Opportunities for Insurance Brokers to Serve Small Market Doctor Practices

As an insurance broker, your role in the small business healthcare market is crucial. You are uniquely positioned to help small doctor group practices navigate the challenges they face in an era of increasing consolidation and market pressure. Your support and the right approach can help your doctor practice clients thrive in today’s competitive healthcare landscape.

According to the US Small Business Administration (SBA), small businesses comprise 99.7% of firms with paid employees and contribute 43.5% of the country’s total gross domestic product (GDP).​ Over 60% of the economy’s growth over the last 17 years is attributed to companies with fewer than 100 employees. Similarly, most doctor group practices are small businesses with fewer than 100 employees. This data provides essential context for understanding the healthcare market landscape and underscores the significant growth potential in the small healthcare market, offering exciting opportunities for you as an insurance broker.

For insurance brokers who work with many of these practices to design employee benefits, understanding the market dynamics is not just important, it’s crucial. These observations offer insights into better advising your healthcare clients. Here are a few key points and trends relevant to small practices:

1. The Impact of Increasing Consolidation: The healthcare market has significantly transformed over the past decade, with more hospitals joining larger systems and fewer independent hospitals. This consolidation has reshaped the industry and has implications for all players, including small doctor group practices.
2. Hospital Acquisition of Doctor Practices: Hospitals are increasingly acquiring doctor practices. The share of doctors in private practice went down from 60.1% in 2012 to 46.7% in 2022.
3. Market Concentration: Most healthcare markets are now highly concentrated, with 90% of metropolitan areas having highly concentrated hospital markets and 39% having highly concentrated primary care doctor markets.
4. Private Equity Involvement: Private equity firms increasingly acquire doctor practices. This trend is accelerating and could lead to further consolidation.
5. Practice Size: In addition to changes in practice ownership, there have been changes in practice size. Between 2012 and 2022, the share of doctors in practices with fewer than five doctors dropped from 40% to 32.8%, while the share in practices with 50 or more doctors rose from 12.2% to 18.3%.

These trends create a challenging environment for small doctor group practices. They face increasing pressure to join larger systems or remain competitive as independent entities. Small practices that adapt to changing market conditions, embrace new technologies, and focus on value-based care models may be better positioned to succeed in this increasingly consolidated landscape.

Implications for Brokers

The consolidation trend in healthcare has significant implications for brokers working with small doctor group practices:

1. Increased Pressure to Join Larger Systems: Many doctors may feel compelled to sell their practices to hospitals or large groups.
2. Potential Loss of Autonomy: Doctors in employed positions often have less control over practice decisions.
3. Changing Practice Models: Doctors may need to adapt to new care delivery and payment models, regardless of the practice setting.
4. Importance of Business Skills: Running a successful independent practice requires strong business skills and clinical knowledge.
5. Opportunities for Leadership: Doctors navigating the changing landscape may find new opportunities to shape healthcare delivery in their communities.

Success Considerations for Group Practice

So, what can group practices do to position themselves for success? Here are a few ideas:

1. Leverage Unique Strengths: Small practices have several inherent advantages they can capitalize on, including strong patient relationships. Their autonomy and preservation of the traditional doctor-patient relationship help build trust and offer personalized care. Small practices can adapt quickly to patient needs and make changes faster than large bureaucratic systems.
2. Form Strategic Partnerships: While remaining independent, small practices can band together to gain benefits of scale. One way to do that is to join independent practice associations or affinity models. This allows practices to share resources, negotiate better contracts, and spread risk across multiple practices.
3. Specialize in Niche Services: It’s possible to differentiate a practice by specializing in specific areas of care. This could be anything from geriatric care to sports medicine, depending on a community’s needs and the doctors’ knowledge. By becoming the go-to practice for certain services, doctors can attract patients and referrals, even in a market dominated by larger players.
4. Focus on Efficient Operations: In a small practice, every dollar counts. Implementing lean management principles to optimize operations is critical. This might involve streamlining administrative processes, negotiating better rates with suppliers, or outsourcing non-core functions. The goal is to reduce overhead costs without compromising the quality of care.
5. Retain Good Doctors: The cost of replacing a doctor is high. Losing one doctor can range from $500K to more than $1M, including recruitment, sign-on incentives, lost revenue, and onboarding.  Although the outlook for the overall supply of doctors is highly competitive, employers can use an overlooked but powerful secret weapon to recruit and retain doctors—a competitive benefits package. That’s where you come in.

Remember, success in today’s healthcare market requires more than clinical knowledge. It demands business skills, adaptability, and a willingness to innovate. By implementing these strategies and offering a comprehensive benefits package to recruit and retain doctors, small doctor group practices can position themselves for success, even in the face of increasing market pressures.

The Right Support for Small Practices – MGIS and Reliance Matrix

MGIS’s history is rooted in the small business healthcare marketplace. With Reliance Matrix’s renewed focus and investment in the small business market, we are highly aligned to service the doctor group practice market. Reliance Matrix and MGIS understand that the right product solutions and quick and correct proposal turnaround are critical in supporting brokers in the highly competitive small market, including doctor group practices.

Through the proprietary collaboration between MGIS and Reliance Matrix, Disability Guard for Doctors™ offers a unique long-term disability product blending the highly valued policy provisions of individual disability insurance with the guaranteed issue and simplified administration advantages of group LTD. Disability Guard for Doctors™ covers doctors and all practice employees on one policy, with the plan flexibility to meet all employee needs.

By offering such comprehensive disability insurance, small group practices can:

1. Enhance recruitment efforts: Strong disability coverage can be a significant differentiator when attracting top medical talent in a competitive job market.
2. Improve retention: Doctors are likelier to stay with a practice committed to their long-term financial security.
3. Provide peace of mind: Knowing they’re protected against the potential loss of income due to disability lets doctors focus more fully on patient care.
4. Demonstrate value: This benefit shows the practice values its doctors and will invest in their well-being.

For those group practices interested in strategic partnerships through an affinity model, MGIS has crafted a targeted disability insurance solution designed to meet the diverse needs of key constituents in modern affinity organizations.

Support for Larger Practices, Too

While MGIS has a strong history of supporting small practices, we also offer solutions for larger, more complex practices. Leave management is critical today, especially in states with mandatory disability and paid family leave programs. Now available with the MGIS and Reliance Matrix specialized insurance program on a fully integrated basis, the Reliance Matrix integrated absence management platform takes the burden off employers and provides decades of expertise and experience. This solution helps doctor group practices (of all sizes) simplify the leave management process.

Reliance Matrix has been recognized as the leading Absence Management provider in the 2023 Design, Delivery and Outcomes in the Integrated Disability, Absence and Health Management Marketplace, an industry benchmarking survey by Spring Consulting Group, LLC.

Learn More by Contacting the MGIS RVP of Sales in Your Area

While the healthcare market continually evolves, the opportunity with doctor group practices remains strong. Doctors’ unique challenges and financial realities underscore the need for a specialized insurance solution. If you would like more information or help in working with group practices (small and large), please contact the MGIS RVP of Sales in your area. They are experts in our products and can provide valuable support in helping you grow your business with doctors and protect doctors’ financial security.