The Affordable Care Act Effect: How the Affordable Care Act Affects Medical Practices

The practice of medicine is highly revered in the U.S., and yet no other industry or career path has as much regulation or such widespread and public potential of litigation for malpractice. The days of the venerable country doctor are over, yet the public still holds that perception, while the reality is more controlled by Federal agencies, insurance companies, Congress, drug companies, attorneys, and technology.

Today, more than 65% of the new physicians bypass private practice when they begin their practice of medicine. Largely due to the costs of starting a practice (much of which is due to the heavy regulation and litigation potential) these new doctors would rather be employees of hospitals and have someone else take all or most of the risk. Just a few of the laws that have contributed to this transition are The Health Insurance Portability and Accountability Act (HIPAA) passed in 1996; the Balanced Budget Act of 1997; the HITECH Act 2009, and of course the Patient Protection and Affordable Care Act (PPACA), commonly called Obamacare.

The Affordable Care Act Effects On Private Practice

Besides the movement away from entrepreneurship, this transition can have an impact of the quality of care if only from the standpoint of the potential for changing the highly regarded “physician-patient interaction” standard the public has long treasured. There is another trend that is just emerging. More of the existing doctors are choosing to become hospital employees rather than struggle with the unprecedented challenges which medical practices face in accounts receivables management and cash flow. Again, these challenges are the result of the regulations of Medicare, Medicaid, commercial insurance, and the many acts mentioned earlier.

The latest act, Obamacare, is still unfolding. Only a small portion of its regulatory structure has been implemented. The act was intended to help citizens pay for healthcare by forcing regulations onto insurance companies and private citizens, but the impact of this, as well as the other acts, always falls on the medical provider, usually in the form of reduced reimbursement. Obamacare promises to impact the financing model of healthcare in ways still unknown, but potentially feared by most physicians. However the known provisions of the legislation are already having an effect. The continued pressure to reduce Medicare reimbursements are a known part of the act. Lesser known provisions, such as the pressure to move the healthcare financing model to ACOs (Accountable Care Organizations), and the incentives to force medical providers to purchase and use EMRs (electronic medical records) systems, have caused nothing less than frenzy in the private medical community.

EMR adoption, which is widely known as a huge disruption of the customary workflow of clinical care, is well underway. The overwhelming evidence gathered to date supports the fact that the negative impact of forced implementation of EMR technology outweighs the positive benefits of automated clinical notes and treatment plans. This too affects cash flow, as the physicians almost always incur inefficiencies (due to the required attesting to meaningful use of the software), resulting in less revenue. Even though EMR adoption was part of the HITECH Act, the use of EMR technology is the technology to support the ACOs created by Obamacare.

The ACO concept was conceived to enhance the quality of patient care by coordinating that care among all providers who treat a single patient. These providers include the various primary care physicians, specialist, hospitals, rehab centers, etc. Each one of these today bill insurance companies and Medicare for their services individually. But under Obamacare and the ACO model, all of the caregivers will share the revenue of one large reimbursement based upon the quality outcome of the care. The percentage of revenue for each provider in the ACO is still not determined but the impact of the anticipated change in how physicians will get paid is huge.

Summary Of The Affordable Care Act Effect

With the newer financial challenges of the Affordable Care Act, the HITECH Act, and HIPAA added to the well-known cash flow challenges of the Balanced Budget Act and the Medicare Act, private practitioners have little incentive to remain in private practice. Just as the new providers entering medical practice are choosing to become employees, more of the existing private practices are starting to close their doors and join their younger colleagues as employees of hospital systems. Those that remain will still face the increasingly more difficult task of maintaining or improving cash flow and revenues.

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