The End of Private Practice?

[DermViser]

So I thought this was an interesting article regarding the effect of Obamacare on private practice:
http://www.forbes.com/sites/scottgo...ngtons-plan-to-end-private-practice-medicine/

The question is does it matter? According to data, most graduating students and residents want to work for hospitals, on salary, etc. If this is the case, should someone who is considering medicine who wants to do private practice, not go into it, if that's not an option?

Also one thing I've never understood, if hospitals can charge more for the same service than private practices (thru facility fees), then why does the govt. continue to allow hospitals to do that? Why not stop reimbursing for facility fees, and pay the same that you would for a private practice for the same service?

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[FedSquarewall]

So I thought this was an interesting article regarding the effect of Obamacare on private practice:
http://www.forbes.com/sites/scottgo...ngtons-plan-to-end-private-practice-medicine/

The question is does it matter? According to data, most graduating students and residents want to work for hospitals, on salary, etc. If this is the case, should someone who is considering medicine who wants to do private practice, not go into it, if that's not an option?

Also one thing I've never understood, if hospitals can charge more for the same service than private practices (thru facility fees), then why does the govt. continue to allow hospitals to do that? Why not stop reimbursing for facility fees, and pay the same that you would for a private practice for the same service?

Not like I know much at this point, but I think I read somewhere that in the next doc fix they were thinking of bringing part A in line with part B rates for many things.

From a family perspective. Many of the physicians in my extended family left pp do to rising costs (I.e. Implementing an emr system was going to cost a ton) and many hospitals were willing to buy out their practices.

 

[jakeislove]

It's chickens coming home to roost.

 

[emflem]

I doubt Obamacare will look like it does now in five years. And there will probably always be room for entrepreneurs, don't you think?

What does this part mean, though? "Also one thing I've never understood, if hospitals can charge more for the same service than private practices (thru facility fees), then why does the govt. continue to allow hospitals to do that? Why not stop reimbursing for facility fees, and pay the same that you would for a private practice for the same service?"

Between Medicare and all that economies of scale stuff, I always assumed PP had to lower their rates or not accept Medicare to compete with hospitals.

 

[maxxor]

I've always felt that the ballooning loan burden will be the death-knell of private practice. If you have a residency graduate with multi hundred thousand dollars in debt, how are they going to get a practice loan, start a private practice, and continue to service their education debt while trying to survive? We already see the beginnings of this with dental grads coming out with $500,000 in debt after dental school and residency. Many are forced to join existing practices or corporate chains just so they can begin to make payments on the debt. I suppose IBR and the like theoretically cap the debt from a cash-flow perspective, but they will get slapped in the end when the whole balance is forgiven and considered taxable income.

There's a reason new graduates prefer to work at hospitals or join large groups with salaries; they need the income guarantee so they can pay their debt off.

Some numbers:

Assume $500,000 debt at 7% interest upon graduation (or whatever). New dental associates make, what, $200k? So post-tax (worst-case scenario) they make $160k, so monthly $13.3k take home
PAYE
Repayment Period 240 months
Initial Monthly Payment $1,521
Final Monthly Payment $3,941
Projected LoanForgiveness $587,180
Total InterestPaid $612,820
Total Amount Paid $612,820

IBR
Repayment Period 281 months
Initial Monthly Payment $2,281
Final Monthly Payment $5,805
Projected LoanForgiveness $0
Total InterestPaid $652,604
Total Amount Paid $1,152,604

Those are some huge payments towards the end, assuming they don't increase their income substantially. I hope they'll find a bank willing to take the risk on a practice loan. I suppose they could rig their reported income to the debt servicers to report less income and thus lower payments leading to better cash flow, but this is tough.

 

[DermViser]

I've always felt that the ballooning loan burden will be the death-knell of private practice. If you have a residency graduate with multi hundred thousand dollars in debt, how are they going to get a practice loan, start a private practice, and continue to service their education debt while trying to survive? We already see the beginnings of this with dental grads coming out with $500,000 in debt after dental school and residency. Many are forced to join existing practices or corporate chains just so they can begin to make payments on the debt. I suppose IBR and the like theoretically cap the debt from a cash-flow perspective, but they will get slapped in the end when the whole balance is forgiven and considered taxable income.

