Medical practitioners are optimistic about their practices' finances but remain concerned about the impact of politics on the American healthcare industry, finds a survey released today by TD Bank, America’s Most Convenient Bank®.
According to TD Bank’s Healthcare Survey of U.S. doctors in the medical, dentistry, veterinarian and ophthalmology fields, most independent medical offices remain small businesses, with 46 percent being solo practices and 78 percent of all practices (solo and those with partners) operating in just one office location.
Investing in Growth
Medical practitioners are positive about their growth prospects, with nearly three-quarters expecting practice revenue to rise over the next two years. Female medical professionals and practitioners under the age of 50 report the most optimism, with 81 percent and 89 percent, respectively, anticipating revenue increases.
Higher revenues will not come without investments that create efficiencies and expand patient bases. Independent practitioners’ largest anticipated financial expenditure in the next five years is equipment financing (45 percent), with physical expansion, relocation or renovation (19 percent) a distant second. The most popular anticipated method for funding these needs is cash (45 percent), followed by a line of credit (34 percent) and credit cards (27 percent).
There are obstacles to expansion, however. Medical practitioners named cost (41 percent) as the leading barrier to growing and expanding their practice, followed closely by patient demand and reimbursement levels (both 40 percent).
Future Financial Strategies
When assessing near-term strategic plans, 74 percent of doctors anticipate purchasing, buying into, merging or selling their practice, and soon – 34 percent expect this to happen within the next four years, while 29 percent said they will pursue one of these options in the next five to 10 years.
Independent medical practitioners also are developing long-term plans, especially for succession and retirement:
- 37 percent of survey participants stated partners or colleagues will take over their practice or buy out their share when they retire.
- 29 percent said their practice will be sold through a transition specialist or broker.
- When thinking about retirement, 42 percent would prefer to cut back on hours for a slow transition instead of retiring outright.
Respondents also expressed confidence in their financial preparedness for retirement. Eighty-six percent of doctors believe they are financially ready, and nearly all (89 percent) said they expect sale of their practice to provide at least a portion of their retirement fund.
“Valuations of practices can vary from year-to-year due to ever-changing factors such as the economic environment, area demographics, number of active patient records, and practice production and profitability," said Dan Croft, Head of Healthcare Practice Solutions at TD Bank. "Although it is nice to think about tapering off work before retirement, that may lower a practice's sales price, as valuations are typically focused on the last 12 months of production and net income.”
Political Landscape Brings Challenges
When asked to name their top three obstacles to operating a practice, respondents reported the following challenges: overhead costs (63 percent); growth/new patient acquisition (48 percent); and private insurance reimbursement (45 percent).
The majority (70 percent) also are concerned that the new Congress will make changes to the healthcare system. This is a significant jump from the 52 percent of doctors who had such concerns before the 2016 election. When asked which specific issues lawmakers should address, respondents named:
- Repealing/overturning the Affordable Care Act (37 percent)
- Increasing regulations on the medical insurance industry (33 percent)
- Enhancing the Affordable Care Act (30 percent)
“Given the uncertainty within the broader U.S. political climate and continued scrutiny around healthcare policy, it is not surprising that practitioners have heightened concerns about healthcare legislation and insurance reimbursement,” Croft said. “Potential changes to both Medicaid eligibility and benefits mean doctors need to develop a broader base of collection sources, including fees for service, membership plans and private/commercial insurance payors, in order to avoid a heavy concentration in public reimbursement sources."
Survey Methodology
TD Bank conducted an online study of 360 physicians, dentists, optometrists and veterinarians that spend any time in an independent solo, group or multi-specialty practice with five or fewer medical professionals. Respondents were selected by ENGINE from a volunteer group. The survey was conducted Oct. 3-14, 2018.
About ENGINE
Engine is a data-driven marketing solutions company. Powered by data, made by people and driven by results, Engine helps its clients make connections that count—leading to bottom line growth, business transformation and an inspired workplace. With global headquarters in New York and 17 offices across North America, the UK, Europe and Asia-Pacific, Engine offers clients a vast range of marketing solutions—including insights, content, distribution, data and technology. Find out more at enginegroup.com/us or follow @Engine_US.
Want to learn more about Small Business & Commercial?