Election Consequences: Decline of Doctor-Owned Practices

With the re-election of President Barack Obama, the Affordable Care Act’s regulations will continue to roll out through 2014.

There will be new rules for how the states and the federal government will run the new health insurance “exchanges.” Insurance companies will have their rules regarding premiums they can charge and the customers they will be required to sign up, regardless of medical history. As for individual Americans, we will be required to present evidence of a “government-defined” health insurance plan to the IRS when we file our tax returns.

But, what about doctors, specifically those who own their own practices? Doctor-owned practices are places where health care is provided, but they are also small businesses, operated by small-business owners and entrepreneurs, the doctors themselves.

Doctors who own their own practices have the same costs as other small businesses: rent or mortgage, staff salaries and benefits, utilities, computers, equipment, furniture, etc. As small businesses that have suffered along with others under the first Obama administration, there is no reason yet to believe they won’t suffer more under the second, particularly when Obama and the Democrats want to increase taxes on those who make $250,000 or more. For those health care providers who have practices with many employees, the issue of the ObamaCare employer mandate to provide health insurance for them is another factor of the decision regarding whether a practice is sustainable.

For health providers who rely on health insurance as third party payers, lower reimbursement rates over the years have greatly impacted small business practices. Most Americans would never accept a job in which their prospective employer told them they would get paid less and less each year they work for the business. Yet, health providers agree to this all the time in the system we have had prior to the era of ObamaCare, a system that is equally dysfunctional.

As a result of lowered Medicare reimbursements, for example, more doctors will now be denying care to our seniors. The $716 billion that ObamaCare steals from Medicare is the reimbursement funding that is supposed to have gone to Medicare providers. Gone with the re-election of Obama.

For those health providers who are “fee for service,” meaning that patients pay them directly for services without insurance as another intervening element of the transaction, the Obama economic decline has led to high unemployment and, consequently, less customers who can pay fees. Health providers who are small business owners have experienced significant drops in income and the reality that they must pay for office expenses with what would have been personal income. Mental health providers are often in this category, having left insurance-based practices because of the extremely low reimbursement rates by health insurance companies in this specialty area.

Doctoral level mental health providers could once have a successful business because many patients preferred to pay them privately to protect themselves from having a mental health diagnosis on their health insurance records. However, with so many Americans out of work, many fee-for-service practices are barely surviving. With the new rules and regulations of ObamaCare, most will close.

The fact is that the costs of complying with all the ObamaCare regulations makes it difficult to sustain doctor-owned practices. With the government now mandating that doctors use electronic records, so that information is easier to share, the costs to implement the requirements will belong to health providers.

Under ObamaCare, many, if not most, doctors will be forced into hospital employment or Accountable Care Organizations (ACO). That means they will no longer be their own bosses, no longer make the decisions about their individual practices and, consequently, no longer have the same level of responsibility for the health care that is delivered. As we have seen in most bureaucratic systems that are reliant upon the government in some way, the buck always stops someplace higher up.

Perhaps some doctors will like being a “company man or woman,” because they won’t have to worry about complying with all the new ObamaCare regulations and administrative issues in their own practices. Instead, they can just show up, treat healthcare problems, collect a salary, and let someone else worry about the business end of it.

Like other small businesses, doctor-owned businesses are facing a forceful blow. Health care business owners can either spend all the money and time required to comply with ObamaCare — money and time taken away from their personal incomes and further investment in their business practices — or close up shop and become just another health care worker on the assembly line that is life.