Not fade away: How rural solo physicians are surviving, thriving
As a business model for rural family physicians, solo private practice is still financially viable, but it is no longer desirable for many DOs, says rural payment expert Ray E. Stowers, DO, the AOA’s 2012-13 president.
The administrative, regulatory and technological demands of practice have prompted more and more traditional country doctors to retire or sell their practices to become employees. What’s more, young physicians interested in rural practice are reluctant to go it alone today due to their lifestyle priorities, says Dr. Stowers, the dean of the Lincoln Memorial University DeBusk College of Osteopathic Medicine (LMU-DCOM) in Harrogate, Tenn.
Rural family medicine: Part 1
Rural family medicine has been a strength of the osteopathic medical profession since its founding. By opening new schools in medically underserved states and expanding class sizes, the profession is leveraging this strength to alleviate the primary care physician shortage.
But given the administrative complexity of medicine today and the sizeable debt load of medical students, rural family medicine faces challenges. This is is the first in a series of articles exploring how osteopathic family physicians in rural areas are adapting to the many changes facing health care.
Nevertheless, some DOs in single-physician practices relish their independence so much that they are determined to make solo practice work. They keep abreast of health care changes and leverage new developments, collaborate with other physicians and with hospitals, and come up with innovative practice management plans and services for patients.
“For me, solo practice has been a good choice,” says Kevin de Regnier, DO, a family physician in Winterset, Iowa, a town of approximately 5,000 people southwest of Des Moines. “I’ve enjoyed being my own boss and running my own show. If I want to add another service to our office, I don’t have to wait for anyone’s approval.
“I decide what’s best for my patients.”
Like other rural primary care physicians who practice in federally designated health professional shortage areas, Dr. de Regnier receives a 10% bonus from Medicare for office visits. This makes a difference to his practice’s bottom line, given that a significant proportion of his patients are elderly.
As do many other rural physicians, Dr. de Regnier uses physician extenders to help with patient care. He supervises two physician assistants, who enable his practice to accept a much larger volume of patients than he could by himself. Consulting with him by phone, the PAs also fill in for Dr. de Regnier for short periods when he travels to professional meetings.
“Because I own my practice, it’s easier for me to take time off because I don’t have to ask for anyone’s approval,” says Dr. de Regnier, the vice president of the American College of Osteopathic Family Physicians. “The downside is that I’m not generating income when I’m not here, but my PAs keep the practice running.” The PAs refer more difficult cases to the local hospital’s clinic, which has agreed to cover for Dr. de Regnier when he is out of town.
Many rural physicians are intimidated by the costs of implementing electronic health records. But rural hospitals are sometimes willing to underwrite at least a portion of the setup expenses.
“I had a conversation with our local hospital, which agreed to provide some financial assistance to us in implementing an EHR system,” says Dr. de Regnier, whose practice has been using EHRs for more than five years. “In exchange, we gave the hospital’s emergency department access to our EHRs. As a result, when one of our patients is over there, the hospital can see what workups we’ve already done, which saves them time and money and improves the quality of care.”
Rural family physicians need to be creative to succeed, Dr. de Regnier says. To stand out, his practice offers certain services to patients that most family physicians don’t provide. For example, he invested in a bone density scanner so he can provide bone density testing to patients who would otherwise have to drive to Des Moines.
“Does it make a ton of money for us? No. But it makes some money, and it provides a service that is needed in our rural community,” he says.
In addition, Dr. de Regnier recently added an allergy clinic to his practice. “It’s doing very well, and it brings a service to the community that wasn’t previously available,” he says. “Doing these types of things helps us to remain financially viable.”
‘Big enough to matter’
In 2007, after five years as an employee, family physician Steven D. Brushwood, DO, took over a practice in Gower, Mo., a town of roughly 1,500 people in the northwest part of the state. “For a few years, I was by myself. Then I took on a nurse practitioner because I needed some help,” he says.
“That’s the great thing about family medicine. You can really tailor your practice to fit the lifestyle that you want to have.”
Dr. de Regnier
As the owner of a single-physician practice, he normally fared well financially. “At the end of the day, I usually made more money than I did when I was employed,” he says.
Initially, Dr. Brushwood was able to handle the administrative responsibilities of solo practice. But health care reform and quality reporting requirements have changed this picture. “I don’t know how truly solo practices are going to be able to comply with the law and survive,” he says.
Dr. Brushwood decided to expand his practice so that he generates enough revenue to justify the hiring of a practice management firm. Because so many doctors have left practice and nurse practitioners are looking for physicians to work with, opportunities for expansion abound.
A few months ago, Dr. Brushwood was approached about opening a second office—in St. Joseph, Mo., a town of around 75,000 people that is a 15-minute drive from Gower. “I agreed to set up a practice with two nurse practitioners who were already there,” he says. “But because I practice in Gower, I wanted to hire another physician as soon as possible to work with the NPs.
