John H. Shim, MD, ShimSpine, Tampa, Fla., talks about consolidation in orthopedics.
"Frankly, orthopedic practices have been in the consolidation phase for quite a long time. Orthopedic surgeons are still subject to the laws of economics. Originally, doctors' offices were like Mom and Pop stores. But, the complexity of medical care delivery and of the reimbursement environment has forced change.
In the past, the patient may have been the customer. No more. The customer for most physicians remains the government or large insurance carriers. With increased burdens to administer the relationships been the doctor and the customers, a whole industry was set up to help the physician navigate all the rules and needs. There are billing experts, compliance experts, risk management experts, etc. Then some doctors realized there is some advantage to joining together to share these administrative burdens. Groups started to consolidate to take advantage of the savings. Then, the government and insurance companies realized the need to control the growth of these costs, therefore started more heavy handed negotiations with these smaller doctor groups.
Doctors, like any business sector, started to further consolidate to gain some strategic advantage. Hospitals started to buy physician practices to vertically integrate more of the healthcare resources to gain better negotiation leverage. For individual small groups, those who were not part of the consolidation, had no bargaining power.
In my opinion, we will continue to see more consolidation in order to achieve better negotiations and access to the government and insurance plans. In addition, with the push for bundled payments, and gain-sharing-oriented plans, only large groups will be able to demonstrate the ability to develop such programs. In the end, a physician will be part of a very large group (even as an employee), or go off the grid, with a very niche, personalized healthcare delivery care model (concierge)."