Medical Mergers, Hospital Takeovers and the Changing Face of Medicine: Does Solo and Small Dermatology Practice Have a Future?

by Noah Scheinfeld, M.D., J.D.

Full Article: Medical Mergers, Hospital Takeovers and the Changing Face of Medicine

Abstract and Introduction:
The trend toward business consolidation, which has affected industries as diverse as car manufacture, advertising, and banks, has been accelerating among entities that provide medical care.  That is, there are fewer and fewer entities that provide medical care, although the ranks of these larger medical entities have swollen.   The Great Recession of 2008, and the “The Patient Protection and Affordable Care Act” (PPACA of 2010 (commonly called the “Affordable Care Act” (ACA) or, colloquially, “ObamaCare”) have hastened this consolidation.  More and more residents (including dermatology residents) completing their training after 2010 have joined hospitals or largemulti-specialty groups.  This trend continued and quickened through 2015, and gives no signs of stopping or reversing in the foreseeable future.  Numerous and complex factors underlie this merger mania, and the residency rush to regular hospital jobs, but the following reasons typify what is most often heard among practitioners:
(1) the need on the part of sellers of medical care, such as hospitals, to scale up and expand in order to negotiate with ever-larger insurance companies;
(2) the shrinking number of insurance companies who can negotiate effectively with hospital and other large medical services entities and suppliers (including pharmaceutical companies)
(3) the quality metrics and requirements for coordinated care under the ACA, together
with the general increase in regulations (such as electronic health records (EHRs), HIPAA, E-prescribing, the swap of ICD-9 for ICD-10, etc.), all easier for larger practices to comply with;
(4) the falling fees, reimbursements, and capitated contacts that put pressure on small practices to reduce the cost of providing care;
(5) the competitive advantage of large hospitals, which can command higher fees due to certain laws (e.g., the 340B discount program–designed to encourage care for the poor and uninsured — which requires pharmaceutical companies to supply their cancer meds at about half the usual cost) and through split billing and facilities fees (in particular through Medicare payments); and
(6) the competitive advantage of large hospitals’ ability to “cross-sell”: using primary care as a funnel to increase the provision of (for example) oncological drug administration, diagnostic test analysis and radiological services.

This article proposes to add a seventh reason to this list, a reason that may be surprising to some (and perhaps ontologically offensive to others): the increased percentage of women in the physician work force, including in dermatology.  This article posits that this is yet another factor supporting the trend toward larger practices in dermatology in particular, and that this spotlights some of how small and solo dermatology practices will need to adapt in order to remain an attractive career path for many in our profession.


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About David Elpern

The Online Journal of Community and Person-Centered Dermatology (OJCPCD) is a free, full text, open-access, online publication that addresses all aspects of skin disease that concern patients, their families, and practitioners. ​It was founded in 2012 by Dr. David J. Elpern, M.D. in Williamstown, MA. with technical help from Inez Tan.

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