Last month, Oscar Center, a healthcare facility built by Oscar health insurance, opened in Brooklyn - all appointments were filled up immediately.

A partnership between Mount Sinai physicians and Oscar health insurance, the healthcare centre provides a "simplified and a futuristic doctor visit." Health information of all patients are stored in one "easy to use and easily accessible place" and no clipboards or receptionists are present. The centre also serves as a doctor's office and a community wellness centre, with yoga rooms and community meeting rooms.

The USD2 billion health insurance start-up's first foray into physical healthcare spaces is the epitome of exactly what is driving small practices away.

The "work shop" model

Small practices previously practiced in a "work shop" model, treating the hospital as an extension of their offices with physicians overseeing clinical matters at individual patient level, while administrators oversaw hospital operations to meet the needs at the community level.

The hospital provided a place to treat patients, advanced technology and support staff to care for them, and in return physicians would serve in non-paid medical staff positions and hospital committees, advising on medical staff structure and medical staff policies to supervise hospital standards.

However in the beginning of 1990s, the integration of hospitals with physicians began, including joint venture, physician-hospital organisations and physician practices were purchased by hospitals. It was believed that managed care, whereby insurers negotiated with a limited panel of hospitals and physicians, would be the new model of coverage.

Factors responsible for the decline in small practices

The market dynamics of the healthcare industry are changing drastically, especially in recent years. Small practices are conforming to the pressure to grow in order to compete with one another, as well as to strengthen their negotiating position with insurers.

These pressures in turn create an arms-race mentality, leading to larger consolidations, larger practices and also the long-standing trends of hospitals absorbing individual practices to boost their position.

Public and private actions also create more administrative burdens leading to further decline of small practices. Employers, insurers and governments are requiring levels of transparency about cost and quality, making it difficult for small groups and solo practitioners to manage as they often lack the infrastructure needed to collect, manage and report data, especially in the age of digitalised health information.

Care coordination also required a higher level of organisation and new personnel, which small practices cannot financially afford. Patients and insurers also demand for seamless, integrated care, which larger practices are able to offer.

The rise in large practices also reflect what is known as a "cohort effect" as younger doctors are 2.5 times less likely than older doctors to be in solo practice, therefore when solo practitioners, they are not being replaced.

Younger physicians also prefer larger practices as they offer a more predictable income and work-life balance they can offer. Some are put off by the business and entrepreneurial responsibilities that solo practices require.

How detrimental is the loss of small practices?

There is mixed evidence on whether quality of patient care is better in large or small practices. Larger practices adopt quality improvement strategies, such as health information technology, multidisciplinary care teams, and after-hours access.

But a study showed that patients of solo physicians and small practices have lower rates of preventable readmissions compared to the larger practices. There is also the value of personal relationships that smaller settings can cultivate.

"We physicians are able to sustain long-term relationships with our patients - and actually know them as people," said Dr. Henry Hochberg, a family physician in Edmonds, US. "The reality is that medicine has become largely corporate and depersonalised."

"It is the deep relationships that will be the major casualty of the disappearance of small practices," he adds.

Small practices will always be part of the healthcare landscape as they are likely to remain common in rural areas, and some patients and doctors will still prefer them.

The only way small practices can adapt to the formal and informal reforms is through the development of physician networks - enabling them to share resources -, health information technology, technical support and payment models that include upfront grants or loans for practices to invest in necessary infrastructure. MIMS

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