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  • Thriving in a Solo or Small Practice Group

    Does the small or solo-practice career have a future, given current changes in the health care system? Following is a detailed summary of this Mid-Year Forum 2017 session on the topic.


    A large percentage of Academy members work in a solo or small group practice. However, there is a trend for consolidation in the field of ophthalmology and health care in general. In an era of reimbursement challenges, rising office expenditures, a more complex regulatory environment, and high costs of new technology, ophthalmologists are trading the independence of solo and small group practice for the stability a larger practice setting can offer. Does this trend mean the end of the solo practitioner or small group practice? Our expert panel debates the future of the small practice and offers valuable insights for those practicing in small and large practices alike.

    Background Information

    U.S. health care markets today are trending towards consolidation into larger practices that can 1) compete for patient access, 2) initiate better payer contracting, 3) recognize a higher utilization of expensive technologies and staffing that can be shared across multiple providers and 4) reduce individual brick and mortar costs. Ophthalmology has traditionally been less affected by many of these market trends and continues to have a significant number of MDs in solo and/or small group practices.

    Integration is becoming a more attractive option for ophthalmologists. The demographics are changing significantly and when polled, younger ophthalmologist-in-training are less interested in the solo-practice model.

    Payers are excluding the small players and looking for larger practices that can manage the entire health delivery process. Is there a future for the solo/small group MD practice and if so, how do ophthalmologists find the right business model to succeed.

    Arguments for Consolidation

    Demographic and employment trends favoring consolidation

    Robert E. Wiggins, Jr., MD, MHA – Academy Senior Secretary of Ophthalmic Practice; Partner, Asheville Eye Associates (moderator)

    The demographics of members in training is changing. 50 percent of current medical school classes are female. Younger MDs are choosing to join larger practice groups rather than entering the solo practice. Below are a few facts impacting the changes in medicine today.

    • 44 percent of all MDs were in solo practice in 1983;
    • 19 percent of all MDs were in solo practice in 2014;
    • MDs employed by hospitals rose from 16 percent to 33 percent from 2007 to 2014;
    • 32 percent of ophthalmologists were in solo practice in 2014;
    • 25 percent of Academy members are female in 2013, nearly double the number from five years earlier;
    • 35 percent of senior ophthalmologists (over 60) in solo practice;
    • 3 percent of ophthalmology members in training surveyed plan to go into solo practice;
    • Data indicates that the millennials and Generation X prefer a work-life balance and may find employment options in a large practice more attractive than solo ownership.

    OMIC data shows an increase in group policy buying from 38 percent in 2005 to 87 percent in 2016. The number of individual policies decreased from 62 percent in 2005 to 13 percent in 2016.

    Solo practitioners still represent a significant number in ophthalmology today. With the senior ophthalmologist retiring and fewer members-in-training going into solo practice, solo ophthalmology practices will decline over time.

    Business factors driving consolidation into large practices

    Derek A. Preece, MBA – Principal and Executive Consultant, BSM Consulting

    Business factors impacting ophthalmologists are creating a move toward consolidation of practices and pressure on solo and small group practices to consider joining larger groups.

    Those factors include:

    • The high costs of equipment and computer systems creates financial challenges for small practices whereas larger groups are more able to spread those costs over more providers;
    • Devoting staff time to compliance with government regulations and payor requirements is easier for larger practices with more employees and more specialized staff;
    • Recruitment of new physicians and exit strategies for retiring doctors are more difficult for small practices;
    • Ownership transitions are less complicated with larger practices and more attractive to younger ophthalmologists;
    • Private equity investors are actively seeking to purchase and consolidate practices.

    The benefits of being “essential” favor large practices in the local health care marketplace

    Ann Hulett, CMPE – CEO, EyeHealth Northwest, PC; American Academy of Ophthalmic Executives Board of Directors

    In small communities, ophthalmologists have no problem being “market essential” since they are often the only practice. But in larger markets, the larger practice has an advantage because they are hard to exclude and can cover more geographic locations through multiple practice locations.

