Massachusetts physician practices considering closure, consolidation
Around 30% of physician practices in Massachusetts have been considering closing down, a new preliminary report shows.
Medical and procedural specialist groups were the most likely to consider closing their practice at 42%, according to a survey of more than 400 practices by the Massachusetts Health Policy Commission and the Massachusetts Chapter of the American College of Physicians from late May to early June. Around 20% of primary care and behavioral health physician groups were weighing closure.
“A striking number is the percentage saying they may close the practice. That is dramatic and way above what I thought I’d be seeing,” Dr. Donald Berwick, HPC commissioner and former CEO of the Institute for Healthcare Improvement, said during the HPC’s board meeting Wednesday.
There are some differences in independent versus hospital-affiliated practices, although those results aren’t ready yet, said David Auerbach, senior director for research and cost trends at the HPC, noting that Massachusetts physician offices experienced a 30% decline in employment from February to April of this year.
Physician practices have been particularly hard hit given their reliance on non-urgent in-person procedures. Outpatient facilities in the New England and Mid-Atlantic region had some of the steepest declines in utilization, research from the Commonwealth Fund shows. Volumes dropped nearly 70% from March 1 to April 5, but have begun to rebound.
That is partially why around 20% of Massachusetts physician practices are mulling consolidating with other practices, joining hospitals or health systems, or selling their practice, according to the survey.
But regulators have warned that mergers and acquisitions will be closely scrutinized, particularly when well-resourced companies buy up smaller ones that were weakened by the crisis, noting that the “imminent failure” argument isn’t always valid.
Physicians have to be incredibly careful when evaluating various M&A opportunities, said Dr. Susan Bailey, president of the American Medical Association, adding that the COVID-19 pandemic is a powerful lesson on what can happen if a physician practice is sold to a large system or private-equity firm.
“They need to ask what role they will have in the management of the practice itself, what will happen during the pandemic and how much autonomy they will have in making clinical decisions,” she said.
More primary-care practices are interested in a partial capitation payment system going forward as the fee-for-service model has left providers more vulnerable, according to the survey.
Around 36% of physician practices said they were aiming to provide more services to increase revenue, which the HPC said it will keep an eye on since it has tried to limit excessive spending and price increases with its cost growth benchmark.
Nearly 30% reported considering boosting revenue through improved diagnostic coding. The commission has been closely monitoring patient acuity levels and hospitals’ coding severity, finding that coding indicates that patients are sicker despite certain acuity metrics stagnating or decreasing.