices continue to be developed and refined.  With the prevalence of cloud-based computing and the shift towards patient records being housed electronically, independent practices are facing increased pressure to switch over to these methods in order to compete in an already very competitive market.  But for many practices, the amount of revenue needed to entertain such a switch is more of a pipe dream than a reality.  With malpractice insurance on the rise and general overhead to take into account, often times, adapting to these new policies is simply not a possibility.

In steps the hospital.  Often times, part of an even larger corporate conglomerate, hospitals are better equipped to adapt to the latest trends and newest technologies that are constantly redefining the healthcare industry.  But where does this leave the small practice? For some, keeping afloat during these times, all the while remaining autonomous can be a tricky juggling act.

Take for example the healthcare climate in Boise, Idaho that has garnered national attention in the last few weeks.  St. Luke’s, a major entity in the healthcare field in Idaho has been buying out small practices in increased frequency, most notable in the last four years.  During these four years, St. Luke’s has acquisitioned some 22 practices in the area, a number that some say is cause for alarm.

Local physician, Dr. Mark Johnson owned a family practice for over 25 years.  That was until he recently, along with his team of healthcare providers, decided that he too would follow suit and sell over his practice to St. Luke’s.  But unlike other practices who have done so for financial reasons, he had a few other concerns on his plate.

“But probably the driving reason was the changing landscape of health care delivery and the uncertainty around that,” Dr. Johnson said. “The thought was that we were going to be in a   safer position if we were aligned and affiliated with a network.”

While Dr. Johnson’s motives are more of an exit strategy and seek to keep his practice alive in the shifting climate, others look to the future with a little more trepidation.

Critics of switches like these (an event that is becoming more and more common throughout the US) fear the amount of control such an entity can have on the rising costs of a sector that some say is already out of hand.  With such a dominant hand, St. Luke’s and other hospitals in the same position can have more power than once imagined.

Relatively inconsequential things like which form of tests are given to areas with much broader, and more economical implications like which medications are prescribed and what policies are used and not used have aroused concern with certain members of the community.  In fact, the issue in Idaho has piqued the interest of the Federal Trade Commission.  Right now, the issue of whether St. Luke’s holds too much power is being debated behind closed doors.

The exact future is unclear but one cannot argue with the facts.  Small practices have always offered the same services as a hospital but with lower prices.  From eye exams, to x-rays, healthcare costs in private practices are notoriously lower. But with more and more of these practices being snatched up by bigger corporations will this continue to be the case?

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