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Why Independent Medical Clinics are the Superheroes of Healthcare

Posted by Tom Lombardo | Mon, Oct 20, 2014 @ 10:00 AM

Why do 44.5% of all doctors think that refusing to accept insurance might be the right direction for their business?

The question perplexes because according to the New England Journal of Medicine the Affordable Care Act provided insurance to an additional 10.3 million Americans, and a recent Gallup poll found that the number of uninsured has dropped to an historic low of 13.4%.

Without Health Insurance in the United States

ACA Meets Its Goals

In fact, if we set aside all the bellyaching in the press we find that the Act has delivered successes across the board:  Pundits thought that employer premiums would skyrocket as soon as the exchanges opened, but that didn’t happen. Some thought that increases in health care costs would accelerate, but in fact they decelerated by nearly half, prompting the Congressional Budget Office to estimate that the Act will save about $104 billion over the next ten years

Most importantly, perhaps, access to insurance improved people’s mental health to such an extent that alleviating the stress around obtaining health care changed the demand for it: Out of all the people who got coverage, only 60% of them actually used it. Specialists of every type, except pediatrics, saw fewer patients so far this year than they did last. And the patients they are seeing have a lower rate of chronic disease than established patients.

Unintended Consequences Take Their Toll

One would think that with all these newly insured people using their insurance in a restrained and responsible way, most practices would scramble to accept as many of them as possible.

But 58% of medical practices have done nothing as a result of healthcare reform.

One reason may be that the Act “has unleashed a merger frenzy” where hospitals scramble to shore up operational efficiencies by acquiring nearby clinics. The Journal describes it as a “march towards conglomeration” with no one having any clue as to whether or not consolidation actually serves the goals motivating it.

Hospitals have long charged more than independents for the same care since they had to create extra margin to support their emergency services, which of course used to be the only healthcare available to many of the millions brought into the fold by the Act. Despite the fact that there should be an alleviation of the poor’s dependency upon emergency room laws, hospitals still need to buy independent clinics because the Act encourages people to use them instead of more expensive hospital services.

It remains to be seen if “conglomeration” actually results in better efficiency, but the trend seems inexorable. In 2012 alone, for example, the number of oncology practices owned by hospitals skyrocketed 24%, turning what used to be independent and unique healing institutions into “outpatient centers” that can be run cheaply within the guidelines of the Act.

What can be seen already is that the Act and the “merger frenzy” have produced a contravening migration of doctors.

Motivated to Practice Medicine

In the past three years for every 146 doctors who left independent practices to join a hospital, 174 left hospitals to go independent. More than a quarter of doctors work in a solo practice, with the next biggest population working in clinics with twenty doctors or fewer.

Hospitals may be circling a lot of those practices, looking for acquisitions that may or may not help their bottom lines, but since 58.8% of doctors say they would not change where they work and 69.3% give themselves a rank of 7 or better on a 1-to-10 happiness scale (as compared to about 53% of the country as a whole), some hospitals may find it difficult to make all the acquisitions they want.

Which leads us directly to a possible answer to our question. The American Association of Medical Colleges warns that we’re running out of doctors, and one major reason is that nearly one-third of all physicians will retire in the next decade.

It’s impossible to know if these older doctors comprise a significant portion of those doctors wondering if they should stop accepting insurance altogether. But one can imagine that a mature doctor with some financial stability may wish to focus on medicine alone without the encumbrances of dealing with billing codes and co-payments. As it is, 57% of doctors ordered unnecessary procedures or tests just to avoid a potential lawsuit last year, and that’s only one indication that today’s health care system may have become so bureaucratized and litigious that it no longer resembles health care to at least some of these more experienced practitioners.

And that may be a great thing for the rest of us, because an environment overrun with procedure and fear may stymie innovation and creativity.

Independence Breeds Creativity

Healthcare Insurance InnovationIn a recent Forbes interview the widely-quoted capitalist commentator Malcolm Gladwell ruminated, “Part of me thinks that innovation, real innovation in health care delivery, needs to happen from the bottom to the top. What I don’t know is whether [the ACA] encourages that kind of bottom-up innovation or discourages it.”

From a long-term, nationwide perspective it may be best for us to have both the “bottom” – read “independents” – and the “top” – HMOs – running at the same time, competing to innovate and leaving open more than one path.

But if Gladwell is right, it makes sense to see doctors moving to the independent situations where they may have greater opportunity to participate in “real innovation.”

And any doctor meditating upon the future of their practice and perhaps contemplating a radical departure from the normal path – because that’s the kind of entrepreneur she wants to be and because that’s the example she wants her legacy to set -- sill knows one thing for sure: if she wants to have options, she must keep the revenue flowing.

Twenty-five percent of doctors find it more difficult to collect co-pays today than they did before the Act for the simple reason that today’s co-pays are much higher. It stands to reason that should a doctor decide to forego insurance and expect his patient to foot her entire bill, then collecting that private payment will be even more business-critical.

In either instance, we know from 30 plus years of experience that a great deal of that revenue will come in the form of a check.  From Millennials to Baby Boomers one in five people has increased their use of checks, and one out of every five purchases over $100 is paid for with a check.

So if you want to keep your options open, no matter where you end up taking your practice, it makes sense to protect revenue from this payment type. We have an entire suite of services tailored to your specific needs that includes check guarantee, a “multiple check” or hold check option that allows a patient to write up to four checks to be deposited over time, allowing them to spread out that co-pay (or full-pay) to meet their cash flow, as well as Remote Deposit Capture (RDC). With RDC you can nearly eliminate trips to the bank saving time and money. And if you work with us, we guarantee every check so your cash flow is protected. 

Medical Remote Deposit Capture Insider's Guide

Topics: Medical

Written by Tom Lombardo