There's a reason new graduates prefer to work at hospitals or join large groups with salaries; they need the income guarantee so they can pay their debt off.

Some numbers:

Assume $500,000 debt at 7% interest upon graduation (or whatever). New dental associates make, what, $200k? So post-tax (worst-case scenario) they make $160k, so monthly $13.3k take home
PAYE
Repayment Period 240 months
Initial Monthly Payment $1,521
Final Monthly Payment $3,941
Projected LoanForgiveness $587,180
Total InterestPaid $612,820
Total Amount Paid $612,820

IBR
Repayment Period 281 months
Initial Monthly Payment $2,281
Final Monthly Payment $5,805
Projected LoanForgiveness $0
Total InterestPaid $652,604
Total Amount Paid $1,152,604

Those are some huge payments towards the end, assuming they don't increase their income substantially. I hope they'll find a bank willing to take the risk on a practice loan. I suppose they could rig their reported income to the debt servicers to report less income and thus lower payments leading to better cash flow, but this is tough.

I was going to say just join an already existing private practice, not create their own.

 

[Jabbed]

Obamacare also caused global warming. By that I mean: somewhere in the distant past there was no global warming, then came Obamacare, and then I opened my eyes and noticed that the ice caps are melting.

Independent practice has been not-so-slowly dying for years. Whether or not this another nail in the coffin is almost irrelevant.

 

[maxxor]

I was going to say just join an already existing private practice, not create their own.

But are practices hiring partnership eligible MDs? At least in radiology, practices tend to hire non-partnership track and their reason is "oh the uncertainty in the market because of Obamacare means we aren't opening up partnership track positions at this time". Similar for anesthesia, ophthalmology, etc. I know of a *large* ophthalmology practice that has one ophthalmologist and 11 optometrists. These private practice guys would rather hire a bunch of midlevels rather than bring in new partners. As long as people are coming out with huge debt loads and an increasingly higher start-up burdens, the existing players don't have to play fair.

People come out of residency, look around and realize "I can either work for some private practice as an associate/employee/non-partnership track OR I can work for XXXX mega-group / hospital and actually get benefits, and look, they pay better".

In your own post, you refer to the notion that "According to data, most graduating students and residents want to work for hospitals, on salary, etc.". Why is this true?

 

[DermViser]

But are practices hiring partnership eligible MDs? At least in radiology, practices tend to hire non-partnership track and their reason is "oh the uncertainty in the market because of Obamacare means we aren't opening up partnership track positions at this time". Similar for anesthesia, ophthalmology, etc. I know of a *large* ophthalmology practice that has one ophthalmologist and 11 optometrists. These private practice guys would rather hire a bunch of midlevels rather than bring in new partners. As long as people are coming out with huge debt loads and an increasingly higher start-up burdens, the existing players don't have to play fair.

People come out of residency, look around and realize "I can either work for some private practice as an associate/employee/non-partnership track OR I can work for XXXX mega-group / hospital and actually get benefits, and look, they pay better".

In your own post, you refer to the notion that "According to data, most graduating students and residents want to work for hospitals, on salary, etc.". Why is this true?

I guess, if a partnership track is your goal. Some people just want to work in a private practice period. I guess graduating students/residents are willing to give up a certain level of autonomy by working for a corporation.

 

[maxxor]

I guess, if a partnership track is your goal. Some people just want to work in a private practice period. I guess graduating students/residents are willing to give up a certain level of autonomy by working for a corporation.

If we accept at face value that "the data shows people prefer working for hospitals", then there has to be a reason. Is it that hospitals offer starting people a better deal? Are the private groups offering less money? Less vacation? Less benefits? There has to be a reason that highly educated and trained professionals are taking these positions.

Is it that the private groups won't give a salary guarantee? Could it be that the higher hospital starting salary is attractive for people who have huge debt loads? Because they advertise positions better? Because they are the only ones hiring?

I would love to work as part of a rads-owned private practice group. I have no idea if they will still exist when I get out of training.

I guess my point is, do we hear rumors/stories of private practice groups unable to fill open positions because all the candidates are taking the hospital jobs instead? I'd say the answer is no.

