Private Medical Practices Face Ongoing Financial Pressures

The healthcare industry has experienced significant changes recently, with private physician practices feeling particular financial pressure. Research from The Physicians Foundation shows about 8% of physicians have closed their practices, with specialists making up over three-quarters of these closures. Based on SK&A market research data, this might represent as many as 16,000 practices across the country, with another 4% of physicians planning to close within the next year. These numbers reflect meaningful changes in healthcare delivery affecting communities throughout Florida and nationwide. 

Financial Reality for Physicians

Physician practices are experiencing substantial financial difficulties. According to The Physicians Foundation survey, nearly three out of four physicians (72%) saw income reductions, with over half of this group experiencing declines of 26% or more. Almost one-quarter of respondents faced income drops of at least 51% during the four months before the survey.

This financial squeeze affects specialists most acutely, as their income often depends on elective procedures that patients may postpone during periods of healthcare disruption. Much of the decline in specialists’ income can be traced to postponement of nonemergent procedures and a general reluctance among patients to seek specialty care.

Challenges for Independent Practices

Private practices typically have fewer financial resources and smaller reserves than larger healthcare systems, making them more vulnerable when economic conditions worsen. The pandemic has imposed severe economic strain on many private practices that often lack the financial resources of hospital systems, academic medical centers and large, multifacility medical groups.

Income reductions at this level may prove unsustainable and could lead to further practice closures or physician retirements. This creates additional pressure on an already strained healthcare system.

Patient Care Implications

Beyond immediate financial concerns, practice closures have important implications for patient health. Nearly three-quarters of surveyed physicians believe their communities may see an increase in serious health conditions because patients have delayed necessary care during the pandemic.

Even as primary care doctors, specialists and provider organizations now work to reduce the backlog of needed nonemergency procedures, there may be lasting health consequences on their communities.

Key Points for Healthcare Leaders

The AHA report underscores several important points for health care leaders:

1. Maintain close relationships with physicians, whether they are employed by provider organizations or are in private practice. This is essential during times of crisis and with potential doctor shortages looming.
2. Continue to question assumptions about traditional ways of doing things. Many facilities eliminated waiting rooms and reexamined triage and other processes. Organizations should explore what lessons they have learned and what changes are still needed or should become permanent.
3. Develop an understanding of the behavioral and mental health needs of teams and communities. Whether organizations are seeing large or small numbers of patients during this crisis, everyone is undergoing a traumatic experience that may impact organizations in the future.

Strengthen Your Practice

Need clarity on how these changes impact your practice operations?

The James Moore healthcare team can help you interpret the financial data and prepare your strategy. Contact us today.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.