And startups can and should help make it happen.
Private practice is dying a slow death because of consolidation on one hand (shrinking the N of existing practices) and complexity/admin burdens on the other (slowing/stopping the formation of new practice). It’s time for the pendulum to swing back.
Systems, payviders, and PE-backed groups all want to own and integrate practices. The money is in professionalization, centralization, negotiating leverage/pricing power, and referrals/LTV maximization So anyone with a viable private practice or group gets an offer they can’t refuse and takes it, diminishing existing practices and cutting off generational transition for younger docs
On the other hand, starting a new practice is so hard that no one tries. Insurance is such a nightmare and new practices get terrible rates. Young doctors have too much debt. Practice complexity has grown faster than the practice revenues. Malpractice insurance, software/tools, can be prohibitively expensive and intimidating when starting from 0. MDs are trained to be clinicians not executives; learning how to manage a business while acting as primary care provider is an additional job.
But private practice is worth fighting for because it generates better outcomes, at lower cost, with less burnout for physicians, and better lifetime earnings (source). If medicine isn’t a high status, lucrative career people will stop pursuing it.
More healthcare IT point solutions isn’t the answer. Private practices are already oversold so the GTM is terrible and the tools are all incremental, not transformational. Moreover it’s a shrinking market as the number of practices drops.
Instead, startups should focus on catalyzing new private practice formation and keeping existing practices independent.
Vertical MSOs (managed service organizations) and/or franchises that can spur turnkey practice formation. This has been a huge success in mental health but where else might the model thrive?
Financing and alternative ownership structures for practice transitions from retiring practice owners to the next gen (an alternative off-ramp from a PE exit)
Creator led practices to capture and drive demand/intent from consumers. What’s the Shopify for influencer HC?
Infrastructure to stand up telemedicine-first practices as a foray into private practice
Contracting entities and supply aggregators so smaller practices can participate in lucrative contracts
In each of these models (about which I’ll write more in the future) you can sell the point solutions or build them into a platform once you’re up and running.
The first and most important step is to save the private practice!