 

[W19]

Obamacare also caused global warming. By that I mean: somewhere in the distant past there was no global warming, then came Obamacare, and then I opened my eyes and noticed that the ice caps are melting.

Independent practice has been not-so-slowly dying for years. Whether or not this another nail in the coffin is almost irrelevant.

I was about to point that out as well...

 

[PhillyMed777]

Frustrating to read these kinds of things when I really want to be in the private sector...I really hope by the time I am out of training it'll still be around

 

[ACSurgeon]

there are multi-specialty PP groups that contract with hospitals. In this model, you are not hospital employed, but you belong to a group of hundreds of physicians and enjoy the luxuries of that (EMR cost, insurance negotiations, etc)

 

[PL198]

I've always felt that the ballooning loan burden will be the death-knell of private practice. If you have a residency graduate with multi hundred thousand dollars in debt, how are they going to get a practice loan, start a private practice, and continue to service their education debt while trying to survive? We already see the beginnings of this with dental grads coming out with $500,000 in debt after dental school and residency. Many are forced to join existing practices or corporate chains just so they can begin to make payments on the debt. I suppose IBR and the like theoretically cap the debt from a cash-flow perspective, but they will get slapped in the end when the whole balance is forgiven and considered taxable income.

There's a reason new graduates prefer to work at hospitals or join large groups with salaries; they need the income guarantee so they can pay their debt off.

Some numbers:

Assume $500,000 debt at 7% interest upon graduation (or whatever). New dental associates make, what, $200k? So post-tax (worst-case scenario) they make $160k, so monthly $13.3k take home
PAYE
Repayment Period 240 months
Initial Monthly Payment $1,521
Final Monthly Payment $3,941
Projected LoanForgiveness $587,180
Total InterestPaid $612,820
Total Amount Paid $612,820

IBR
Repayment Period 281 months
Initial Monthly Payment $2,281
Final Monthly Payment $5,805
Projected LoanForgiveness $0
Total InterestPaid $652,604
Total Amount Paid $1,152,604

Those are some huge payments towards the end, assuming they don't increase their income substantially. I hope they'll find a bank willing to take the risk on a practice loan. I suppose they could rig their reported income to the debt servicers to report less income and thus lower payments leading to better cash flow, but this is tough.

that's like the most bleak situation possible. 500k in debt would be 99th percentile. it's not really a good number to use to represent avg student, I feel like somewhere between 200-250k is more reasonable since the avg is like 175k with the people at 0 included. i still love you though

 

[maxxor]

that's like the most bleak situation possible. 500k in debt would be 99th percentile. it's not really a good number to use to represent avg student, I feel like somewhere between 200-250k is more reasonable since the avg is like 175k with the people at 0 included. i still love you though

The sticker price for the dental school at my medical school is $380,000. If you were absolutely destitute, the minimum loan requirement is $160,000. Most people are between $160-320,000. Throw in an another $240,000 for an orthodontics residency, plus the evil power of compound interest, and you'll see that $500,000 is not impossible. My original post used dental students, because I was recently browsing the finance and investment forum here on SDN and saw the financial advisors who were running the numbers for dental graduates. I had no idea their debt loads were so high.

AAMC/ACGME have bandied about the idea of charging MDs tuition for residency, like many dental residencies do.
https://www.aamc.org/download/253650/data/acgmestatementonmedicarereimbursement.pdf

 

[PL198]

The sticker price for the dental school at my medical school is $380,000. If you were absolutely destitute, the minimum loan requirement is $160,000. Most people are between $160-320,000. Throw in an another $240,000 for an orthodontics residency, plus the evil power of compound interest, and you'll see that $500,000 is not impossible. My original post used dental students, because I was recently browsing the finance and investment forum here on SDN and saw the financial advisors who were running the numbers for dental graduates. I had no idea their debt loads were so high.

AAMC/ACGME have bandied about the idea of charging MDs tuition for residency, like many dental residencies do.
https://www.aamc.org/download/253650/data/acgmestatementonmedicarereimbursement.pdf

I didn't see you mention after residency when I read your post so yeah that'll make the numbers a bit higher lolz

 

[PL198]

they will charge for residency eventually as they continue to neuter what the residents can do. the more you neuter them, the less valuable they are to the hospital and thus someone has to pick up the tab, either the gov't or students. I would think that would show volumes about medical education though if someone can legally have the title dr in front of their name and still have to pay for training. that would be incredibly sad.

