Texas doctors finding it tough to remain independent
From his languid drawl to the University of Texas Medical School diploma that hangs in his office, there is little doubt Dr. Charlie Stiernberg carries the Lone Star gene. And with it comes a Texas-sized craving for independence that has spilled over into his medical practice for the past three decades.
The 63-year-old ear, nose and throat specialist doesn’t much like outsiders telling him what to do or how to do it. That’s why about a year ago when a major hospital in Houston came calling, hoping to persuade him and the other physicians at Hillcroft Medical Clinic to come under its much bigger wing, he said no thanks. He didn’t think he would be able to make care decisions without someone looking over his shoulder.
“At the end of the day, we would have little say,” Stiernberg said.
An independent streak is deeply ingrained in Texas medicine, but these days it’s becoming a struggle for smaller practices to remain autonomous. Reimbursement payments are drop- ping, and insurance companies are becoming less willing to negotiate with smaller players, many doctors say. Mix in new regula-
tions under the Affordable Care Act, often requiring additions of staff and expensive technology services, it is small wonder some independent doctors feel they are in quicksand.
“It gets harder and harder every year. They just keep heaping more and more on us. The fun-to-hassle ratio has gone way down,” said Dr. Michael Gorback, a 62-year-old pain management specialist in solo practice in Webster. Gorback writes — often with dismay — about the financial side of medicine on a blog called Wolf Street.
Texas ranks first
Texas ranks first in the nation in the number of solo practices in the country, as 29.2 percent of doctors in the state are in a solo practice compared with 17.2 percent across the nation, according to a 2014 survey by the Physicians Foundation, a national nonprofit that researches medical practices.
Another 32 percent of Texas doctors are in small practice of 10 or fewer doctors, which is on par with the rest of the U.S.
In recent years, hospitals have been on a buying spree, luring overwhelmed small-practice doctors with offers to buy them out — and bring their patients along with them. The doctors become employees or enter some type of affilia-
tion agreement.
In this era of consolidation and integrated care, a doctor’s practice that offers a specialty or preventative health is especially attractive — or vulnerable — to a buy-out.
The loss of autonomy might sting for doctors who choose to sell, but when stacked against familyfriendly hours, more insurance and government reimbursement and a built-in infrastructure of staff and equipment, it can feel like salvation.
Nationally, the number of doctors employed by hospitals skyrocketed in just a decade, rising from 11 percent in 2004 to 64 percent in 2014, according to a report by the Irving-based physician search and consulting firm Merritt Hawkins.
Independent-minded Texas is not immune from the trend. A Texas Medical Association survey from last year showed a nearly two-fold increase in the percentage of hospital employee doctors, from 4 percent to 7 percent, between 2012 and 2014.
For Dr. Bart Putterman, a Houston obstetriciangynecologist, it came down to the math. After 22 years in a six-doctor practice he kept losing ground. In 1988, his insurance reimbursement to provide pregnancy care and a routine vaginal delivery was about $1,700. In 2009, it had dropped to $1,500.
He remembered the frustration of arguing over the reimbursement: “They would say, ‘We don’t really care what you think your services cost; this is what we’re going to do.’ ”
When Texas Children’s Hospital approached him about selling his practice, he and the other doctors jumped.
“We are employees, make no mistake about that. There is a lot of bureaucracy. You can’t just do what you want to do,” Putterman said, but added he has no regrets. “You trade some loss of control for security. I don’t have to worry about finances like I did.”
Some doctors, like Stiernberg, hope to forge a middle ground by banding together in an accountable care organization, which creates a collective of sorts and wields more clout in insurance negotiations.
‘Define independence’
And then there’s a new player that has quietly appeared on the Texas medical scene. Private equity firms have begun offering investment in private practices. By law they are not allowed to buy the practices outright but can help independent doctors set up management companies and infuse them with cash for expansion for a fee.
Once, such outside investment was reserved for profit-heavy specialties like cardiology. But nowthe reasoning seems to be that with value-based care, incentives will be tied to better overall patient health. Since the doctor most people see first who will most influence their health is a family or primary doctor, investors may see those practices as a new income stream.
Dr. Clive Fields, a family doctor whose father, Dr. Harold Fields, founded Village Family Practice in Houston 40 years ago, signed on with a venture capitalist two years ago to raise money to expand. The practice now has gone from one location to five, with a total of 27 providers.
“Three or four years ago, we realized that this valuebased care model is not going away,” Fields said. He wanted to remain independent but also knew his practice could not afford the technological equipment needed to comply with new federal regulations.
“I would never have had the time or the talent to grow our practice,” he said.
An investor seemed like the perfect solution, especially with promises that there would be no interference in the medical side of things.
“We may not be independent in the old way of two doctors with an office on the corner but we can still be independent with help,” Fields said. While some wonder if having an outside investor keeps a doctor truly independent, others shrug at the question.
“It depends on how you define independence,” Dr. John Vanderzyl, one of seven family physicians at the Sugar Lakes Family Practice in Sugar Land.
About 10 years ago, Vanderzyl was approached by a large hospital system about selling his practice. He, too, balked.
“People like being their own boss in these parts,” he said.
What remains unclear is whether a large medical group or a small shop better serves the patient.
Maybe bigger isn’t better
A 2014 study in the Journal of American Medical Association found that spending per patient was 10.3 percent higher for hospital-owned physician offices compared with doctor-owned organizations. The costs were nearly 20 percent higher when hospital networks employed physicians rather than independent physician offices.
“On the face, it’s a good idea. We’re better together than we are individually,” said Travis Singleton, senior vice president for Merritt Hawkins. “The problem is I have not seen it happening. Maybe bigger is not better.”
Most agree it is too soon to know who is doing it right. But there seems to be consensus that a solo doctor or small practice will be increasingly hard-pressed to do it entirely alone in the future, said Paul Keckley, managing director of the Navigant Center for Healthcare, Research and Policy Analysis.
“That kind of independent practice is a relic of the past.”