Practice Size - Is Bigger Better?

Recent studies suggest that larger physician groups not only have advantages over smaller groups and solo practices when it comes to negotiating contracts but they may also offer better quality of care. According to a report in American Medical News, larger practices are more likely to result in the “public practice of medicine”, where peer review and pressure improves the quality of the medical care delivered.

A Center for Studying Health System Change report found that financial pressures are resulting in the migration of doctors from smaller group settings to larger ones.

On the other end of the spectrum are physicians who claim that a “lean and mean” model of small or solo practices delivers a superior product in a more cost-effective manner. One family physician left a six-physician practice to go it alone. With one full-time nurse, he answers the phone himself, and credits his very low overhead for a higher net income than he had practicing in a larger group.

As reimbursements continue to decline and expenses continue to climb, it is most likely the small practices which will suffer the most - more so than larger groups and perhaps the solo doctor with the ascetic, bare-bones model of practicing medicine. Experts in the industry talk about a “sweet spot” for the number of physicians in a group (which varies according to specialty). Up to a certain size, there are realized gains from economies of scale. Get too large, however, and inefficiencies and bureaucracy start to creep in.