 

[PhillyMed777]

there are multi-specialty PP groups that contract with hospitals. In this model, you are not hospital employed, but you belong to a group of hundreds of physicians and enjoy the luxuries of that (EMR cost, insurance negotiations, etc)

Can you or anyone else say a little more about this...like is it common and/or rising in use? Will we see more of this kind of thing in the future?

 

[DermViser]

I didn't see you mention after residency when I read your post so yeah that'll make the numbers a bit higher lolz

For all intents and purposes, you can't make any loan payments in residency, period. You're pretty much living hand to mouth.

 

[Silent Cool]

that's like the most bleak situation possible. 500k in debt would be 99th percentile. it's not really a good number to use to represent avg student, I feel like somewhere between 200-250k is more reasonable since the avg is like 175k with the people at 0 included. i still love you though

This is very reasonable for ANY private dental school. 500k is what you will owe at graduation.

 

[DermViser]

This is very reasonable for ANY private dental school. 500k is what you will owe at graduation.

Why would it be 500K at graduation for dental school?

 

[Silent Cool]

Why would it be 500K at graduation for dental school?

The COA at practically any private dental school with accrued interest will come to 500k.

If you add on ortho tuition with accrued interest at a place like penn then you are looking at a cool 800k. At usc or bu it's almost an even million.

 

[DermViser]

The COA at practically any private dental school with accrued interest will come to 500k.

If you add on ortho tuition with accrued interest at a place like penn then you are looking at a cool 800k. At usc or bu it's almost an even million.

How much does it cost for Orthodontics tuition at Penn?

 

[Silent Cool]

How much does it cost for Orthodontics tuition at Penn?

The COA for the two-year program is 220k.

 

[DermViser]

The COA for the two-year program is 220k.

So after dental school, those who match in Ortho have to cough up 220 K to the school!?!? How much for just tuition and fees? Can you get school loans for that?

 

[Silent Cool]

So after dental school, those who match in Ortho have to cough up 220 K to the school!?!? How much for just tuition and fees? Can you get school loans for that?

I believe TF are 70-80k per year. Yes you simply sign the dotted line and our Keynesian central planners hand out the money like it's candy.

Simply google "penn orthodontics tuition."

 

[fancymylotus]

Heh. I have friends that are nearly 1 mil in debt.

Marry rich, I guess

 

[DermViser]

I believe TF are 70-80k per year. Yes you simply sign the dotted line and our Keynesian central planners hand out the money like it's candy.

Simply google "penn orthodontics tuition."

It's so weird from our world, where paying tuition for residency training is an anathema.

 

[Frazier]

So I thought this was an interesting article regarding the effect of Obamacare on private practice:
http://www.forbes.com/sites/scottgo...ngtons-plan-to-end-private-practice-medicine/

The question is does it matter? According to data, most graduating students and residents want to work for hospitals, on salary, etc. If this is the case, should someone who is considering medicine who wants to do private practice, not go into it, if that's not an option?

Also one thing I've never understood, if hospitals can charge more for the same service than private practices (thru facility fees), then why does the govt. continue to allow hospitals to do that? Why not stop reimbursing for facility fees, and pay the same that you would for a private practice for the same service?

I will have to read the rest later, but I got to this paragraph:

The result is a bipartisan package of “reforms” that visits so many new rules and complexities on doctors that individual physicians simply won’t be able to participate. They’ll face three choices. Refuse to see Medicare fee for service patients. Sell their practices and join a hospital or health system. Or ask their older patients to join Medicare Advantage plans, and see them under that arrangement. (Under Medicare Advantage, doctors won’t be directly responsible for adhering to many of the new payment conditions. The presumption is that these plans already enforce their own conditions to try and coordinate medical care.)

Leaning towards concluding the specialties which are least likely to accept medicare patients to begin with, more likely they are to simply avoid these "many new rules and complexities". These same specialties, sometimes tend to have much lower overhead inherent to their practice than -- say -- the specialties that are most likely to accept medicare patients.

