Uncertainty Will Fuel Continued Consolidation
Smaller, independent physician practices have been especially hard hit by the pandemic and the related changes in patient behavior. In many ways, the COVID crisis has given us a new understanding of what it means to be an essential healthcare service. Prior to COVID, we really thought about virtually all healthcare services as essential: it was impossible to imagine a situation in which patients would outright stop seeing their clinical, ancillary and dental providers of care for months at a time. Yet, as states and localities shut down in response to the pandemic, this situation became the reality. Even as practices began to reopen, most ran well under capacity to conform to state social distancing guidelines, which removes much of the efficiency that providers rely upon to make a practice profitable and stable. For many “mom & pop” practices, the insecurity of the last several months and the uncertainty about what lies ahead, will, I believe, lead many independent providers to consider joining forces with a larger organization. I believe consolidation really makes sense for a number of specialist areas, especially where the consolidating organization can offer market power in negotiating reimbursement rates, centralized billing and IT infrastructure, referral programs, and other resources. This kind of stability helps providers navigate tough times and helps to ensure that they can devote more focus on delivering care overall.