Major reasons why doctors are selling practices to hospitals
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Major reasons why doctors are selling practices to hospitals

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Doctors are increasingly selling their practices to hospitals today. This article focuses on its reasons and effective solutions for doctors to continue with their practice.

Doctors are increasingly selling their practices to hospitals today. This article focuses on its reasons and effective solutions for doctors to continue with their practice.

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Major reasons why doctors are selling practices to hospitals Major reasons why doctors are selling practices to hospitals Document Transcript

  • Major Reasons Why Doctors are Selling Practices to Hospitals
  • A recent CNN report says that the trend of doctors selling their private practices to hospitals has picked up pace. The number of physicians who sell their practices to hospitals has increased to 40% from 30% over the last five years, according to experts. Hospitals are now rushing to increase their market share as soon as possible in the expectation that millions of more Americans can gain access to healthcare with Obamacare. So these big players are very keen to buy private practices and hire doctors. Doctors who sell their practice typically become the employees of the hospitals and enjoy fixed salaries without worrying about administrative work. Let us explore the exact reasons which have led to this disturbing trend in the light of the above report. Shrinking Reimbursements In its effort to reduce the federal deficit, the federal government decided to cut down the health care costs. The Centers for Medicare and Medicaid Services (CMS) reduced the reimbursement for physicians and are now planning to lower the rate of payment further in future. Reduced payments imposed higher costs on private practices and made their situation worse. Dr. Patrick Cobb, an oncologist in Montana sold his thirty year old group practice Frontier Cancer Center to a hospital in December 2012 after struggling a lot for years. The main reason for this decline was chemotherapy drug reimbursement changes. Oncologists used to buy the drugs for patients and bill the insurers for reimbursements in the case of cancer treatment. In 2003, Medicare reduced reimbursements for chemotherapy drugs significantly. Cobb’s Cancer Center spent millions to buy these drugs from distributors. When the reimbursement was reduced, the costs went up phenomenally. Even though Cobb and other oncologists took pay cuts, it was not enough to offset declining revenues and the practice closed one of its locations in 2008. They started looking for a buyer in 2012 and finally sold the practice to Mont.-based St. Vincent Healthcare which hired all of them. High Investments While reduced reimbursement rates did increase the investment on the part of the private practices, doctors are forced to spend more money out of their pockets to implement electronic medical records. Federal law insists that physicians implement digital records technology by 2015. Otherwise, their Medicare payments will be cut by 1%. Electronic Health Record (EHR) implementation will be very expensive for private practices and it will definitely increase their outlay. Dr. Dwayne Smith, a bariatric surgeon says that digital records implementation would have been a very difficult proposition for his practice. He sold his group practice to Cincinnati-based St. Elizabeth Healthcare in 2011. Even though his practice was profitable, increasing costs were the reason to sell it to a hospital. Doctors Even Facing Bankruptcy Doctors often take pay cuts to leverage reduced reimbursement and increased costs as in the case of Dr. Patrick Cobb. However, if the situation remains the same for a
  • long time, it will be difficult for them to manage their expenses, and they will eventually land in debt. Reduced reimbursement for chemotherapy drugs and medical supplies providers put the profitable solo practice of Dr. Dennis Morgan, an oncologist at stake and he began to make cutbacks to manage the falling revenues. This affected his expenses slowly and his business debt grew. In 2011, his practice was filed for bankruptcy. How Outsourcing Can Help Increase Revenue Even though the practice of medicine, either group or solo is a service, it needs revenue for sustenance. In the current scenario, even qualified, trained and experienced physicians find it difficult to reap the expected financial returns from their practices. It has become very expensive to operate a practice today and at the same time very difficult to gain maximum reimbursement for services provided, due to Medicare regulations. The best option to tackle this situation is to seek help from an external service provider instead of having it done in-house. By outsourcing the administrative work to a professional medical billing and coding company, private practices can increase their revenue and make their services profitable. Such companies can provide the following services to the doctors. • • • Assist in revenue cycle management Monitor overall financial performance Identify the factors which affect cash collection • • Implement an organized and efficient workflow to reduce errors and gain maximum reimbursement Reduce expenses • Customized medical billing and reporting In addition to that, they can take care of EHR implementation and maintenance of digital records without HIPAA compliance risks. Doctors can easily retrieve medical records from them in the hour of need. They can even provide medical record review services for doctors. A reliable medical billing and coding company offers timely and affordable medical billing, coding and audit services for physicians ensuring due reimbursement. Professional billing staff keeps themselves updated about each and every code change and changes in regulations. They know the services that are covered, and will help physicians avoid providing services that have no coverage. A dedicated medical billing firm is a physician’s best partner, helping to maintain a steady revenue inflow through accurate and timely reimbursement.