“In early July, within one week of opening the new office, a DO family physician contacted me and asked if I’d like to buy out his practice and hire him, which I agreed to do. When this is finalized, we will serve a significant percentage of the patients in northwest Missouri.”
Dr. Brushwood believes having a larger practice will give him more clout when the Affordable Care Act rolls out fully. “With the health care law coming, I feel that we have to be big enough to matter,” he says.
Besides expanding, Dr. Brushwood has restructured his practice. He persuaded a practice management expert to start a medical management services company that has hired all of Dr. Brushwood’s staff. While retaining ownership of his practice, Dr. Brushwood pays the firm a fee for staffing and practice management.
“This arrangement has been working well in terms of reducing my administrative headaches,” Dr. Brushwood says. “But we’ve only been doing this since the beginning of July. Time will tell whether this was a smart thing to do financially.
“But I’m hopeful. When you have a small practice, it becomes a challenge to manage the business and still see patients and do things that will actually create revenue. Now I’m able to focus more on patients.”
Becoming rural health clinics
Independent physicians in underserved rural areas who have many Medicare and Medicaid beneficiaries have the option of converting their practices into CMS-certified rural health clinics, notes Dr. Stowers, who started the first rural health clinics in Oklahoma. Under a federal law passed in 1977, practices that become rural health clinics are not paid on a fee-for-service basis but rather receive a calculated capitated amount for Medicare and Medicaid patients.
“Rural health clinics create a very financially sustainable practice model,” Dr. Stowers says.
R. David Hill, DO, a family physician in Southwest City, Mo., converted his practice into a rural health clinic some 15 years ago, after being in solo practice for 18 years.
“My wife, who was the practice’s administrator at the time, had done a lot of research regarding how we might be able to transition from a private practice into a rural health clinic and how that would help solve some of the payment problems we’d started having with Medicaid and Medicare,” Dr. Hill remembers. “At first, I was skeptical of the whole idea because as a rural health clinic, you have to have at least a half-time nurse practitioner. I could hardly pay my own salary at the time.”
To generate enough revenue to pay an NP, Dr. Hill decided to open two rural health clinics from the outset. He now operates four such clinics in different small towns in his county and recently hired another osteopathic physician to work with him.
Rural health clinics break even on their Medicaid patients, which is unheard of in other practice models, Dr. Hill says.
“When you’re in private practice, you get paid less for Medicaid and Medicare patients than your costs for rendering care,” he says. “If you’re an independent rural health clinic, in contrast, you submit a cost report each year that includes all of the expenses incurred in treating your Medicaid and Medicare beneficiaries. Your own salary, which can be a decent salary, is included as part of your overall costs.
“The government then comes up with a computation of what it costs you to render care to each patient.”
Expansion has been easier than Dr. Hill anticipated because of the shortage of primary care physicians in his area. “When I first came to the county, there was a family physician in every town. All of those doctors have either died or retired,” he says.
Staying ahead of change
Most rural physicians feel overwhelmed by the Affordable Care Act and other government requirements and initiatives, says Dr. de Regnier. The trick, he says, is to stay on top of the changes before they come to fruition and seize opportunities that will pay dividends in the long run if not immediately.
Dr. de Regnier’s practice is preparing to become certified by the National Committee for Quality Assurance (NCQA) as a patient-centered medical home, even though no Iowa health insurers currently offer a financial incentive to physicians for doing so. “I have colleagues on the East Coast who enjoy a substantial payment differential for being a patient-centered medical home,” he says. “We think this will come to our area, and we want to be ready.
“In addition, if more rural primary care physicians in Iowa become patient-centered medical homes, insurance companies will take note.”
To take advantage of the Medicare Shared Savings Program authorized by the Affordable Care Act, physicians need to be part of accountable care organizations (ACOs), which are intended to improve care coordination and quality and reduce costs. Small rural practices can join forces with one another and with other health care organizations to establish ACOs.
“A group of us in solo practice across the state came together and formed an independent practice association, which is partnering with a larger organization in Massachusetts that helps with the administrative side of being an ACO,” Dr. de Regnier says. “Ours was the second ACO to be approved in Iowa.”
Rural solo practice has become much less enticing to young physicians today in part because of their student loan debt. But a variety of loan repayment opportunities make it financially feasible for new graduates to set up independent practices, according to Dr. Stowers.
To attract more new physicians, rural hospitals often offer to pay off a portion of a doctor’s student loans in exchange for patient referrals. “This is very widespread,” Dr. Stowers says. “Several of our students at LMU-DCOM have agreed to practice in small rural communities after residency. The community hospitals will relieve a percentage of their debt every year.”