I have a list of most/least likely medicare accepters [sic] among the charts in my sig.

There is one glaring absence in the list, IMO, for a specialty that could easily escape medicare patients and still have month long waitlists. I'll leave it to suspense.

 

[Silent Cool]

It's so weird from our world, where paying tuition for residency training is an anathema.

Yup. Its criminal, IMO. There are *SOME* programs that pay a stipend, but the vast majority charge hefty tuition.

http://www.dental.upenn.edu/academi...ams/orthodontic_residency_program/annual_fees

http://dental.tufts.edu/admissions/...tioncost-of-attendance/postgraduate-programs/

https://dentistry.usc.edu/programs/certificate/orthodontics/

http://hsdm.harvard.edu/academics/programs/orthodontics

http://www.roseman.edu/admissions-aeodo-nv/aeodo-tuition-and-fees

http://www.ohsu.edu/xd/education/sc...dents/upload/2014-15-Tuition-Fees_Final-5.pdf

http://cumc.columbia.edu/student/finaid/pdf/dnbgpg 1415Y1.pdf

http://dental.nyu.edu/academicprograms/advanced-education-programs/tuition.html

 

[W19]

This is very reasonable for ANY private dental school. 500k is what you will owe at graduation.

Why dental school is so competitive then if the average student will have that kind of debt? I remember seeing somewhere in the dental forum that starting salary for general dentist is usually between 90k-120k, and the average salary is 150k according to BLS, so how are they going to be able to pay that astronomical debt? Are they relying on government programs? Even for a 300k student loan, you are still talking about 2k-2.5k monthly payment for 20 years with no help from he government... I would not take on that kind of debt thinking that the government will bail me out...

 

[W19]

Yup. Its criminal, IMO. There are *SOME* programs that pay a stipend, but the vast majority charge hefty tuition.

http://www.dental.upenn.edu/academi...ams/orthodontic_residency_program/annual_fees

http://dental.tufts.edu/admissions/...tioncost-of-attendance/postgraduate-programs/

https://dentistry.usc.edu/programs/certificate/orthodontics/

http://hsdm.harvard.edu/academics/programs/orthodontics

http://www.roseman.edu/admissions-aeodo-nv/aeodo-tuition-and-fees

http://www.ohsu.edu/xd/education/sc...dents/upload/2014-15-Tuition-Fees_Final-5.pdf

http://cumc.columbia.edu/student/finaid/pdf/dnbgpg 1415Y1.pdf

http://dental.nyu.edu/academicprograms/advanced-education-programs/tuition.html

Lol... Some programs cost over 300k for residency. This is crazy. That makes me think that med school would still be competitive even if COA was over 500k; it seems like most people go blindly into these 'prestigious' professions without even thinking the financial ramification.

 

[Silent Cool]

Why dental school is so competitive then if the average student will have that kind of debt? I remember seeing somewhere in the dental forum that starting salary for general dentist is usually between 90k-120k, and the average salary is 150k according to BLS, so how are they going to be able to pay that astronomical debt? Are they relying on government programs? Even for a 300k student loan, you are still talking about 2k-2.5k monthly payment for 20 years with no help from he government... I would not take on that kind of debt thinking that the government will bail me out...

I believe the reason behind dentistry's rise in competitiveness in recent years is that the spots were reduced in the 1980s (after a massive expansion in the 1970s). As the population grew and the supply of dentists remained flat, their incomes surged into the early 2000s. People are entering it now not realizing that the economic circumstances that allowed high incomes no longer exist and that the supply of dentists is again expanding, similar to how it did in the 1970s. Still not as bad as pharmacy, though.

 

[W19]

I believe the reason behind dentistry's rise in competitiveness in recent years is that the spots were reduced in the 1980s (after a massive expansion in the 1970s). As the population grew and the supply of dentists remained flat, their incomes surged into the early 2000s. People are entering it now not realizing that the economic circumstances that allowed high incomes no longer exist and that the supply of dentists is again expanding, similar to how it did in the 1970s. Still not as bad as pharmacy, though.

