Extinction of the Rural Practitioner

The changes taking shape in rural parts of our country are causing access issues for rural consumers. Not surprisingly, money is at the root of the problem. General practice physicians in rural areas just aren’t able to maintain the financially viable private practices they once were.

Decreasing reimbursement rates are frustrating the private practice business model. Federal reimbursement rates, most notably, have been decreasing over the past several decades, and should continue decreasing beyond next year. While these lower reimbursement rates have directly contributed to the reduction of private practices in both rural and urban parts of our country, rural physicians are having a harder surviving. Simply put, reduced reimbursement rates are making it harder for private practice physicians to do what they’ve always been doing—caring for patients while being their own boss.

The physicians in rural America have been some of the hardest hit by the reductions. To truly understand this effect, you must first understand a few points. First, general practice physicians tend to predominate the physician make-up in rural areas. Second, general practice physicians, especially those in rural areas, have limited opportunities to bill insurers and the government for high revenue-generating services. Instead, they typically spend a lot of their time and energy providing routine, low revenue services. Contrary to what some may think, practicing general medicine in a rural market is not a lucrative business today.

Compound these points with a third point—the severe recessions currently affecting rural economies—and one can more clearly see how general practice physicians are finding themselves increasingly unable to maintain private practices. Today’s economic and political climates are unfavorable to rural practitioners, and Federal reform isn’t providing the respite that many desire.

Reform prescribes that physician practices implement new technological developments (e.g., electronic health records, data management software, etc.) at risk of receiving even lower reimbursement rates than they’re projected to receive. So, why is it that private practitioners don’t adopt these measures to prevent further reductions? Well, it’s because these technologies are expensive! The initial cost for the new systems cost physicians upwards of $1 million, not including other, non-license costs (e.g., costs routine maintenance, database management, etc.). Many small practices—like those scatter throughout rural areas of our country—are effectively priced-out. To them, the decision comes down to early retirement or taking the loss.

It will be interesting to see how the younger generation of general practitioners will rise to the challenges facing rural patient populations. Of course, they can’t be expected to assume the entire caseload of the retiring physicians. A young physicians are at the beginning of a long career. They have a lot of opportunities available to them. They aren’t limited to purchasing an aging private practice. They can become part of a hospital system, in a big city, getting wonderful experience caring for a diverse patient base. What will prompt them to move to the rural areas? Will it be the prospect of taking out thousands of dollars in loans to update an aging private practices office? I highly doubt it, especially not when they’re already swimming in debt from medical school. Nevertheless, the younger generation of physicians definitely has its hands full.

Our Aging Population, as A Trend in Healthcare

Data from: http://www.census.gov/population/projections/data/national/2008/downloadablefiles.html

The US population is aging. Markets in the health care industry are changing as a result. People are getting older at a faster rate than children are being born. In fact, the present US birthrate is at its lowest level since 1920! According to the graph above, over the next forty years, the ratio of 0-17 year-olds and 18-64 year-olds in our population will be slowly decreasing. During that same period, the population ratio of 65-100 will be increasing, and considerably. Between the years 2006 and 2050, the US will see a 15 point fluctuation in population ratios between its “young” (18-64) and “old” (65-100) populations. Our country has never witnessed a fluctuation of this magnitude in its regularly recorded history.

The fluctuation will be protracted, but palpable. Despite having small population numbers now, older populations will experience significant growth in the future. It will be important for communities at large to consider the effects of this increase. The increase will not happen in a vacuum, out of sight from society. It will be noticeable in everyday life. In relation to health care, our country’s health care system—both private and public—will realize greater demands for geriatric care. Nursing home, rehabilitation and hospice care will see increases in their patient base. The elderly will gain a larger foothold (and, in doing so, gather market power) in the US consumer market as a result of their expanded presence.

Competition in future health care markets will be contingent on appreciating the changing composition of our country’s population. The fact of the matter is this: health care becomes a constant one’s life when someone reaches a certain age. Based on Census data, our future will bring with it more people reaching that “certain age”.  These people will demand more care than they have in the past, and we must reasonably and cost-effectively respond to meet that demand.