Midsized Groups Carry the Day

Edition: November 2002 - Vol 10 Number 11
Article#: 1351
Author: Repertoire

What kind of a set-up market are distributors facing today? Statistics are hard to find, but anecdotal information is not.

For example, in North Carolina, Jerry Shelton of Tarheel Physicians Supply sees physicians continuing to leave large group practices in order to form smaller ones, or even to go solo. Meanwhile, in Rhode Island, Normand Chevrette of Claflin Equipment Sales & Service finds physicians continuing to gravitate toward smaller (three-to-five-doc) groups while avoiding solo practices. In addition, hospitals have, by and large, given up forming and owning large, multispecialty practices, he says.

William Jessee, M.D., CEO of the Medical Group Management Association, Englewood, CO, notes that among his organization’s members, very large and very small groups are falling out of favor. On the one hand, physicians in small groups (those comprising two, three or four doctors) are realizing they can be more successful joining with others to form single-specialty groups comprising eight or nine docs, he says. At the other extreme, very large groups are slimming down. “There seems to be a greater realization that there are efficiencies and more economic leverage to be had by smaller groups,” that is, those with 10 or fewer physicians, he says.

Meanwhile, many hospitals that created large, multispecialty groups by buying out 20 or 30 physician practices are selling them off, says Jessee. “Often, they were groups in name only,” he says of such practices.


What kinds of doctors are demanding setups? There’s a good chance they’re not primary care physicians or anesthesiologists, says Jessee.

Several years ago, graduates of medical school were heeding the call for more primary care docs, and the industry worked hard to improve their salaries, says Jessee. But after a brief flurry of activity, demand is once again outstripping the supply of primary care physicians. The simple reason is that young doctors find the long hours and relatively low pay altogether unappealing.

Lifestyle issues are also affecting the number of surgical residencies, says Jessee. “Surgery residencies still pride themselves on making their residents suffer a lot” with long hours and time on-call, he says. So even though a surgeon’s pay is OK, Generation “X”ers and “Y”ers “are more interested in having more balance in their lives.”

Anesthesiologists are also becoming hard to find, says Jessee. One reason is that the demand keeps growing. “In the old days, if you did office-based surgery, the surgeon provided the anesthesia,” he says. But not today. “If you did that today, your malpractice premiums would go through the roof.” Besides, many states prohibit anyone except anesthesiologists administering anesthesia.

The ebbs and flows of physician supply-and-demand are all part of what Jessee calls “cyclical variations.” “After you’ve figured out [which specialties] you have too many of and turned the faucet off, by the time you figure out you need more, it’s hard to turn the faucet back on.”