The independent private practice doctor is becoming extinct in America. Physicians are being squeezed because of the amount of money that they charge for the various procedures they perform. The high cost of malpractice insurance is also making it very expensive and some doctors have decided to go naked. The only problem is if the patient is treated incorrectly and is injured or dies, there could be problems receiving compensation if the physician is broke, or has their assets concealed in the wife’s or husband’s name, or maybe in offshore bank accounts. Professionals such as physicians tend to rely on their bean counters and a lawyer or two. These accountants and lawyers can give advice, but at the end of the day, in order to survive, the business needs to run on its own and be profitable.

Over the years, the average patient in America has been treated worse and worse when going to the doctor. In the doctoring business, the patients are for the most part a captive customer. Patients are many times lucky to ask a question or two when seeing the doctor. The average patient in America is nothing but a number.

How did doctors get into this precarious position? Basically, this situation is no different than other industries that have had too much fat built into them. Examples include:

1) Dingy and dark mom and pop video shops that were put out of business by Blockbuster Video.

2) The local book store who sold books for list cover price until Amazon came along and started selling new books at least 30% off and delivered to the front door.

3) The office supply stores who sold supplies at ridiculous prices. This opened the door to Office Depot and other large office supply companies to sell office supplies and equipment for much less money.

4) Local mom and pop hardware stores that sold home repair products to the do it yourself homeowner at super high prices and then came along Home Depot and Lowe’s.

The list can go on and on. When an industry is charging too much or not providing the best possible buying experience, that industry exposes itself to competition from better financed and much better run competitors. Years ago, an industry like healthcare could keep marching along charging insane prices while the doctors got rich earning high salaries. The game has changed and nothing is sacred. Predatory competitors will swoop in to not only take away market share, but quite possibly destroy entire industries like the previous examples that have been given.

For decades, the physicians have lived high on the hog with the amount of money charged for patient care. Order an expensive test here and order a test there and Medicare, Medicaid and the insurance companies payed the bills.  All the while, year after year, decade after decade, the price for health insurance just kept skyrocketing. Thirty years ago or so, mainly the small business person was feeling the squeeze on health insurance for their employees. Forward another decade and the large companies and city, county, state and the federal government started to hurt with healthcare costs for their employees and retirees.

Now it is time to come back full circle to the private practice doctor who is feeling the heat from all sides. The chickens have come home to roost and many physicians are running for cover merging or being taken over by companies or hospitals because they can no longer stay in business on their own. Becoming an employee and working for the cost cutting MBA suits may be the only option available going forward. The days of physicians earning obscene amounts of money seem to be coming to a close. Entitlement thinking caused the changes. Build it and the patients will need us. This is the business philosophy. The physician private practice business model is just another industry that is poorly operated and generates large fees for the below average service being given to the customer.


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