It's worst than pharmacy IMO... The average COA for pharm is probably <200k and most pharmacists make 12ok+/year. That is a better ROI and the pharm job market is not that bad like most people would make you believe if you are willing to relocate... In fact, the people I know who graduated pharm school did not even have to move and they are making well over 130k+/year...

 

[DermViser]

It's worst than pharmacy IMO... The average COA for pharm is probably <200k and most pharmacists make 12ok+/year. That is a better ROI and the pharm job market is not that bad like most people would make you believe if you are willing to relocate... In fact, the people I know who graduated pharm school did not even have to move and they are making well over 130k+/year...

And probably a good lifestyle for that 130 K.

 

[W19]

And probably a good lifestyle for that 130 K.

Yep... 40 hrs/week... You can't beat that. One is a good friend of mine who only has less 140k student debt because she was able to work par time while in pharm school, which is something that most med/dental school students probably can't do.

 

[PL198]

Heh. I have friends that are nearly 1 mil in debt.

Marry rich, I guess

awkward but refreshing you're saying this because you're the suga momma

 

[PL198]

what if you did OMFS? you'd probably have over a million plus unless there's some special thing with interest for them being covered by programs or something like that due to their education situation

 

[fancymylotus]

awkward but refreshing you're saying this because you're the suga momma

Am I?

 

[PL198]

Am I?

if your SO is just starting to be a resident, then I'd say yes

 

[Lysinee]

HillaryCare in 2016 might fix everything, just a gut feeling.

Heh. I have friends that are nearly 1 mil in debt.

Marry rich, I guess

...or work like a dog.

 

[fancymylotus]

HillaryCare in 2016 might fix everything, just a gut feeling.





...or work like a dog.

Nope. Not happening. I can run a successful private practice or three and have time for my kids and my SO without working like crazy.

 

[fancymylotus]

I'll just need lots of retail therapy and Xanax to do it!

 

[b-rad12]

Why dental school is so competitive then if the average student will have that kind of debt? I remember seeing somewhere in the dental forum that starting salary for general dentist is usually between 90k-120k, and the average salary is 150k according to BLS, so how are they going to be able to pay that astronomical debt? Are they relying on government programs? Even for a 300k student loan, you are still talking about 2k-2.5k monthly payment for 20 years with no help from he government... I would not take on that kind of debt thinking that the government will bail me out...

I believe those numbers are not counting a vast majority of dentists who own their own practice.

 

[Silent Cool]

what if you did OMFS? you'd probably have over a million plus unless there's some special thing with interest for them being covered by programs or something like that due to their education situation

OMFS pays a stipend. The only time you would have to pay more is if you attend a 6-year OMFS program.

 

[67552931811]

Lol... Some programs cost over 300k for residency. This is crazy. That makes me think that med school would still be competitive even if COA was over 500k; it seems like most people go blindly into these 'prestigious' professions without even thinking the financial ramification.

I got a buddy whose dental school's COA is over 100k a year. I asked him what his plan was to make his debt as low as possible/ to pay it back, his response, "Ugh, I don't know, I haven't thought about it."; My reply, "😕."

 

[PL198]

OMFS pays a stipend. The only time you would have to pay more is if you attend a 6-year OMFS program.

ah so you're accepted into an OMFS program before you start the medical school portion?

 

[Silent Cool]

ah so you're accepted into an OMFS program before you start the medical school portion?

Yes. But approximately half of OMFS programs are 4-year programs with no medical school component.
For the 6-year, you need to pass the USMLE (generally after intern year) to advance to the 3rd and 4th years of medical school.

 

[Silent Cool]

I got a buddy whose dental school's COA is over 100k a year. I asked him what his plan was to make his debt as low as possible/ to pay it back, his response, "Ugh, I don't know, I haven't thought about it."; My reply, "😕."

Yup. That's the cost of just about every private dental school currently.

 

[ACSurgeon]

Can you or anyone else say a little more about this...like is it common and/or rising in use? Will we see more of this kind of thing in the future?

I'm not really an authority on this, just know that it exists. Not sure that it's a growing trend, but seems more alive than solo PP or even few partner PP. Negotiating with insurance companies and getting privileges at hospitals and covering overhead seems to be the biggest hurdle in solo or few partner PP.

Attendings are welcome to chime in...