The article “Why I Didn't Get a Paycheck Last Month” [March/April 2012] describes a trend in primary care that affects many private practices. The author is wise to start paying attention to the bottom line to avoid again being upside down in revenues versus expenses. Our group practice had a similar situation not too long ago when a busy NP retired and we could neither absorb her practice nor find a replacement. Her exam rooms remained empty, and the overhead kept churning along without her.
I believe that private practice is coming to a crossroads. Even with assiduous attention to maintaining or increasing practice volume and production, managing accounts receivables, staying on top of the billing service, and negotiating with vendors on office supply costs, I don't think private practice will stay viable in the long run. Although private practices are small businesses, they are not subject to the rules of a free-market system. In most cases, we live and die by the fee schedule, which at best remains fixed, yet we are continually battling inflation of our labor, benefits, rent, and other expenses. Other types of business (law practices, plumbers, the local dry cleaners, etc.) can both cut expenses and raise fees. But for those of us who play the insurance game, the latter is not usually an option. At some point, the margin between revenue and expenses is going to narrow so much that experienced physicians will have to make some tough decisions about their practices.
My group just joined our hospital's new primary care community clinic, which we helped develop. My partners and I are now W-2 employees; while we have given up some freedom, we feel we have added years to our careers.