Stopping the Sky from Falling: Why What is Happening to Physicians Matters to Audiology

The healthcare delivery system is rapidly changing. I think it is very important for audiologists to better understand these market changes and why it is important for audiology practices, care delivery, and pricing models to advance before it is too late. Practice consolidation, health system acquisition and private equity engagement is coming to every healthcare discipline, including physical therapy, occupational therapy, chiropractic medicine, dentistry, and optometry. The only difference is that in audiology most of the consolidation is due to manufacturer and private equity purchases rather than large service organizations or healthcare systems. This type of consolidation is, in my opinion, worse than what we are seeing in other professions in that is creates an unequal wholesale pricing and managed care (because the hearing aid manufacturer owns the hearing benefit plan) landscape.

Per data from the American Medical Association and Healthcare Dive:

• “The share of physicians working in private practices, or those wholly-owned by physicians, fell by 13% between 2012 and 2022 — from 60.1% to 46.7%, according to a survey released this week from the American Medical Association”. 
• ‘The percentage of physicians working in practices at least partially owned by a hospital or health system increased by almost 8% during that time frame, while the share of physicians working in hospitals increased by 4%’.
• ‘Four out of five physicians surveyed who sold their practice cited a need to negotiate higher payment rates with payers as a main driver for their decision, while others pointed to a need to manage administrative and regulatory requirements’.
• ‘Studies have found that consolidation can lead to decreased physician earnings and increased costs for patients seeking care’ (as we see in our own healthcare costs).
• ‘In 2021, the Physician Advocacy Institute estimated nearly 70% of all U.S. physicians were employed by hospitals or corporate entities’.
• In Family Medicine, for example, the proportion of family physicians reporting working in practices with 5 or fewer providers declined from 15% to 11% for solo and 37% to 34% for small (2 to 5 providers) practices from 2014 to 2018. I am confident that this was even more exacerbated by COVID, given that is estimated that 6% of physicians left medicine in 2021 and 2022.
• Per data from the Kaiser Family Foundation:
• Across almost every dimension we examine, the share of physicians accepting new Medicare patients is similar to the share accepting new patients with private insurance, with the only exception being the share of obstetricians and gynecologists accepting new Medicare patients (93%) is somewhat lower than the share accepting new privately insured patients (99%).
• Physicians accepting new patients with private insurance will not be participating in every plan’s network, and similarly will not be in every Medicare Advantage plan network. Most non-pediatric office-based physicians accept new Medicare patients (89%), as well as new private insurance patients (91%).
• In 2011 and 2019, 88% and 89% of non-pediatric office-based physicians accepted new Medicare patients, respectively, with modest fluctuations in the years in between. The share accepting new patients with private insurance increased by 10 percentage points over the period, rising from 81% in 2011 to 91% in 2019, a share similar to Medicare.
• Across most specialties, the majority of physicians (at least 80%) accept new patients with Medicare and private insurance. Almost all surgical specialists accept new Medicare and privately insured patients (96% for both). Among primary care physicians the rates are lower, but comparable for new patients with Medicare (83%) and private insurance (86%), similar to the share of physicians in other medical specialties accepting new Medicare (87%) and privately-insured (88%) patients. The share of physicians accepting new patients is lowest among psychiatrists with 60% accepting new Medicare patients and 59% accepting new privately insured patients.
• In 23 states, at least 90% of all non-pediatric office-based physicians accepted new Medicare patients in 2015-2017. Across states, the share of physicians accepting new Medicare patients ranged from a high of 95% in three states (Iowa, Minnesota, and Pennsylvania) to a low of 76% in the District of Columbia, similar to the range across states for privately insured patients.
• A very small (1%) share of non-pediatric physicians formally opted-out of the Medicare program in 2022, with psychiatrists accounting for a disproportionate share of physicians opting-out. In all states except for Alaska and Colorado, less than 2% of physicians have opted-out of Medicare.
• It is also estimated that 1 to 2.5% of physicians are in concierge care models, with an estimated growth to 10% by 2030.

• Given these changes in the healthcare landscape, I believe audiologists should begin considering the following to proactively prepare for hearing benefit plan expansion, increased competition from manufacturer owned clinics, direct to consumer and big box retailer, further industry consolidation, and greater private equity involvement:

• Educate yourselves (on just your staff) on business and revenue cycle. Lots of the problems I encounter with my audiology clients can be solved with training and knowledge. Many local and online colleges (seek out specialized certificate programs in entrepreneurship or small business management), the Small Business Administration, and even my own, Audiology Resources, offers coursework to make you a more knowledgeable, confident practice owner.
• Know the true value of your business to a potential partner or purchaser. Your accountant can be invaluable in helping you determine what your business is actually worth. Do not solely depend on manufacturers for this type of valuation.
• Be cautious of manufacturer contracts, loans, and investment without the perusal of your own healthcare attorney. Some of these relationships can be legally questionable and can make selling or merging your practice more difficult.
• Determine your personal, professional, and financial goals for yourself and your business.
• Carefully evaluate the role of managed care in your practice. All managed care is not good or bad and each plan needs to be individually evaluated for its role and relationship to physician referrals (because, as I noted above, most physicians are in-network and, as such, need to be able to refer to other in-network providers), new patient acquisition, patient retention, revenue, and accounts receivable.
• Consider mergers and/or acquisitions with other private practice audiologists and dispensers in your area (this is common in medicine) to increase the value, scope and reach of your practices, increase your negotiating power with managed care entities and decrease your wholesale costs with manufacturers. This will help you combat manufacturer, private equity and health system consolidation and maintain your independence.
• Create more value for your patients (and, as a result, more value for your practice) through practicing to top of license, top of scope, and top of research evidence.
• Explore alternative practice models, such as telehealth and concierge care.

As I continue to state, there are many opportunities and unmet patient needs in audiology. We just have to consider what is happening with other healthcare professions and create a pathway that enhances the role of audiology private practice in the hearing healthcare ecosystem. If we do not evolve our practice ownership, scope, care, delivery, and pricing models now, we are ripe for disruption down the line and being Chicken Little is becoming exhausting.