"I would not agree that grouping does not save economies of scale. If you want to be in managed care on a risk basis, you need a big bankroll that can only come from large groups," he says. Korneluk responds that doctors need only be associated with a large contracting group.
Bigger is not better in terms of numbers of doctors.
Korneluk says he conducted studies in the 1970s while employed by the American Medical Association that showed soloists can be very profitable. Dyads-two-doctor practices-are most profitable, three are less successful, four and five even less successful. When you get to six-physician groups, you're as profitable as when you were one. But the more doctors added, the lower the morale.
"Groups beyond six break down," Korneluk points out. "Six can fit in a minivan, six can sit around a table, there are six cokes in a six-pack and you can design a building of one floor with six doctors. More than that and you have to add floors."
Parshall disagrees. "We've always told doctors they need to develop large groups to gain market share," he says.
Centralizing billing and collections doesn't improve collections.
"Many large consulting firms of a decade ago recommended centralization for economies of scale," Hess says. "Costs actually go up, because when you centralize you require a highly skilled individual to run the organization. You need computer systems but only a few people can operate them. There's not enough time to do individual account receivables so there's a decrease in collections. The level of connectivity or commitment goes down, so now you have substantial decreases in staff morale. There's an additional barrier of communication when staff don't report to the doctor and there's an overall lack of accountability and responsibility, so the blame thing kicks in.
"While centralization works well in hospitals, it doesn't work well in physician practice," Hess says. "And, we found centralizing reduces productivity by as much as 20 percent. There's also a higher level of dissatisfaction among patients and physicians.
Page 1 | Page 2 | Page 3 | Page 4 | Page 5 |
