BUSINESS MONDAY: Independent healthcare specialists grapple with business pressures

David Dawson has had a very busy year.

As a psychotherapist and licensed independent clinical social worker, his high patient load makes sense given recent rises in anxiety and depression, suicidal ideation, substance abuse, and divorce. According to the National Council for Behavioral Health, 52 percent of its members have seen an increase in the demand for services and 65 percent have had to cancel, reschedule, or turn away patients.

But, for Dawson, he was seeing an overwhelming volume of referrals before the pandemic. “On average, I’d say I turn away a dozen people a week,” he said. A self-employed therapist, he has not been able to manage a waitlist, nor does he want to. He would rather give patients the opportunity to find services quickly. “If I can’t schedule you in three to four weeks, I simply cannot take you on,” he said.

Given his experiences and conversations with other clinicians in the region, Dawson points to a shortage of therapists as the primary culprit and believes that this is the case with other healthcare providers including primary care physicians and specialists.

Matt Kitsos, press secretary for the Massachusetts Health Policy Commission, is unaware of a comprehensive statewide database of all healthcare practitioners by ownership and specialty—the commission only captures information about hospitals or physician organizations with at least $25 million annually in net patient service revenue. However, labor market information available from the Massachusetts Department of Unemployment Assistance’s Economic Research Department does, indeed, paint a picture of provider shortages. In Berkshire County from 2010 to 2019:

• The number of physician offices decreased by 27.5 percent Doctors of Medicine (M.D.) and Doctors of Osteopathy (D.O.) only, which can include primary care physicians, neurologists, oncologists, dermatologists, psychiatrists, and surgeons
• The number of general or specialist dentist offices decreased by 17.2 percent
• The number of other health practitioners’ offices increased by 13.7 percent Those with other medical degrees or licenses which can Include chiropractors; optometrists; psychologists; physical, occupational and speech therapists; podiatrists; acupuncturists; midwives; and nurses

Employment data within these categories is slightly more varied. Average monthly employment in physicians’ offices decreased 22.6 percent in this same period, while dentist offices and offices of other healthcare practitioners saw increases of 5.5 percent and 28.1 percent, respectively. This means that the number and size of physicians’ offices are shrinking, while the size of dentists and others’ offices is growing.

“What’s happened is that, over the past 20 to 30 years, there has been a consolidation of medical services across the country,” said David Elpern, M.D., a dermatologist based in Williamstown who has been practicing independently for 27 years. Hospital corporations, large non-profit health systems, and private equity firms—think Aspen Dental—buy practices for economies of scale, leading to fewer privately-owned offices.

“Medicine is now a commodity because of market share,” he said.

In fact, business ownership by physicians in the U.S. has declined by 30 percent over the past 35 years and physicians are more likely to work as employees, according to the American Medical Association. Physician employees may make more money, have reliable income, and be able to negotiate salary increases—which can be a real draw. The Association of American Medical Colleges found that, in 2012, four years of medical school can cost more than $200,000 at most institutions, with students averaging $170,000 in debt.

“A big group can hire you and pay $250,000 to $400,000 per year,” said Elpern. “But after a few years, you have to generate that income yourself. You don’t want your doctor to feel that his responsibility is to the company instead of the patient.”

While some practitioners do well financially, it’s not always obvious what is required to maintain a medical business. Those who choose to be self-employed or operate their own office struggle with the same overhead that other business owners have.

Dr. Sarah Martinelli worked hard to renovate and outfit her new endodontic office, Shire City Endo in Pittsfield, which celebrated its grand opening on Monday, March 29.

“It’s been very expensive in general,” she said. “You have to take on a lot.” In addition to startup costs and equipment purchases, independent practitioners have to pay for staff, rent or mortgage, utilities, medical supplies, electronic records systems, liability and other insurance, and higher self-employment tax. As expenses mount, it can be difficult to make a profit.

For Martinelli, the autonomy is worth the effort. Prior to opening Shire City Endo, she worked at Western Mass Endo, a group practice. Several years ago, she said, partners sold 51 percent of the company to a private equity firm and became a branch of Affinity Dental Management, an umbrella corporation that employs 400 people across Massachusetts, New York, Connecticut, and Vermont. Now, as a business owner, Martinelli has control over everything from the physical space to the website and fee schedule, which she keeps relatively low because she doesn’t accept insurance.

“The whole push for this office is to keep things as simple and straightforward as possible,” she said. “There are no hidden fees or confusion about payment, and there’s a lot of that in the dental world.”

Shire City Endo will submit claims as a courtesy—in which case, patients will receive the reimbursement directly—but they expect full payment up front via cash or CareCredit, a third-party financing option. Martinelli says this model creates a better course of treatment for the patient and a more predictable cash flow for her.

Some independent practitioners are trying to expand the insurance plans they accept in order to treat more patients and provide additional services. Dr. Katherine Mallory, a psychiatrist who specializes in children and families, has a full schedule of clients and a growing waitlist of over 100 names. Although she said she left Berkshire Medical Center in 2018 to establish her own office in order to spend more time with clients, she stopped providing individual therapy because she is overbooked.

Mallory offers hour-long group therapy sessions that allow her to see multiple clients at a time, but she said people still request one-on-one sessions. Her plan is to hire a nurse practitioner and a therapist to work with her, but she is struggling to get on a group insurance panel, which requires a Type 2 National Provider Identifier (NPI).

“People don’t understand how difficult it is to get paneled,” she said. “It can take months to get a different NPI, and another couple of months until you can [bring someone on board]. It’s a lot of bureaucracy, and it’s difficult and frustrating for clients to wait.”

Unlike Shire City Endo, Mallory Psychiatry is not a fee-for-service practice. She accepts Blue Cross Blue Shield and Cigna insurance plans, although discrepancies in reimbursement rates create cash flow issues.

“Cigna pays me half of what Blue Cross does, especially for therapy,” she said. “It’s more cost effective for insurance companies not to pay psychiatrists for therapy. They incentivize me to write prescriptions because I’m an M.D. If I was taking more Cigna clients, that would be a real strain.” Cigna did not respond to a request for comment.

Given these challenges, how can independent practitioners maintain a private practice? It’s daunting, Elpern admits. You have to limit the number of patients you see, prioritize the work over income, and not expect to make a big salary.

“That’s not what I signed up for when I went to medical school,” he said. “I don’t look at it as a business—this is the biggest problem with medical care.”