Scholarships for those who commit to rural practice are also available, though less common than loan-repayment arrangements. The Des Moines (Iowa) University College of Osteopathic Medicine (DMU-COM), for example, offers full-ride scholarships to six students a year in its rural medicine track. Although they may serve residencies in other states, the scholarship recipients agree to practice in rural Iowa for four years after residency.
The program is in its sixth year, so the first scholarship recipients are now in their second year of residency, notes David Plundo, DO, DMU-COM’s associate dean for clinical affairs.
Without student loans to pay off, these future graduates might have the financial wherewithal to start solo practices after residency. But Dr. Plundo believes only a few will choose to do so.
“What I’m seeing from students—even those in our rural track—is that they are choosing careers based on lifestyle,” Dr. Plundo says. “We are just not seeing students with any interest in being a doctor who practices 24/7, 365 days a year.”
Dr. Plundo expects some of his rural track graduates will start or join small-group practices so they can share call and administrative overhead. More will probably become employees of practices owned by hospitals or other organizations.
Despite the rewards of solo or small group practice, Dr. Stowers suspects that a large proportion of LMU-DCOM graduates will follow the national trend and work for someone else.
“More than 60% of physicians in the U.S. today are not in independent practice,” Dr. Stowers points out. “There is a huge, huge change happening in this country—more and more doctors are choosing to become employed physicians.”
A graduate of the Edward Via College of Osteopathic Medicine—Virginia Campus in Blacksburg, J. David Danner, DO, considered various practice types and locations when he finished his family medicine residency three years ago.
“I was wide open in terms of what I was looking for,” says Dr. Danner. He joined a small hospital-owned practice with two other physicians and a nurse practitioner in Stuart, Va., a town of 900 people in a county of 19,000. “I was just looking for a good opportunity, a good location and a good fit for my family,” he says. “Because family docs are in high demand, I had several opportunities.
“The biggest advantage you get from working in a solo practice is autonomy. You make decisions on your own, and you can add that personal touch when you see patients.”
“I could have gone into solo practice. I could have had one partner. But the position I chose was the best fit for me overall.” He selected it because he likes the community, the proximity to his family and his wife’s, and the ability to work in the emergency department of the critical access hospital that owns the practice.
Dr. Danner seriously considered solo practice. “The biggest advantage you get from working in a solo practice is autonomy,” he says. “You make decisions on your own, and you can add that personal touch when you see patients. If you are a good businessperson, you can make that work.
“However, you lose economies of scale. For example, one receptionist can cover three doctors. One billing person can cover three doctors. So in a practice with three physicians, you are dividing the cost of office staff by three rather than one.”
In his practice setup, Dr. Danner shares call with two other physicians, which gives him time with his family. But he still works very hard by choice.
“I’m the team doctor for the high school, one of the county medical examiners and the jail physician,” he says. “I also volunteer at the free clinic we have here, and I work in the hospital emergency room.
“I wear a lot of different hats, but there are only so many hours in the day. So you just work hard all day and do the best you can.”
Dr. Danner, though, is grateful he spends most of his time with patients rather than in administrative tasks.
Letting someone else worry about rules and regulations, coding and billing, medical liability insurance, and hiring and paying personnel—that’s one of the main allures of employment, whether by a hospital, a large group practice, or another type of health care organization. But with the convenience and steady income comes a loss of independence and perhaps passion for practice.
What’s more, employed physicians, who have to request permission to take time off, don’t necessarily have better work-life balance, Dr. de Regnier contends.
Rural physicians in solo practice do have time for their families and other personal pursuits. “There is this perception that if you are out there by yourself, you are a lone ranger and have to do it all,” Dr. de Regnier says. “But there is more help available than you think. For example, you can partner with other practices in your community to share call.
“I’ve been in solo practice for 26 years, and I’ve never missed a single kid’s school activity, ball game or performance. That’s the great thing about family medicine. You can really tailor your practice to fit the lifestyle that you want to have.”
Dr. de Regnier concedes that the business model of rural solo practice isn’t easy and isn’t for everyone. “There have been lean times in the past when payments were slow coming in, which meant that my staff got paid but I didn’t take a paycheck home that week,” he says.
As the only owner of the practice, he bears sole responsibility for his employees’ jobs. “There is the weight of knowing that their livelihood depends on my making good decisions and keeping the practice afloat,” he says.
Even in good times, family physicians in rural solo practice do not realize their highest earnings potential, says Dr. de Regnier, noting that employed family physicians sometimes can make $200,000 or more a year. “By my community’s standards, I make a good living,” he says. “I’ve certainly never been hungry or gone without. But I don’t make that kind of money.
“Yet I’ll trade the income for my freedom and lifestyle anytime.”