2023 was a year of big changes in many areas, including healthcare. As I look back at the year, I see many moments that affected our doctor community and will likely continue to affect us. I rounded up some of these events and changes to share with you and explain how they may affect you in the future as a healthcare professional.
Big Companies Bet On Healthcare
In recent years, major corporations have made significant strides in entering the healthcare sector, leveraging their extensive resources and technological expertise to disrupt traditional models. Two of the most notable this year were Amazon and Walmart.
Amazon now offers 24/7 on-demand virtual care nationwide and in-person or remote primary care visits as a Prime membership add-on. This year, Walmart expanded its walk-in health centers, under the Walmart Health arm, to two new states, planning to have over 75 centers by the end of 2024.
Looking ahead. Many expect the trend of continued investment in healthcare from big companies like the Amazons and Walmarts of the world. We are already seeing similar results from private equity, which you can read about in the next section. It will be interesting to see how other health systems and payors adapt to this, with some being concerned this may potentially negatively impact patients and doctors.
Private Equity Continues Investment In Healthcare
Private equity is spending big on healthcare investments. In 2021, these investors spent more than $200 billion on healthcare acquisitions, and $1 trillion in the past decade.
Private equity acquisitions of U.S. physician practices rose from 75 in 2012 to 484 in 2021, an over 600% increase. A July 2023 study found that in 28% of metropolitan areas, a single private equity firm has more than 30% market share, and in 13% of metropolitan areas, a single firm’s market share exceeds 50%.
What does this mean? Private equity investing in healthcare is impacting healthcare costs, quality, access and more, though more research needs to be done to quantify these effects. Some studies have found that private equity influence tends to increase healthcare prices and utilization, with these costs affecting both patients and the larger society.
Concerns are growing about the effects of private investment. In the coming years, we may see transparency rules that require disclosure about who owns private, for-profit healthcare organizations. There will likely be continued shifts on what specialties private equity targets with recent pushes into Dermatology and Radiology for example, but what specialties will be targeted next?
Doctors would be wise to continue to be vigilant on how these firms are impacting your community and the healthcare industry at large. There are many who are concerned that the mission of the larger investors in healthcare and the ideals instilled in our training and oaths as doctors, may not always be aligned.to care for the health and wellbeing of our patients.
Rate Increases
Inflation reached a 40-year high in 2022, peaking at 9.1% in June. The Federal Reserve adjusted the federal funds rate to combat the rising consumer costs, increasing it by 4.25% over the course of the year.
In 2023, the Fed continued raising rates another 100 basis points to help cool the economy. These efforts have worked, with November’s inflation rate standing at 3.1%, just above the desired 2.0%.
Because rate changes can impact credit card rates, private student loan rates, mortgages, practice loans and more, doctors have likely felt the effects in one way or another.
What’s next? So what can we expect moving forward? Though the Fed hasn’t shared specific plans for next year, economists predict that rates will hold steady over the next several months before cutting rates mid-2024. Rate cuts would mean loans, like mortgages, auto loans, personal loans and more, could become much cheaper.
Noncompete Agreement Bans
Noncompete agreements have long plagued the doctor community, presenting challenges when looking for a new position and limiting opportunities for career advancement. Only five states (California, Colorado, Minnesota, North Dakota, and Oklahoma) ban almost all noncompetes.
Early in 2023, President Biden addressed noncompete agreements directly in his State of the Union address, pushing for a national ban across industries. Despite this push and a formal rule proposal from the Federal Trade Commission, a final noncompete ban has not yet been issued by the FTC.
What’s next? The FTC is expected to vote on the proposed rule in April 2024. If the rule is passed, the FTC estimates that it would impact about 30 million Americans and boost wages by almost $300 billion per year.
In addition to the potential compensation benefits, the healthcare community could also likely see improved patient access, enhanced availability of specialist coverage, and reduced health inequities. Banning noncompete agreements could be very impactful for a large portion of the healthcare community—physicians, dentists, veterinarians, nurses, and more to practice where the market demands for their services are..
Student Loan Changes
This year saw big changes in federal student loans — proposed forgiveness, a new income-driven repayment plan, and resumption of payments.
Earlier this year, the Biden Administration proposed a one-time forgiveness of up to $20,000 of student debt per borrower. The Supreme Court subsequently struck down the proposal in June.
During this time, the Biden Administration announced a new IDR plan, Saving on A Valuable Education (SAVE). This plan lowers monthly payments, doesn’t charge interest not covered by the monthly payment, and allows married borrowers to not include spousal income when calculating payments.
After three years of no interest or payments, student loan interest resumed Sept. 1, and payments were due in Oct. The resumption of payments resulted in stress and uncertainty for borrowers because some servicers and repayment plans changed. To ease the financial strain of a new monthly bill, the U.S. Department of Education created an “on-ramp” to payments, offering a one-year grace period where interest accrues but with no penalty for missed payments.
