New Pediatric Practices – Who Are They? [Part 3]

I hope some of you are still following.  Because this is the fun part.

Over the last two days, I’ve posted the results from our poll that tries to examine the demographics of (new) pediatric practices and where pediatricians get their practice management advice from.  The results have been interesting, imo, and should serve as a warning call to those of us who serve the market.

Why?

Because I believe that the “growth” opportunity in pediatrics is for small practices opening in under-served locations.  Consultants like PCC, Susanne Madden at The Verden Group and IPSMO, Paul Vanchiere at PMI, and Tim Rushford at PedsOne – we’ve all seen it subjectively, but now we have evidence.   And the implications of this opportunity are important:

  • Practice growth in rural and urban (vs. classically suburban) areas is driven by a variety of factors, not the least of which is the fact that many urban and most rural areas have high Medicaid populations.  High Medicaid, historically, means Bad Business Plan, so every type of group, from the hospitals all the way down to the practices that were formed 20 or even 40 years ago, has already taken up space in the lucrative suburbs.  What space is left?  As BillZ pointed out to me at the NCE, the hospitals don’t want to go into these low-revenue locations – what a great place to practice!
  • The face of the physicians opening these new practices is younger, dominantly female, and increasingly of-color.
  • Success for these practices will be defined by the ability to run a leaner practice with lower overhead and practicing medicine as efficiently as possible.  This sounds like an empty platitude, but a practice that generates $85/visit needs to behave differently from a practice that generates $140/visit in order to stay alive.

Let’s peel back the last data set to see what we’re talking about.  I’ve already discussed how the demographics of the respondents already paints an interesting picture.  But what if I told you:

  • 85% of the independent offices opened since 2007 were opened by women?
  • 45% of the independent offices opened since 2007 were opened by pediatricians of-color?
  • 60% of the independent offices opened since 2007 are in rural or urban areas?
  • 52% of the independent offices opened since 2007 have at least 30% Medicaid, 21% have 70% or more?

I don’t want to twist the data so much that we can’t trust what some of us have been seeing for a few years.  For example, if I look at respondents who expect to open a practice of their own in the next few years, their expected locations return to a suburban distribution typical for pediatricians, but I wonder how much of that is wishful thinking.  No, 10-doctor practices in the suburbs aren’t going away, they’ve just pushed out enough of the competition – often with the help of their big-brother-hospital – that new practices are moving into places where patients who may not have even had a pediatrician before.

What does this all mean?  I want some input here, but here’s what I see so far:

  • PCC earns a living providing concierge-level consulting and service to pediatric offices – we need adjust our model if we want to service this population of pediatricians.  PCC is popular because we aren’t lean.  We do things other vendors won’t do (like spend time on this stuff and share it).  Can we maintain that culture in a market with a fraction of the margin that we’ve all come to expect?  Time for us to find out!
  • Billing services – like PedsOne, above, or Athena – have to operate in an even more automated fashion.  They need to make starting a practice something that comes in a box and takes just a button click.
  • Paul and Susanne have already started adjusting the focus of their educational content and service offerings.  See their WWW sites.
  • If the AAP wants to do anything to promote physician wellness and fight burnout or even just to support the growth of independent pediatric practice – especially those serving Medicaid populations – it needs to get out in front of this multi-layered problem.  Where’s the AAP’s Medicaid Information and Liaison Center?  At the last NCE, there was one class about opening a new practice (hey, Susanne, that’s us!), but – shame on us – we never even talked about the populations new practices apparently serve.  With so few state and district chapters producing any practice management content – let alone something decent – who can a pediatrician in Marfa, TX (rural) or El Paso, TX (urban) even turn to?
  • We have to get over the social discomfort of realizing that the face of the AAP isn’t changing, it has changed.  It’s female, increasingly brown, and focused on a different population.  All of my male, white readers, don’t take any of this the wrong way – I know how much you have done for your Medicaid patients and the sacrifices you have made for the profession (remember, I’ve been working for you for almost three decades).  But for every complaint I hear on SOAPM about how the new docs are all about lifestyle and don’t want to work or learn like you did, we consultants are helping a new practice open in a location that represents so much more risk than most established pediatricians have ever taken.  Yeah, it stinks fighting that Children’s Hospital, many of them act like organized crime.  But it’s not any easier carrying 6-figures of debt, having a young kid with a bun in the oven, and trying to figure out whether you need to see 28 or 33 kids every day just to cover that lease knowing that the present administration just cut CHIPRA funding.To be clear, I am not trying to compare the sacrifice or effort required above.  I only mean to say that over the next ten years, the problems, focus, style, and culture of new pediatric practices are going to be different from the classic “target audience” of groups like the AAP.  Is anyone else ready to work on this?  I know my consultant friends above will turn on a dime and we’re obligated, if we want to stay busy, to adjust the lens of our work to reflect the increasing urban/rural growth of pediatrics – can we pull the AAP along with us?

I’m glad to pull out more data from the results (if I can), just ask.

2 replies
  1. Paul R. Farrell
    Paul R. Farrell says:

    Hi Chip,
    This information is very enlightening. I realize my time practicing Pediatrics is coming to a close. As of February 2019 I will be retired. I think there are things about serving the Public Health insurance population that are noble but very risky for a start up practice. As a group, these patients have a high rate of broken appointments and you can charge for a missed appointment but the Public Health Insco’s won’t pay it. The next issue is the more money you generate that comes from the coffers of the state or federal government the more “strings” are attached to it. Perhaps I just expanded on your very accurate statement of you have to practice very efficiently and smartly when you are getting $85/visit vs. $140.
    Paul Farrell

    Reply
  2. Suzanne Berman, MD, FAAP
    Suzanne Berman, MD, FAAP says:

    Paul’s right – there are challenges inherent in serving a high Medicaid population. But honestly, there are challenges inherent in serving a suburban commercially-insured population. High deductible plans, competition from urgent cares on every corner, parents who have “done their research.” Medicaid patients may not keep appointments, but a 0.5% no-show rate is worthless if paired with a 40% schedule saturation rate.

    My concern with the AAP is that they will mount a Dunkirkian campaign to save Medicaid or CHIP for kids, but won’t provide the same energy on resources so that pediatricians can actually work with these plans in a sane way.

    Reply

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