Kaiser Health News and NPR yesterday reported on an important US healthcare trend: Hospitals Lure Doctors Away From Private Practice. A dramatic shift from practice-owning physicians to salaried, hospital-employed physicians, could create an equally dramatic shift in medical device market opportunities.
First, we may see shifts in procedure volumes and market shares, as salaried physicians no longer have the same economic incentives to prefer one tool or technique over another. Today, an office-based gynecologist wants to perform office-based ultrasound procedures, to pay back a capital investment. Salaried physicians simply expect the hospital-owner to worry about capital budgets and bottom lines. Might we predict ultrasound procedure volumes to drop? The shift from hospital-based procedures to physician-office or surgi-center procedures has been at least partly driven by physicians taking more of the economic pie, and hospitals getting less – witness the growth in standalone mammography centers and the growth in mammograms. Might physicians simply refer their patients to hospital-owned mammography centers?
Second, hospitals will try to optimize cost and revenue structures across their whole system, including the physician practices. If a hospital system determines that office-based treatment for menorrhagia is the most cost-effective approach, we can imagine them standardizing procedures and equipment across their physician-office network. Imagine the possible changes to the physician-office sales process. Today, dozens of individual transactions are made by independent physicians. Tomorrow, this could be transformed into a heavily negotiated centralized purchase by a single hospital system. More buying power will affect pricing, as well as support requirements. We’ve seen physician preferences in hospitals overruled by a standard set of equipment purchased from “approved vendors.” Imagine this model applied to the office environment.
Third, there may be new opportunities for devices that lower overall hospital system costs, or improve hospital-system outcomes, but are currently held back by inadequate or non-existent physician reimbursement. To really go out on a limb, we can even imagine a future in which the level of payment associated with a CPT-4 physician procedure code just doesn’t matter.
So, keep an eye on this trend in your market. Where are your physician customers practicing today, and where will they be in five years? How might this change affect your market opportunity?
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