Dan Gorenstein (DG): Independent physician practices are disappearing. 20 years ago, most doctors worked for themselves.  

But two decades of buying sprees by hospitals, retail pharmacy chains, insurers and private equity groups, have now left just a quarter on their own.

Gwen O’Keefe (GO): I think the ability to practice this kind of medicine is going away.

DG: Today, what happens when physicians no longer run their own shops and one doc debates whether to stay after her practice was bought up by a huge health insurer.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein, this is Tradeoffs. 

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DG: Oregon primary care doctor Gwen O’Keefe faced a tough choice.

She had been professionally satisfied – working in an independent practice in Western Oregon owned by physicians. But in March, UnitedHealth Group, the nation’s largest insurance company, bought out the office.

All of a sudden, Gwen had to weigh whether to become one of 400,000 employees at this Fortune 5 firm. Here to walk us through Gwen’s choice – and take a closer look at the loss of independent practices nationwide – is reporter producer Alex Olgin.’

Hi Alex. 

Alex Olgin (AO): I’m doing well Dan, Hi.  

DG: So Alex, Gwen’s dilemma is obviously important to her and at the same time it captures this shifting landscape where we are seeing fewer and fewer independent docs in business for themselves.

What happened when you went to meet with her?

AO: So I drove to her place about an hour south of Portland last month.

Sfx: car, pulling up, etc

AO: I pulled up to a cute yellow three-bedroom home on a quiet street. Gardening gloves, shovels and soil were strewn on the back patio. 

And you know, Gwen is 57. She and her husband came here three years ago with the idea that this would be her last stop in her career as a doctor. 

GO: I was looking for a smaller town. Like a college town. My daughter moved here. My parents are here, my sister’s here. So I have a lot of roots in the state…And I was looking forward to getting back to working with a team of internists doing primary care in a non corporate medicine clinic.

AO: And, Dan, for Gwen, working for the 100-provider Corvallis Clinic seemed like a dream job.

GO: I really wanted the opportunity to go back being able to focus on the the two joys of internal medicine for me, which is the diagnostic dilemmas and figuring out the mystery, and developing long time relationships with patients and being able to help them in their health care journeys.

AO: But 18 months after she started, the doctors who owned the clinic sold it to Optum. For Gwen that would likely mean more patients and shorter appointments. 

At this stage in her career Gwen liked taking time with patients, particularly her elderly ones. Looking them in the eye. Going slow. 

GO: The average age of my patients was in their mid 70s. I had a lot of patients up in the 80s, 90s and several centenarians. And in a geriatric population, there’s a lot going on. So you need the time and the energy to be able to explain things to people 

AO: When Gwen thinks about the kind of medicine she wants to practice, one case jumps to mind. A woman in her early 60s came into her office back in 2022. We’re going to call her Sarah.

She was struggling to breathe. A previous doctor blamed the breathing on Sarah’s weight. But the whole diagnosis seemed off. Pretty quickly Gwen realized this was one of those medical mysteries she was good at helping her patients solve. 

GO: When she first came to see me and I was perplexed by her presentation, I went through a whole bunch of questions, then did an exam and then developed my analysis plan of what type of testing were we going to do to try to figure this out? 

AO: It took 3 months, but they figured it out. This is how Gwen wants to work. Take her time, figure things out. Like I said before, go slow. and actually have the time to dig in and help someone. 

AO: With Optum about to take over, she figured those days would be done. That said, she still was debating whether to leave there was a lot to like about the lives they’d set up for themselves in Corvallis. 

Here’s the reality, Dan, over the last 20 years, doctors like Gwen  spend less and less time as ‘disease detectives’ and more time on paperwork, more time calling insurers. That’s the last thing Gwen wants it’s the last thing lots of docs want. But more administrative duties and rapid fire patient appointments is increasingly the norm for lots of U.S. physicians.

DG: I’ve certainly heard lots of docs tell me about these sorts of headaches. So let’s go a layer deeper. 

If physicians don’t want to practice this kind of ‘corporate medicine’ people are probably wondering then why are physicians selling their practices to hospitals, insurers and all the rest? 

AO: Right. Well, in a survey, doctors told the American Medical Association there are three big reasons they are getting out of business for themselves.  

First small practices get paid less than big ones. Second, all that time spent dealing with insurance approvals and other administrative stuff. And third, it is expensive to buy electronic health records, and hire all the staff to run a practice. 

DG: A lot of this, it sounds like, ultimately, comes down to money. 

AO: It does. And, you know, lots of doctors end up selling to hospital systems. 

