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March 14, 2022

Pandemic fuels physician consolidation trend, as CT struggles to retain doctors


The trend in recent years in Connecticut and nationally continues to show hospitals and other corporate entities buying up smaller physician practice groups, and healthcare experts say they don’t see it slowing down, even in the face of potential increased scrutiny from policymakers and regulators.

Many younger physicians right out of medical school, and older doctors looking for an exit strategy to sell their practice and focus strictly on medicine as opposed to administrative and IT responsibilities, are more than willing to join larger groups or healthcare systems.

The numbers — buoyed by the global health pandemic — show that by the end of 2020, 49.3% of American doctors were employed by hospitals and or health systems, according to an analysis from the Physicians Advocacy Institute (PAI).

In addition, PAI research showed that hospitals and other corporate entities acquired 20,900 physician practices from 2019 to 2021, representing a 25% increase in corporate-owned practices overall.

Experts say COVID in many instances accelerated the decision of doctors who were finding it hard to keep afloat financially to make the move to larger health entities.

“COVID made it worse,” said Susan Huntington, who is the chair of law firm Day Pitney’s healthcare practice and vice chair of the corporate and business group. “If the key person like an office manager in that small practice got sick from COVID, for example, that was it. At the start of COVID people could not get supplies and masks and small physician practices were at the end of the food chain.”

Huntington, who represents many physician groups and previously worked for Hartford HealthCare providing legal advice, said many younger physicians are eager to avoid the hassles that come with having their own practice. Oftentimes, too, Huntington and others said, larger health systems offer higher pay.

“Younger doctors — those who are right out of school — do not mind being employees of hospitals and larger companies,” she said.

Challenges mount

While physician practice consolidation has been going on for years, it’s gotten more attention over the last 12 months as policymakers and others try to get a better understanding of its impact on the marketplace, including on the costs and quality of care.

For example, state lawmakers last year passed a law that requires the Office of Health Strategy (OHS), which oversees the healthcare industry, to create a working group to study and recommend new regulations for physician practice mergers and acquisitions.

Currently, OHS can’t review acquisitions involving group practices with fewer than eight physicians, limiting the agency’s oversight scope.

And the trend of physician group M&A activity is at the heart of a January federal lawsuit St. Francis Hospital and Medical Center filed against Hartford HealthCare. The suit alleges HHC is trying to create a monopoly on hospital services by acquiring physician networks, particularly cardiologists, and demanding that they refer their patients only to Hartford HealthCare.

HHC denies the allegations, saying they are without merit.

Certified Public Accountant John Trusler, a director at Hartford-based accounting firm Whittlesey, said the most active physician group purchasers have been the state’s three largest health systems: Trinity Health Of New England, Yale New Haven Health and Hartford HealthCare.

He said the days of the solo physician internal medical doctor seem to be behind us.

“[Doctors] view it as a way to get away from the administrative responsibilities and to let someone else do that,” he said.

Things like investing in electronic health records and keeping up with HIPAA privacy rules are complicated for small groups without a lot of resources, he said.

“Billing is complex and human resources as well,” Trusler added. “And, finding the talent and maintaining staff is also tough these days.”

In addition, Trusler said, with a larger system, physicians have more negotiating power with insurance companies.

The downsides for physicians, Trusler said, “is the loss of independence and autonomy with the decision-making process,” but many feel like they have no choice.

“When I speak to them, they are telling me that there is that burnout factor of trying to manage all of the administrative responsibilities and, instead, they want to focus on seeing their patients,” Trusler said.

Small practice appeal

While many doctors are joining larger groups, others still want their independence.

That includes Dr. Khuram Ghumman of the East Granby Family Practice, which has 12 employees, including two part-time doctors and four nurse practitioners.

Ironically, Ghumman started his career working at a larger health system, but he said he’d never go back because there is something special and personal about the care small practices can offer.

“It’s very challenging for small practices to survive and thrive,” Ghumman acknowledged. “I still think that you can offer better care in a smaller system. I want to spend time with my patients. I do not want to practice someone else’s policies. I want to practice good medicine.”

Ghumman is a member of the Connecticut State Medical Society (CSMS), which has been warning that it’s getting harder to recruit doctors to the state due to the high costs of living, regulatory issues and high medical malpractice insurance costs.

That recruitment problem hits smaller practices particularly hard.

“I just do not have the same resources as a larger system to attract new physicians,” Ghumman said. “I’ve been actively recruiting for the last five years and it’s been a problem for many small practices; a survival problem. The last doctor I hired was in 2016. I’m looking to hire two more, like tomorrow. I think it’s just more attractive for them to go to a larger practice. There may be better outreach and they might be offering them more money.”

Talent woes

Dr. Ronald Adelman, president of the CSMS and an ophthalmologist at Yale School of Medicine, said “there is not a one-size-fits-all” physician practice model.

Adelman noted that Connecticut ranked No. 47 in the country in 2021 for retaining physicians trained in-state, according to the Association of American Medical Colleges.

He also has seen first-hand young doctors’ desires to join larger health networks, he said.

“Of the last 20 [young] people I trained, 19 joined larger groups,” Adelman said. “Younger physicians are just interested today in finding a job and joining a group, rather than starting their own group.”

Huntington said the physician consolidation trend shows no signs of letting up.

“It will be harder and harder to own a small independent physicians practice with the increasing costs — labor costs, IT costs and regulations,” she said. “There is not an end in sight.”

Source: Physicians Advocacy Institute

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