    As Medicare Advantage continues to grow and alternative payment models emerge, more of our patients will receive care through coordinated networks. Networks turn first to the groups who are seeing the most patients and to the groups who can electronically exchange information. Clinically integrated networks believe coordination of care lowers cost. Larger practices have the ability to provide care and with certified electronic health record systems, can respond and share data more easily. Often network participation requires hospital privileges and larger practice share call with less burden.

    Larger group practices have a stronger voice in the community and are more likely to be present when discussions with networks take place. Recruiting physicians can be easier for larger groups. Doctors completing their training now have had years of EHR usage and see that as the norm. Some are reticent to take on personal responsibility for the financial and business management of a practice.

    Arguments for Solo/Small Practice

    Arrangements for solo practices that maintain autonomy

    Brenda N. Laigaie, Esq. – Partner, Wade, Goldstein, Landau & Abruzzo, P.C.

    There is room and a need for the solo practice and you can thrive and survive. There are three essentials to staying relevant: 1) Get your house in order, 2) Consider expanding services, 3) Keep your ear to the ground.

    Get Your House in Order!

    Purchase and learn to use a certifiable EHR system and practice management system. Consider joining a clinically integrated network to lower the cost of access to these electronic practice management systems. Understand compliance polices and educate your staff. It is important to monitor your payor contracts and fee schedules. Participate in payor payment programs such as the Merit-Based Incentive Payment System to maximize reimbursement. Know your referral sources and understand what their needs are to assure high satisfaction.

    Expand Services

    Make your practice attractive to your referral sources. Know what they provide and don’t overstep by taking patient services away from them.

    Consider leasing space, staff and equipment to specialists for patient convenience if you aren’t fully using your resources. Ensure compliance with Stark Law (“Stark”) exception and Anti-Kickback Statute (“AKS”) safe harbor regulations.

    • Document through a contract, in writing and signed;
    • Set compensation in advance and at fair market value;
    • Ensure contract does not take into account the volume or value of referrals between the parties;
    • Set a term of no less than one (1) year.
    Keep Your Ear to the Ground

    It is critical to know what is happening in “your” marketplace. There are options that allow solo/small practices to participate in the marketplace while maintaining autonomy:

    • Accountable care organization: Entity comprised of a group of providers that are responsible for the quality and costs of healthcare for a population;
    • Patient-centered medical home: Team-based health care delivery model whereby patient care is coordinated through a primary care physician to ensure that the patient receives the necessary medical services along the continuum of care;
    • Clinically integrated network or independent physician association: Physicians, hospitals and/or health system components along the continuum of care who share accountability for their patients.


    • Group purchasing/shared expenses;
    • Access to preferred drug pricing/rebates;
    • Access to the highest quality EHR/PMS;
    • Access to payor contracting and assistance with payor programs;
    • Access to compliance programs and training;
    • Potential for participation in clinical trials.

    How solo practices can more easily become efficient than large practices

    Aneesh Suneja, MBA – President, FlowOne Lean Consulting, LLC

    An increasingly complex health care delivery system requires a physician practice to be efficient and provide an optimal patient experience. Lean management offers ophthalmology-specific solutions to schedule the patients properly, minimize wait times by 50 percent or more, optimally locate the testing equipment, reduce patient and staff footsteps, empower the staff and build a system to keep the physician on time. As a result, the patients promote the practice to increase referrals; the staff feels engaged and empowered to provide the best care; the physicians enjoy a joyful environment to see their patients while the practice sees annual revenue increases of $120,000 to $160,000 per MD with added efficiencies.

    Solo practices can make lean changes more quickly as compared to the larger practices because decisions do not require buy in of multiple physicians and it is easier to engage the entire staff to achieve the goals.

    There is significant information on lean management available through the Academy’s website. You will find articles, webinars, master classes and upcoming educational opportunities for Academy and AAOE members.

