Privately Owned Medical Practices - Are They Becoming Extinct?

There are so many challenges in today’s medical environment that make it increasingly difficult to survive without partnering or selling to a hospital system or corporation. Insurance negotiations, practice marketing, employee management, malpractice, rising health care costs are just a few things that a physician must juggle, while simultaneously seeing patients during a prolonged worldwide pandemic. All things considered, many physicians and physician groups are understandably opting to cash out and reduce stress.

Dermatology is certainly not immune to this trend. Private dermatology offices around the country are being sold to corporations. Now that over 50% of dermatology practices employ a Physician Assistant (PA) or a Nurse Practitioner (NP), there is a good chance you will go through at least one buy-out or merger during your career. Alternatively, if you are in the market for a new job, you may be applying for a position in one of these growing corporate practices.

Whether your office is acquired by a corporation or you are job hunting in a world increasingly dominated by corporate-owned practices, navigating what is the best fit for you can be daunting. Knowing potential pros and cons of this ever-changing healthcare model may help you understand why things are done in particular ways and how to negotiate things that matter most to you.

Before writing this article, several colleagues with long dermatology careers, who have experience working in both a private and corporate practice, were interviewed. Several common suggestions, pitfalls, and insights emerged during each interview. They are categorized and summarized below:

Contracts:

If you are currently working in a private practice, negotiate what is important to you now! (salary, paid time off, non-compete, continuing education allowances, etc). PAs/NPs often have no idea the practice is being sold until the deal is done. Typically, the seller (your employer) will negotiate that all current employees maintain the same contract through the transition. If your contract is the way you want it, then the transition should guarantee the terms of your legal agreements; but remember, you are being hired by a new company, and at your insistence, a new contract can be negotiated. Oftentimes, the entity buying the practice would rather make you happy (within reason), than risk losing you.

Specifically, if you are offered new employment documents, look closely at non-compete clauses and work travel requirements. Depending on the number of offices, and their geographic distribution within a corporation, a non-compete may be more restrictive than you assume. For example, if you have a non-compete that states you can not work within 15 miles of the practice - it could mean any clinic associated with that practice. Negotiating a specific “home” office that would target and limit a non-compete clause is essential. In addition, the contract may also state that you work in different practice locations “as deemed necessary” by management. If your new corporation encompasses a large area (maybe several states), you could be asked to relocate or endure long commutes. If you’ve grown some roots and have spent years building a loyal patient base, consider negotiating a limited travel distance and relocation safeguards.

Bigger Company, Bigger Voice:

A company with hundreds of employees and many practices will typically offer better choices and better rates for health insurance, vision, dental, life, and retirement. Also, bigger companies have bigger buying power when it comes to buying supplies for the office, cosmetic products, and cosmetic services. Buying higher volumes at lower rates can allow for a higher profit margin, which can benefit everyone involved. Plus, having a bigger voice benefits the practice when it comes to insurance payments from payers. Not only is the company big enough to negotiate much higher reimbursements, they usually have a billing department trained to ensure those payments come through. Since many PAs and NPs have a commission-based contract, they can potentially see an increase in their paychecks almost immediately.

Scheduling and Staffing:

When transitioning to the new company, addressing work-schedule templates, patient volumes, and procedure expectations are imperative. Do you want to work more or fewer days? See more or fewer patients? Will scheduling only occur by your local staff or will there be a remote call center that can also schedule patients? Do you want a full-body skin exam at the end of the day? Do you want surgeries scattered in your schedule or at a designated time? These are all things to consider. Having your schedule too full or scheduled incorrectly can be very stressful. Conversely, if you love a busy schedule, a call center is more likely to fill any cancellations so that your schedule is always full.

With regards to staffing, having cross-trained staff access across several clinics can be very useful. In a private practice, if one or two employees are sick or on vacation, you are forced to work with a skeletal crew. A larger group, with several nearby practices, can shift personnel to help ease the shortage at your practice site.

Corporate Versus Private:

Finally, corporate medicine brings more rules and regulations that may be hard to initially understand and digest. There may be many departments such as human resources (HR), Information Technology (IT), Coding/Billing, Compliance, etc. As each department has its own priorities and demands, you will definitely receive (and need to respond to) more emails than before. Keeping track of everything all at once can be a bit overwhelming. There can definitely be a benefit to having access to all of these departments because you have access to experts in their field that can help with any issues that may arise. Private practices do not usually offer the same range of support. On the other hand, corporations may require more levels of approval to get things done, which can be very time-consuming. Getting things done in private practice versus a corporate practice can be comparable to trying to turn a rowboat in the water versus turning a big ship. Lastly, a larger group can offer access to a wide and varied referral base. If your office doesn’t perform a certain procedure, you may be able to refer within the company or vice versa. This may also open up doors for training in new clinical arenas or procedures.

In summary, there are pros and cons to working in a corporate practice. As more private practices decide to join corporations, it is likely most dermatology clinicians will have to navigate this scenario. While solo practices can have more of a small-family vibe, one can argue that a corporation-owned practice can maintain an intimate and patient-focused environment locally while allowing access to, and support from, a larger extended family. Be prepared and focus on potential positives if this transition comes knocking on your door!

Vicki Roberts PA-C is a dermatology PA at Palmetto Dermatology in West Columbia, SC where her clinical focus is general dermatology and surgery. She also keeps busy with her two always hungry teenage boys, two loving dogs, and one sassy cat.