While disruptions in healthcare are nothing new to physicians, the biggest disruption has been consolidation. The trend of local hospitals merging with large healthcare systems is affecting private practices rather significantly. 

Large healthcare systems negatively impact the flow of patient referrals that many private practices rely upon to stay in business. The change creates a competitive dynamic for independent practices – they either need to grow or discover a specific niche in their field. 

Consolidation for Hospitals and Insurers

And unfortunately, hospital growth is not the only thing that threatens private practices. Big insurance companies are also entering the provider side of healthcare. However, with less competition among insurance companies, there are lower payments for providers, yet higher premiums for consumers. 

Large insurance companies, such as UnitedHealth, have entered the provider space focusing on acquiring smaller, private practices. This is possible through billion-dollar divisions that zero in on specialty care practices. For example, UnitedHealth Group has it’s OptumCare division, which acquired Surgical Care Affiliates for $2.3 billion. As insurance groups expand their footprint, independent practices struggle to survive. 

Independent practices and private physicians are looking to private equity to grow and compete with these market changes. Fortunately, private equity firms are responding in a positive light and are fueling consolidation in certain niches with billions of dollars. 

The medical community shifts to value-based care with healthcare consolidations. Private funds are more and more interested in specialties where independent practices are the industry leaders, as they may be able to aid in consolidation. 

How this Affects Patients

The dangers of healthcare system consolidation include higher prices for patients, but not guaranteeing a higher level of care. There is a wide range in hospital prices across markets, hospitals within the same market, and even between patients within the same hospital. What this suggests is that hospitals are charging noncompetitive rates. 

This fluctuation in pricing makes patients feel uneasy and uncomfortable about their care. Nearly 31% of older Americans worry about being able to afford procedures and care at a facility closest to where they live and are able to easily get to. Of course, this is no surprise because hospital systems tend to charge more than independent practices. 

Patients often feel intimidated by large, expensive hospital systems and do not like feeling locked in to certain physicians and treatment types. While consolidation and mergers benefit the hospitals themselves as they turn to a value-based care model, patients don’t see it as a positive. 

Patients wants to have control over their healthcare and care deeply about their level of comfortability with a provider. A patient-focused model of care is more familiar to private physicians, some of whom have seen the same patients for decades. 

Independent practices need partners in growth who understand their level of attention to their patients and their desire to remain separate from hospitals’ monopolistic activities. Since private practices play such a large role in the future of the healthcare industry, it is important they receive the highest level of support and care. 

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