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Physician Marketing Dangers and Opportunities Grow as Doctor Employment Shifts 77%

By Stewart Gandolf, Chief Executive Officer

Animated 3D stick figure sitting down in frustration, leaning on giant red question mark The paramount question that nearly all physicians have been asking themselves is, "Where do I want to work?" Just six words, but it's an extremely complicated question.

As the turbulence of healthcare reform forces change, almost every doctor in the nation is pondering some version of a question like this one and wondering about their future. Self-employment? Form, join or leave a group medical practice? Relocate? Become an employee of a hospital or health system?

And, once their decision has been made, healthcare providers can consider the opportunities and dangers that remain. How has the competitive landscape changed? What assumptions and constants have disappeared? And what adjustments are needed in the marketing plan to remain competitive and survive?

Here are some of the big-picture numbers that are driving change in healthcare today. It's a picture of change on a large scale.

Healthcare Mergers and Acquisition activity is at a record pace.

"Mergers and acquisitions in the healthcare industry surged in the second quarter of 2011," reports HealthcareLeaders Media, "setting a pace to break all previous records in the sector."

Within this sector, "$7.3 billion was accounted to mergers and acquisitions of providers, including hospitals ($3.5 billion), managed care ($1.6 billion), long-term care ($985 million), and physician practices ($416 million)." Observers believe the pace is accelerating as hospitals build their accountable care organizations.

Physicians are leaving private practices for health system employment.

One of the main dynamics in this picture, according to a new report from Accenture, is that "community-based physicians-those previously in private groups-are increasingly selling their practices or seeking employment directly with healthcare systems, and hospitals are aggressively acquiring physicians to remain competitive in the industry."

"By 2013, less than a third of physicians will be in private practice, electing instead for employment with larger health systems," comments amednew.com. "The rate of independent physicians employed by health systems will grow by an annual rate of five percent over three years," according to the report.

"Burdened by administrative responsibilities of their private practices, physicians are increasingly attracted to the resources that health systems offer, as well as manageable work weeks and job stability," notes the report."

Small practices are adapting to survive.

Data released last month by the Medical Group Management Association (MGMA) indicates that "65 percent of established physicians hired, and 49 percent of those finishing residencies, landed positions in hospital-based practices in 2009. Industry analysts agree that solo and small practices are becoming less common, and more physicians are becoming employed by hospitals and large groups."

The dangers in physician marketing are significant.

We agree in general with the Accenture report that concludes, "how the physician employment trend and its implications will unfold remains to be seen." But clearly, for the solo and small group providers there will be challenges and dangers. Some of these include:

  • The primary competition is (or will become) the hospitals and/or health systems. The hospital-based provider system is a larger business entity, which in many instances will have significant marketing and business development resources.
  • As physicians migrate to hospital employment, the report suggests that patients will increasingly move to large health systems, as opposed to the current trend of visiting doctors in private, small practice settings.
  • Specialists and other providers who rely on professional referrals will experience changes in once-reliable sources that have shifted their allegiances along with their employment.
  • Physicians who remain in small groups or solo practice will need to be more aggressive in their marketing activities in order to survive the changes and remain independent.

The opportunities are also are significant.

  • As this trend continues, there will be fewer physician practices in direct, toe-to-toe competition.
  • The public is long accustomed to selecting a healthcare provider in a small, private practice setting. Highly personalized care, a close relationship with physician and staff, and a smaller, more intimate facility appeal strongly to a large number of prospective patients.
  • Medical practice marketing is highly manageable and affordable in a solo or small group setting. The Return-on-Investment accrues directly to the practitioners, partners or owners.
  • Physician marketing and advertising can enhance the professional reputation of an individual doctor (or small group of doctors) rather than a large healthcare facility or institution.
  • Some professional specialties-such as cardiovascular care, radiology, cancer care and orthopedics-can compete effectively as stand-alone practices or service providers.

Regardless of where you are in the decision process, we can help you understand your options in a rapidly changing healthcare environment and help you respond quickly to opportunities in the marketplace.

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