More than 50% of physicians in the country now work for big hospitals. 

And you know who, Dan, is actually the biggest boss, the single largest employer of doctors in the country – is Optum. The company that just bought the practice where Gwen works in Western Oregon.  

DG: And again Optum is the health care arm of the largest insurer in the country, United. 

AO: Right. The company now employs or affiliates with 90,000 doctors. That’s 1 in 10 of all physicians in the country. 

Put it altogether, close to 80% of all doctors – work for hospitals, insurers, retailers or private equity firms. This stat comes from a report by the Physicians Advocacy Institute and consulting firm Avalere Health. 

DG: Wow, I didn’t know that. So, Alex, what do we know about what happens when these independent practices get gobbled up by bigger companies? Basically when there’s this consolidation?  

AO: So, Dan, studies have found that typically prices go up when hospitals or private equity groups buy practices. To give a sense of the scale, one study found prices rose 14% after hospitals bought physician groups.  

Which makes sense. Remember independent practices say they are joining these bigger groups to get paid more by insurance companies. So that lines up. 

DG: That does line up. And, also what happens to patients like the ones Gwen sees when these practices get sold. 

AO: The evidence on this is really limited. 

Basically, the clearest thing we can say as of now is that there’s no evidence to suggest it results in better health for people.

DG: Ok, Alex. Let’s slow down for a second. A lot of moving parts. 

You’re saying there’s evidence that shows when independent practices get scooped up by hospitals – prices go up. 

And you’re saying when we see this consolidation there’s not comprehensive evidence that the quality of care improves. 

AO: Correct. 

DG: And what about when you throw insurers into the mix? What about cost and quality? 

AO: Dan unfortunately we really don’t know how cost or quality changes. Optum – which buys up more practices than any other insurer – is secretive about these deals making it hard to study.

DG: Thanks for breaking that all down for us, Alex. 

AO: You got it. 

DG: Alright, after the break why insurers are buying up these practices and Gwen makes a final call whether to stay in Corvallis and work for Optum or pull up stakes. 

MIDROLL

DG: Welcome back. Today we’re talking about how physician practices owned by doctors have been scooped up by hospitals, insurers and others over the last few decades.

Now more than three quarters of docs in the U.S. are employees. 

And based on the evidence – this consolidation means prices go up and there’s no clear benefit in terms of patient health.

Helping us understand the consequences of this trend is reporter producer Alex Olgin.

So Alex, it seems like there’s a lot of downside to these deals.

AO: For sure. 

Dan, this consolidation has been a slow burn.

Most of these practice purchases are small. They usually fly under the radar – of patients and even regulators.   

University of Chicago economist Thomas Wollmann came up with a great term for this – he calls it stealth consolidation. 

Stealth because almost all of these deals are so small they’re rarely reported to federal regulators. And almost never investigated for any antitrust issues. 

DG: So it’s my understanding these deals are getting some more scrutiny. Is that right?  

AO: That’s right Dan. Federal officials are starting to pay more attention here and really states are becoming more active in reviewing these smaller deals. 

In fact Oregon is one of a handful of states, along with Massachusetts and New York, state officials there now need to sign off.

And actually, the Optum purchase of Corvallis Clinic, where Gwen works, caused quite a stir here.

Patients sent in more than 300 letters to state officials asking them to block the deal. 

They were worried because of what happened to another practice in Oregon, this one in Eugene. 

DG: What happened in Eugene? 

AO: Well Optum bought the Oregon Medical Group in 2020. Since then it’s been hemorrhaging doctors. 

More than 30 have left. And now the group is so short-staffed they’re sending letters telling people they need to find different doctors.

Here’s long time patient Geoffrey Malecha giving an interview to the local TV station KEZI. 

KEZI: “I’m 77 and my wife is 77. We’re close to needing a lot of care and all of a sudden we’re at the curb.” 

AO: And Dan, it’s unclear how many people this is happening to. 

This patient crisis in Eugene, this is the kind of thing Gwen is worried  about happening in her own clinic about 50 miles North in Corvallis. 

Will so many doctors leave the Corvallis Clinic that her patients will struggle to get care?

But Gwen worries about her patients. Will so many doctors leave the Corvallis Clinic that her patients will struggle to get care?

DG: Right is she worried about her and her colleagues abandoning her patients and leaving them high and dry.  

AO: Yea she is, that’s one of the reasons she’s really thinking about staying.  

GO: People are really struggling. There’s not a lot of good options for them. And it makes me really sad. 

