Over the weekend, I read an interesting article in the New York Times on doctors giving up private practices in America. It seems that the number of physician-owned practices has declined from a relatively stable rate of 70% to below 50% in the course of three years. Who’s buying these practices? Hospitals and healthcare systems (also known as an Integrated Delivery System [IDS] or Integrated Delivery Network [IDN]).

I’m not surprised by the trend. Indeed, I’ve witnessed it firsthand. A couple of years ago, my primary care physician sold her ‘mom and pop’ practice to a large multi-facility, multi-specialty ‘big medicine’ corporation. However, I was surprised by the rate of change: a decline of 20% in three years. 

Clearly, this has wide-ranging implications for the future of health care system. As in any industry, ‘vertical integrations’ and ‘supplier consolidations’ alter its dynamics. If it’s not already done so, it will give providers more power in negotiating with private insurance payers. It could also reshape the relationship between providers and patients, thereby making it less personal and more transactional (a trend we’ve already seen with the rise of the ‘McClinic’ at pharmacies, grocery stores, shopping malls, etc.).

I suspect it will also have implications for health information technology (HIT). Given a shared pool of resources (both financial and human capital), it is reasonable to expect an increase to HIT adoption rates, as well as a general trend toward more robust and complex enterprise-class solutions. As a result, I anticipate that HIT vendors—especially those selling enterprise software to manage practices and electronic medical records—will continue to consolidate as well.          

For more information, I’d recommend visiting the MGMA web site, which includes a series of interesting blog posts on the topic of selling a private practice to an IDS.