DaVita® Medical Insights

Shaping the Future of Private-Practice Nephrology

The American Society of Nephrology (ASN) has long performed nephrologist manpower analyses and reported on developments and trends in the field. ASN’s latest report reveals several trends, propelling nephrology into a new era. One area feeling a significant impact is private practice. Traditional means of running a successful practice are in many cases failing, prompting a need for transformation. This transformation not only supports sustainability but may help bolster the success of private nephrology practices in future.

A look at key trends

  • Private practice as a business: In the age of value-based payment programs, private practitioners are faced with growing administrative burdens in order to comply with reporting requirements and receive appropriate reimbursement. Beyond patient care, practices are saddled with the implementation of several onerous functions: coding, billing, collections, cost analysis, payer contracting, human resources, legal, compliance and accounting. In today’s market, most fellows don’t expect nor are they trained to perform as business people. Furthermore, nephrologists are among those most affected by federal policy changes—creating additional administrative and payment complexities—as Medicare patients constitute the majority of renal patients and account for the largest portion of renal care costs.
  • Complexities of compensation: As value-based payment programs mature, cracks in the system have left nephrologists with sub-optimal reimbursements and lagging reimbursement schedules. This, coupled with an understandable lack of business savvy, has prompted many to pursue supplemental income. Many enter joint ventures with dialysis facilities in addition to serving as medical directors. Others perform legal work or research or take advantage of rental or royalty opportunities. This is acceptable to some in the short term but is not a suitable long-term solution for the industry as a whole. Adding to the need for incoming nephrologists to acquire adequate compensation or supplemental income is the student debt most accrue throughout their education. Student debt for a United States medical graduate averages $220,000. Hospitals and health systems have an advantage over private practices in their ability to provide attractive signing bonuses and debt-repayment programs.
  • Competition for newcomers: Today, some 36 percent of graduating nephrology fellows are foregoing practice in their specialty and are instead opting for employment as hospitalists. The appeal is the secure hospital setting and better salaries—up to $60,000 higher. Starting salaries for hospitalists are approximately $240,000 compared to $180,000 for private practice nephrologists. Larger private practices may successfully attract newcomers but often fail to retain them, losing half within the first five years. In addition to income, the new generation of nephrologists places high value on work-life balance.1 Job satisfaction is closely tied to being able to manage work and personal life. Again, hospitals and health systems are at an advantage, as the demands of private practice make it difficult to compete with the time-off and schedule flexibility options of large organizations.

Positioning for the future

So, what can today’s private nephrology practices do?

The most essential step is the adoption of new management, operations and marketing thinking; i.e., thinking of the practice as a business. As a business, it is essential to audit and analyze performance and determine what functions and products are needed to remain competitive. (Professional management companies can assist with this.) In addressing these strategic issues, be cognizant of your personnel resources. Do you have the right people in the right places? What skill sets do you need to be successful? Is reorganization and additional hiring required? Finally, you might consider new partnerships or merging your practice in order to gain greater market share and take advantage of the value-driven reimbursement movement, in which bigger tends to be better.

When it comes to attracting new talent, think out-of-the-box. Could you offer signing bonuses? Tenure? Investment opportunities? The latter serve to not only attract fellows but incent them to commit to the practice’s success. Furthermore, use interviews as opportunities to share business strategies and plans for growth. Transparency is well received and can help establish a positive rapport with potential hires/partners.

As you contemplate the roles of junior nephrologists, consider how your business can leverage their particular skill sets and backgrounds. For example, medical students are now trained in electronic health and medical records, essential to modern practice operations. How can this knowledge be integrated into the junior nephrologist’s role? Also, international medical graduates may help attract and retain new patient populations. Could bringing in nephrologists with unique backgrounds and abilities create an opportunity to reach new markets?

Finally, to be successful in this new era, senior nephrologists must be receptive to adopting policies appealing to newcomers (flexible scheduling, part-time arrangements and so on). Likewise, it is to the advantage of the practice to embrace the incoming ideas, ambitions, philosophies and new-knowledge banks of junior nephrologists.

An age of opportunities

While change can be difficult, now is the time to harness the potential for success. At this pivotal juncture, private nephrology practices can make smarter business decisions and adopt new philosophies to thrive financially while supporting improved patient care and health outcomes. Gone are the days of popularity- and volume-based success. The success of private nephrology practices will now be based on receptiveness to change and the ability to respond to new industry demands. It is up to today’s nephrologists to chart the course for their success while establishing a solid foundation for those who will follow.

[1] Quigley L. et al., American Society of Nephrology, Report on the Survey of 2017 Nephrology Fellows, 2017.

Robert Provenzano, MD, FACP, FASN

Robert Provenzano, MD, FACP, FASN

In addition to his roles as chief medical officer at Nephrology Practice Solutions and vice president of medical affairs at DaVita Kidney Care, Robert Provenzano, MD, is a clinical professor of medicine at Wayne State University School of Medicine in Detroit, where he earned his medical degree. He completed his fellowship training at Henry Ford Hospital and served as the chief of the nephrology, hypertension & transplantation section and director of nephrology research at St. John Hospital and Medical Center in Detroit. Dr. Provenzano is former president of the Renal Physicians Association and chair of the National Kidney Foundation of Michigan. He is also former CEO of St. Clair Specialty Physicians, PC, a multistate nephrology practice. He has published extensively on kidney care business models and is the chief medical officer of Nephrology Practice Solutions (NPS), a national kidney care management company affiliated with DaVita that oversees owned and managed practices. Twitter: @DrBobPro