AO: On the other hand, staying could  have meant a new role. Basically, encouraging doctors to comb through patient records and document every potential illness to get more money from Medicare. The program that treats 66 million older Americans and people with disabilities.   

AO: Gwen did this in an old job. And she hated it. 

GO: It makes life as a doctor absolutely miserable. And my gut reaction to that was so emphatic of, oh my God, no way can I be the face of that. I cannot do that.

AO: This kind of work often goes by the name upcoding.

And, the federal government is cracking down on this practice basically when health insurers exaggerate how sick patients are. 

In fact, the Justice Department is suing United and several other insurers for adding false diagnoses to patient charts. Gwen says she wants no part of it.  

GO: I don’t believe in the way health care has gone, and the insurance based practice that’s really focused on using coding to extract as much money as possible, really to the benefit of the shareholders, not to the benefit of patients.

AO: We reached out to Optum to ask about upcoding and Gwen’s other concerns about how they treat doctors. The company did not respond.  

DG: Alex, you’ve painted a bleak picture. Doctors leaving, patients getting all but fired, and more administrative work. Are there any pros to these deals? 

AO: Yea there are a few pros. Doctors who own their practices can get a big payday and retire. 

For those who stay, these companies take over all the business and management headaches. They get to be an employee.  

And here’s the really important thing Dan. These deals can keep doors open. I mean that’s what happened with Gwen’s practice. 

The Corvallis Clinic was going to shut down unless somebody bought the practice.

DG: Right if the office closes, then patients would really be in a bind. In that way the Optum deal is a clear pro. For Gwen, the benefit of staying would be to keep caring for her patients. 

AO: Yea that’s right. Gwen told me that was a real pull.

It’s one thing to say ‘I’ll be there for my patients.’ But Gwen and I talked about this a lot what does ‘showing up’ actually looks like. 

Now, Dan, do you remember when we were talking about the woman who came to Gwen with the mysterious breathing problem?

DG: Sure, the one with the diagnosis Gwen thought was odd. 

AO: Yeah. Well, I want to tell you what happened after Gwen and her patient Sarah, spent three months getting to the bottom of things.

And I want to tell you about it – because, at least for Gwen, it epitomizes how Gwen wants to show up.

This is pretty tough Dan, because Sarah was diagnosed with a terminal lung disease. And she needs a lot of support.  

GO: My role has been really working with her on explaining what’s going on. Because she goes to the specialists, they tell her a bunch of stuff really quickly and she doesn’t, you know, uh, get the gist of it. 

AO: The specialist explained to Sarah her only hope would be a lung transplant. But because of her overall health, she was ineligible. 

GO: So I talked to her about and gently broke the news. That she was not a transplant candidate. And she said, so that means I’m going to die of this disease. And. And we just sat with that for a few minutes.

AO: Gwen has had a lot of these hard conversations over her career. And she’s good at it. This is how she wants to spend her remaining years in this profession.

GO: A lot of these discussions are about what’s most important to the patients. You have to give people time to think about what are alternative ways to live a good life during the time that she has. You know, I’m really happy that I helped people in that way.

AO: When Gwen added up the reasons to stay and to go. It came down to this. She wanted to spend her remaining time as a doctor practicing the way she wanted. 

She knew that was unlikely to happen at Optum so she decided to leave.  

DG: So where is Gwen going to go?

AO: She’s actually my neighbor now. She moved to Portland. She has a noncompete agreement so she needed to find a job more than 25 miles from the clinic’s offices. 

Gwen landed at the big academic hospital in Portland called Oregon Health and Science University. 

She left primary care. Her new job is helping patients get ready for surgeries and educating new doctors. 

GO: This is my last and final stop in my career. I feel like the main thing I can contribute now is teaching future doctors, helping them navigate this changing world.  

AO: Gwen is hoping to impart her disease detective and patient connection skills on the next generation of physicians. So in 20 years when she needs this care, it will be there. 

DG: Alex thanks for your reporting on this. 

AO: You’re welcome Dan. 

DG: One final piece of news on physician practice consolidation. 

A few weeks after Optum bought the Corvallis Clinic, the company has its sights on a 3,000 physician practice that’s part of Steward Health Care, a collapsing hospital system spread across eight states.  

Massachusetts regulators are investigating the deal. And U.S. Senator Elizabeth Warren has urged federal officials to do the same. 

I’m Dan Gorenstein. This is Tradeoffs.

Tradeoffs’ coverage of health care costs are supported, in part by Arnold Ventures and West Health.