Good news! Independent physicians are optimistic about the future of their practices, according to a healthcare survey recently conducted by TD Bank, Cherry Hill, NJ. In fact, almost 75% of practicing physicians expect their practice revenue to grow over the next 2 years. The most optimistic about the future were women (81%) and physicians under the age of 50 years (89%). Independent physicians are optimistic about the future of their practices, and almost 75% of them expect their practice revenue to grow over the next 2 years. Even better news is that their anticipation for growth is supported by several market forces. According to the Association of American Medical Colleges, by 2030 there will be a shortfall of up to 121,300 physicians. Depending on the number of advanced practice nurses and physician assistants available, this shortage could be between 14,800 and 49,00 in primary care alone. Further, according to a survey from the Medical Group Management Association, compensation for primary care doctors has increased by over 10% over the past 5 years, which is almost twice the increase seen by specialty physicians. Finally, growth of the US population and particularly the elderly population will demand that more medical services be available to treat the accompanying increase in age-related health conditions. Who was surveyed? The survey was conducted among 360 independent doctors in the United States from the medical, dentistry, veterinary, and optometry specialties. Respondents were selected from a volunteer group, and included those who spent time in an independent solo, group, or multi-specialty practice with ≤ 5 medical professionals. According to the results, most independent medical offices are still small businesses. In all, 46% were solo practices, and 78% of all practices were operating with a single office location. Future costs Physician respondents also reported that their largest anticipated financial expenditure in the next 5 years will be equipment financing (45%), followed by physical expansion, relocation, or renovation (19%). Cash was the most commonly reported method expected to fund these expenses (45%), followed by a credit line (34%), and credit cards (27%). Of the 74% of physicians who anticipate purchasing, buying into, merging, or selling their practices in the near-term, 34% anticipate doing so within the next 4 years, and 29% in the next 5 to 10 years. Future plans When questioned about their long-term plans, 37% of respondents planned to have their partners/colleagues take over their practice or buy out their share upon retirement. Another 29% reported that they expected to sell their practices through a transition specialist or broker. Cutting back on hours rather than retiring completely was the plan for 42% of respondents. Most were also confident that they were prepared for their retirement, with a full 86% reporting that they were financially ready and 89% expecting the sale of their practices to contribute to their retirement funds. “Valuations of practices can vary from year-to-year due to ever-changing factors such as the economic environment, area demographics, number of active patient records, and practice production and profitability,” said Dan Croft, Head of Healthcare Practice Solutions at TD Bank. “Although it is nice to think about tapering off work before retirement, that may lower a practice’s sales price, as valuations are typically focused on the last 12 months of production and net income.” Challenges ahead Yet respondents also reported facing some challenges. For example, the top three hurdles to overcome in operating a practice included: Overhead costs (63%), Growth and new patient acquisition (48%), and Private insurance reimbursement (45%) In addition, costs were listed by 41% of respondents as the primary barrier they had to growing and expanding their practices. This was followed by patient demand and reimbursement levels, each cited by 40% of respondents. Finally, a full 70% reported concerns about a new Congress changing the healthcare system, reflecting an 18% increase from 2016 survey results received before the presidential election. The political climate Political concerns loomed large, according to respondents, and issues they think should be on the agenda included the following: Repealing or overturning the Affordable Care Act (ACA; 37%), Increasing medical insurance industry regulations (33%), and Enhancing the ACA (30%) “Given the uncertainty within the broader US political climate and continued scrutiny around healthcare policy, it is not surprising that practitioners have heightened concerns about healthcare legislation and insurance reimbursement,” said Croft. “Potential changes to both Medicaid eligibility and benefits mean doctors need to develop a broader base of collection sources, including fees for service, membership plans and private/commercial insurance payors, in order to avoid a heavy concentration in public reimbursement sources.” Source
