Can Small Practices Lead to Big Changes?

A daunting challenge ahead for small practitioners .. at the same time may provide some insight into what's keeping the healthcare system operating at the "cottage industry" level .. the key question appears to be "can fundamental quality improvement happen without consolidation of providers into larger scale operations"?

Small Practices Face Big Challenges
Elyas Bakhtiari, for HealthLeaders Media, December 10, 2009 

In Atul Gawande's latest piece in The New Yorker, the physician-author compares the current pilot-project approach to reforming healthcare with efforts in the early 1900s to improve agricultural production. Farmers at the time were struggling with analogous problems—spiraling costs, a lack of "comparative effectiveness research," poor quality rating mechanisms, and industry fragmentation—and only began to see improvements after government-initiated pilot programs spurred innovation. 

Gawande, who was named one ofHealthLeaders' 20 People Who Make Healthcare Better this year, offers long-term and clear-eyed hope amidst a lot of short-term nay saying and pessimism about the future of healthcare. 

But his analogy may not be very reassuring to one segment of physicians. A consequence of agricultural progress that Gawande briefly glosses over is the near extinction of the small family farmer. If healthcare follows a similar path, does the solo or small physician practice face the same fate? 

Before the transformation of agriculture, the industry presented a similar economic challenge as healthcare does today. Forty percent of a family's income went to paying for food and almost half the American workforce worked in agriculture, many on small farms. Scientific and technological advancements, as well as evidence-based efficiencies, cut spending to 24% of income and 20% of the workforce by 1930, Gawande explains. Today it only accounts for 8% of income and 2% of the labor force. 

Consolidation of farms and the rise of big agribusiness played a major role in that. Small farmers increasingly had trouble purchasing necessary new equipment and keeping up with productivity gains made by larger operations with more capital to invest. Sound familiar? 

It's no secret that, even with the reimbursement bonuses in the HITECH Act, solo and small physician practices face a steeper climb when purchasing and implementing electronic health records than larger groups. 

A new study published in the Journal of the American Medical Association highlights yet another small-practice struggle: Nearly 65% of primary-care physicians work in practices that are too small to draw meaningful conclusions about the quality of care they provide based on Medicare data. Even aggregating data over a 3-year period for each physician group failed to produce large enough sample sizes for half of the groups with fewer than six physicians.
Don Berwick, MD, MPP, president and CEO of the Institute for Healthcare Improvement, offered some suggestions to improve data collection without compromising the size and autonomy of practices, such as pooling data from all payers and surveying patients about their experiences. 

But measuring small-practice quality will become a more significant change if one of these payment pilot projects evolves into a full-fledged quality-based reimbursement system.
Given the general direction healthcare is heading and the financial pressures physicians face, it's likely that the proportion of doctors in small practices will continue to drop over the next couple of decades. 

There are some options for the little guys, though. An independent practice can have a managed service organization run by a hospital or other entity handle human resources and administrative tasks, or a physician-hospital organization, where money matters are handled jointly. Some physicians may also look at limited or divisional mergers, where a small practice retains its individual identity but joins other practices to form a corporation. 

To stay small, many practices will have to find help, and perhaps give up some of their autonomy. But that may be the only way to resist the tide of consolidation.