Despite months of preparation, student loan servicers dropped the ball as payment resumed. Borrowers’ payments were incorrectly calculated, servicers were overwhelmed by call volume, and many borrowers were put in “administrative forbearance” as the institutions worked to resolve these issues. As of writing, these challenges are still being worked out and it may take months to see them fully resolved.
The bigger picture. This was a big year of change for student loans, but we saw no real solution in what really matters—the cost of education itself. Fixing the student debt problem by addressing solutions targeted after borrowers have already racked up five- or six-figure debt doesn’t make sense.
Having incurred six-figure debt myself, I understand how heavily that burden can weigh on an individual and their family. I hope in future years we will see reform to the exorbitant cost of higher education and present a longer-term solution to this huge issue.
The Match
As with many years before, Match Day marked an important day in the lives of medical students transitioning to residency. The match saw the second largest applicant pool in its history at over 48,000. On Match Day, over 39,000 medical students nationwide learned the place where they will conduct their training for the next few years. Also, this year saw the number of U.S. DO students participating in the NRMP match grow to an all time high of over 7,000. We want to send a special congratulations to all of those who participated in the Match this year and entered residency this summer!
Looking ahead. The 2024 Match is coming up quickly, meaning a whole new set of medical students is looking ahead to their residency placement. If you are finishing your final year of medical school, I wish you luck as you interview, rank and get matched!
I’ve been in your shoes before, so I know the stress and challenges that accompany this exciting time. We have a page dedicated to Match resources made for you. Find important dates, salary information and helpful articles here.
Medicare Cuts
This year physicians saw a 2% decrease in reimbursement from Medicare, a federal program that most physicians participate in. Though this decrease was less than the projected 8.5%, this cut put a strain on practices that serve a large number of Medicare patients, especially when coupled with the lack of yearly inflationary adjustment for physician services.
Adjusted for inflation, Medicare physician pay has decreased by 26% from 2001 to 2023.
What’s next? In 2024, physicians are facing a proposed 3.37% payment reduction, despite the cost of running a practice increasing by 4.6%. This will put an even greater strain on physician practices.
Medicare is becoming unsustainable for both physicians and patients. Access to care is being threatened by the continued cuts, and I believe this program needs to be reformed so vulnerable populations are able to receive the high-quality care they deserve.
DSO Growth Continues
Over the past few years, we’ve seen growth in dental support organizations. DSOs contract with dental practice owners to manage some or all of their non-clinical functions like billing, marketing, human resources, and more.
Looking ahead. In 2022, 13% of dentists were affiliated with a DSO, up from 10.4% in 2019 and 8.8% in 2017. Based on projections, this will continue to trend upward in the coming years.
Dental Students Are More Likely To Go Into Private Practice
In recent years, private dental practice ownership has been declining, dropping from 84.7% in 2005 to 73.0% in 2021. Despite this, graduating dental students have increased interest in entering private practice.
Visible growth. Between 2018 and 2023, graduates who planned to become a private practice dentist increased from 48% to 53%. Of those planning to enter private practice, 34% plan to work at a DSO, double the amount in 2018 (16%).
Veterinarian Workforce Increasing
Pet ownership has risen significantly over the past few decades—from 56% of U.S. households in 1988 to 66% in 2023. An increase in pets means an increased need for animal care. Employment of veterinarians is expected to grow 20% from 2022 to 2032, an increase of an estimated 17,700 veterinarians needed in the workforce.
Looking ahead. A greater need for veterinarians means the supply will need to increase as well. Two new veterinary schools will graduate their first classes in 2024 and 2025, and one graduated their first class this year, in 2023. Ten other schools are in development.
Pharmacists Walk Out
In the fall, we saw pharmacists stage a series of walkouts at some of the country’s largest drugstore chains due to unsafe working conditions. Walgreens and CVS employed pharmacists said their employers would refuse to grant sick leave, understaff locations, and require long solo shifts, putting pharmacists’ and patients’ health and well being at risk.
In early November, walkout organizers and IAM Healthcare, a healthcare professionals union, announced a partnership to help pharmacists unionize at these chains. A walkout organizer working with the unionization effort said he expects 90% of CVS and Walgreens pharmacists to be unionized in 5 years.
Moving forward. The well being of the healthcare community affects us all. Pharmacists need to be better taken care of, so they can care for patients well. The current system for retail pharmacists and the responsibilities they shoulder in outpatient pharmacies is unsustainable and unsafe for patients and needs reform.
Looking Ahead
Healthcare is always changing and evolving. 2023 saw lots of change, both positively and negatively. As I look ahead to 2024, I am excited for both the major and minor successes and look forward to making the best of the challenges that lie ahead.
Though as just a single doctor among many, I may not be able to make significant change on my own, but I hope you will join me in a commitment to making healthcare better in the ways that we can. Happy New Year!