    Solo practice perspective: Why I see solo practices surviving

    Ravi D. Goel, MD – Regional Eye Associates, Board of Directors, American Academy of Ophthalmic Executives, Member American Academy of Ophthalmology

    Modeling of workforce requirements is a difficult undertaking. In 1995, the Academy published a paper on future workforce issues. The paper predicted workforce requirements through 2005 and suggests that if ophthalmologists are the primary eye care provider no excess of ophthalmologists will exist. Thus, the pressure on solo practices may in part depend on the relative roles of ophthalmologists and optometrists as primary eye care providers. Economic conditions also play a role in the demand for eye care services as shown in an AOS paper in 2011.

    Cardiology was highly coveted in the last decade by health systems. Cardiologists earned hospitals as much as $2 million per physician. The reality is that ophthalmology is not a profit center for health systems and less likely to be a target.

    The changing eyecare workforce in 2016 will continue to have advantages for small practices. The baby boomer generation is entering the Medicare market. In fact, the baby boomer effect will continue in the decades ahead. See“The Changing Eyecare Workforce” by Academy CEO David W. Parke II, MD, for more detailed information. Compensation by practice setting still favors self-employed vs. employed.

    The Academy’s IRIS Registry is the small practice savior. Regulatory burdens continue to challenge the practice of medicine, and the Academy’s ability to create solutions for Academy members will continue to aid the profession. Rural areas may not be as amenable to large group practice.

    The entrepreneurial spirit will continue to inspire ophthalmologists to practice in solo and small practices with the goal of protecting sight, empowering lives.

    Summary of Audience Comments

    Technological innovations seems to be a root of high expense for practices. Doesn’t this make it hard for the small practice? Equipment manufacturers have created ways for creating ongoing costs of equipment such as “click” fees. Limited competition also contributes to the higher costs. These issues make it harder for the small practice.

    Why are private equity firms a threat? Why not just partner with other practices? PE firms may provide buy-outs for owners of small practices. PE groups typically buy, then sell later for a return on their investment. Often the MDs are left looking for employment. PE firms were a part of the 90s. They failed then. Today’s PE firms have a lower cash flow for purchase. Smaller practices tend to be more attracted to the PE option. Larger practices have a more difficult time reaching a consensus of partners to sell. Be cautious when reviewing any offer to purchase. Remember that the focus of PE firms is on profit, not patient care.

    How do you attract the millennial market to refractive surgery in an era of low cost competition? One option suggested included maintaining credentialing for certain providers (e.g. optometrists) with various vision plans. Although the reimbursement for routine exams is often low, it is a market of consumers who choose options like refractive surgery.

    How do you deal with the senior doctors who want to go part-time in larger practices? One suggestion is to terminate the full employment/partnership once certain criteria are met and keep the senior physician working as an employee. The schedule should be fixed days/times to prevent underutilization of staffing. The senior doctors are sometimes paid on a “percent of receipts” basis once part-time.

    Are ACOs becoming more prominent and why join? One reason for practices to join is continued access to patients. Be cautious in reviewing the contracts for how bonuses and penalties may be allocated. Primary care practitioners tend to be favored in ACOs. Very little money is trickling down to specialists and most ACOs at this time are not generating bonuses. Understand how administrative costs are paid and have a good rationale for how your practice might benefit from participation.


    Ophthalmologists in private solo and small practices enjoy the independence afforded by such a practice setting and believe it affords their patients the opportunity for high-quality, personalized eye care. However, demographic trends favor the decline of the solo and small private practice over time and the pressures on physicians who practice in these settings are significant.

    By recognizing that there will be a continuing demand for ophthalmologic services as baby boomers age, using Academy resources such as the IRIS registry to comply with complex federal regulatory programs, learning how to practice more efficiently by using lean management principles, and banding together and pooling their experiences and resources, physicians in solo and small practices can put themselves in a much better position to put their practices on a sound financial footing so that they can put the interests of patients first, protect sight and empower lives.

    Review more sessions in the Mid-Year Forum 2017 report.