In a health care environment moving toward accountable care organizations (ACOs) and population health management, what is the role of small physician practices? Can they compete? Does it matter if they cannot?
The number of small practices has been declining for decades. Between 1983 and 2014, the percentage of physicians in practices of 10 or fewer declined from 80% to 61% and those in solo practice, from 44% to 19%.1 In 2015, 34% of physicians were in practices of 100 or more.2 This trend has likely been accelerated by recent policy changes, such as quality and outcomes reporting, health information technology (IT) requirements, and the scale requirements needed to participate in ACOs and other value-based purchasing programs. Physicians in large practices or employed by hospitals also are often relieved from the business side of medicine and secure higher payment rates that large organizations can negotiate with health insurers, and such consolidation may lead to increased profits.3