The Future of U.S. Independent Private Practice: Growing Optimism Amid Some Tough Challenges Ahead

A recent survey on the state of independent private practices reveals a mixed but promising outlook. On one hand, providers are increasingly optimistic about revenue growth and their ability to remain independent despite the evolving healthcare landscape. These folks are MAVERICKS. They want their own brand and not to be eclipsed by some huge hospital chain.

In 2024, 64% of practices reported expectations of increased revenue, a significant rise from 37% in 2023. That's despite the #CHANGEHEALTHCARE mess that occurred in February and is still not solved. This trend suggests that practices are becoming more adept at navigating the financial pressures and challenges posed by payment debacles, regulatory changes, insurance negotiations, and the growing costs to deliver care.

Moreover, 72% of providers expressed confidence in their ability to remain independent over the next 5 to 10 years, up from 56% just a year ago. To me, this is music to my ears. This growing optimism is likely driven by several factors, including innovative business models, greater control over patient care, and the ability to maintain personalized relationships with patients—key features of independent practice that many providers still value over joining larger health systems.

I have long been a supporter of, developer and consultant to IPAs, PHOs, and MSOs. ACOs not so much. And my ACO opinion has proven out time and time again. I went on record in print in my 2012 textbook that I was not a fan of ACOs and doubted their sustainability. But it's time for IPAs and MSOs to rise from the ashes of the 90s like a PHOENIX.

Leveraging IPAs and MSOs for Independent Practice Sustainability

While optimism is rising, independent practices must still contend with significant challenges to achieve long-term stability. This is where Independent Practice Associations (IPAs) and Management Services Organizations (MSOs), as discussed in both of my my internationally published, peer-reviewed books from 1997 and 2012, play a pivotal role in facilitating cost containment and practice management efficiency.

In smaller communities, where professional healthcare administrators may be in short supply, IPAs and MSOs provide an invaluable framework for addressing critical operational needs.

The problem with rekindling these business models is that most of the veteran administrators and Executive Directors I worked with then are retired and playing golf somewhere. I was a young'un back then. Now I'm soon ready to retire.

These two organizations allow practices to share complex overhead costs and benefit from economies of scale—without losing their clinical autonomy. I've developed more than 175 and been acting executive director until they were fully fledged. Some still exist today!

1. Cost Containment: IPAs and MSOs can help practices pool resources to negotiate better rates on key operational expenses, such as electronic health record (EHR) systems, billing software, malpractice insurance, and medical supplies. By centralizing these functions, independent practices can dramatically reduce their individual cost burdens, creating a more sustainable financial model for long-term success. Set the supply chain up as JIT, to get better buying power.
2. Practice Management Efficiency: Many independent practices lack the administrative expertise or resources to navigate the growing complexity of healthcare regulations, payer negotiations, and compliance requirements. MSOs can step in to handle critical management functions, such as human resources, billing and coding, prior authorizations, and payer contracting. This enables physicians to focus on patient care while relying on the MSO to manage day-to-day operational tasks. Just make sure the model is "for profit" and "economically integrated". A messenger model MSO is a waste of time, capital and opportunity. There's no negotiation clout in them. That was my biggest complaint about ACOs. And another thing. I've studied and consulted on failed SUPERGROUPS. There are some excellent examples of success here and there, but this is not the right model for all physicians and all MSOs.
3. Shared Marketing and Payer Contracting: One of the most significant benefits of IPAs is their ability to organize co-op marketing efforts and negotiate better terms with insurance payers. For independent practices, negotiating individually with payers can be time-consuming and often results in unfavorable terms. However, when practices band together through an IPA, they can achieve stronger collective bargaining power. This allows them to negotiate better reimbursement rates and shared risk contracts, which may otherwise be out of reach.

Unlike with hospital owned practices, in the IPA and MSO model, you don't have to forego brand differentiation, recognition or be eclipsed by the behemoth health system up the road. There is a silver lining in that. The hospitals and health systems that are paying docs on payroll won't be marketing in the community. The keep their docs in the dark like a mushroom. And rightfully so. Those docs want 15 minute breaks, an hour for lunch, benefits, a salary, and management. They want to come in, put on a lab coat see patients and go home. They want to go home at five. Fine. Be an employee. Not everyone wants that. Those who are more entrepreneurial are ready to take on my risk for a greater reward. Those are my guys and gals. They develop a reputation and brand, and fill niches rather than be part of the woodwork and "expendable".

1. Co-Op Marketing Initiatives: In small communities where independent practices struggle to compete with larger healthcare systems, cooperative marketing through an IPA or MSO can help level the playing field. Shared branding, advertising campaigns, and patient outreach initiatives become more effective and affordable when funded by multiple practices. This not only helps grow patient volumes but also strengthens the reputation of the collective network, benefitting all members -- and the community.

A Crucial Tool for Small Communities

These models are particularly beneficial for smaller or rural communities, where resources and administrative expertise may be scarce. The shortage of seasoned healthcare administrators in these regions places additional stress on independent providers, but IPAs and MSOs offer a collaborative solution. By centralizing administrative talent and business functions, independent practices in these areas can remain competitive and profitable while delivering high-quality care.

I actually launched a new IPA and MSO in a small town where I currently reside. It's doing well. It is a niche IPA for personal injury medical care services. I own it outright. The providers are subcontractors to me. It is well rounded and includes, like Noah's Ark, providers in every specialty I need. I also have contracts with all the ancillaries I need. I serve as case manager, for now. The MSO acts as biller, marketer, does the business development to attorneys and referring docs. Each practice does their own thing with their own staff and their own EMR. They bill ME at the MSO and are paid cash either in advance or within 10 days of service. No liens, no lien purchasers, no waiting years to get paid, no bill reductions after the long wait. The MSO stays in the shadows. It doesn't need to be seen, heard, or spotlighted. It works, we've managed several cases and we also manage medical travel cases from a 9 state radius and Canada. What's comical is we all make money and have no hassles. Meanwhile, the local competitors won't take personal injury cases, are afraid of them, and are jealous as hell of what's going on here. But they are B list and I didn't invite them for a berth on the ark. I don't need to.

Also, how big does the MSO have to be? I have run many startup MSOs with a staff of 3. It has to be the right 3 people or they must be trained. I don't need a billing service for this. I don't need collection teams, postage, printing, or other wasteful expenses. So that means that the MSO does not have to charge a hefty fee to exist or serve.

In conclusion, the growing optimism among independent practices about their ability to thrive is encouraging. But to fully realize this potential, embracing the support systems provided by IPAs and MSOs is key. These organizations help practices remain independent while offering solutions to the challenges of cost containment, practice management, and payer contracting—ensuring the viability of independent private practice well into the future.