Private practice doctors continue to fade away

The Norman Rockwell family doctor is fading fast, as doctors increasingly choose health system employment over opening an office and hanging out a shingle.

Premier Medical Associates had been the region’s biggest independent medical practice before its decision in November to ally with health insurance giant Highmark Inc., and Excela Health’s recent hiring of 11 cardiologists reflects a bigger trend in the employment of doctors. And it’s a pattern that’s also playing out nationally, experts say.

“In a lot of respects, the private practice model is a dying model,” said 34-year-old Dr. James Lynch, an Excela cardiologist who said he never considered opening his own office after completing eight years of training following medical school. “I feel a lot more comfortable going to work every day and taking care of patients” rather than dealing with the challenges of running an office.

Although hard data are not available, the number of independent physicians in western Pennsylvania has declined to about 25 percent from around 50 percent 10 years ago, according to Allegheny County Medical Society Executive Director John Krah. Intensified competition between the University of Pittsburgh Medical Center and West Penn Allegheny Health System has only accelerated the trend.

“I’m surprised there is still 25 percent out there,” Krah said.

UPMC employed 3,240 doctors during the latest six-month period ended Dec. 31, up 391 from the same time a year ago. Aiding the gains was the acquisition of Hamot Medical Center in Erie and the Erie Physicians Network, the county’s biggest multispecialty group.

Like UPMC, West Penn Allegheny Health System President and CEO Dr. Keith Ghezzi said the system is focused on hiring physicians and reorganizing its physicians’ organization. The system has a medical staff of 800 and employs another 600 doctors.

“We’re very close, very close to announcing some key hires,” he said. “The interest in our system is robust.”

In the meantime, Ghezzi said he is focused on improving the system’s financial performance by bringing “rigor and discipline” to internal procedures.

Nationwide, hospitals employed some 211,500 doctors in 2010, a 34 percent increase since 2000, according to a recent survey by the American Hospital Association as analyzed by Medscape Medical News.

Driving the trend is hospitals’ need to fill beds through a steady stream of patient referrals, according to lawyer Michael Cassidy, who specializes in health care law at the Downtown offices of Tucker Arensberg PC. Federal law prohibits health systems from paying doctors for patient referrals, but employees are under no such restriction.

Employment can be a hedge against the vagaries of Medicare reimbursement, while insulating doctors from overhead expenses related to running an office, Cassidy said.

Anxiety about reimbursement reforms, including such things as global payments by Medicare for a bundle of services, also is driving doctors to seek employment rather than go it alone, said Edward Kabala, a partner at the Downtown offices of Fox Rothschild LLP, who represents doctors in contact negotiations.

“These hospital systems are snapping up docs all over the place,” he said. “They are trying to lock down their referral sources, and the only way to do that is to employ them. It’s the reality today.”

Employing physicians is necessary to prevent “gaps in coverage” in the community when a referring physician retires or leaves the area for another job, said Kirk Miller, vice president of physician services at Excela Health. Employed doctors also are a recruitment and retention tool for the system’s medical staff.

“It gives us a way to be attractive,” Miller said.

The grind of a private practice also can be overwhelming. After his partner of 20 years left, Dr. Alan Olivenstein said he worked three-and-a-half years without a day off, seeing patients while looking after billing and other issues. He was among the 11 cardiologists Excela Health recently hired.

“It wasn’t a hard decision because I was really at the end of my rope,” Olivenstein said. “I was really just considering closing the practice and moving to Florida.

“Honestly, I think that, within the next 10 years, private practice will be a thing of the past, except for boutique practices.”

The Pittsburgh area is a “wonderful medical community, but in the last 10 years, the medical economics have changed dramatically,” Olivenstein said, increasing the hassles of private practice.

Dr. Louis Civitarese, a family practice physician, is hoping Olivenstein isn’t right.

Civitarese is part of Mount Lebanon-based Preferred Primary Care Physicians, which with 31 doctors and 17 offices has become among the last remaining big medical groups left in the region. Key to a successful private practice is the willingness to hire the necessary business and administrative talent to keep the back office running smoothly.

“I’m one of the endangered species, but we would hope our generation is not the last to offer the viable option of private practice,” said Civitarese, who has been practicing medicine for 23 years. “We find it very rewarding.”