SIC 8011 Offices, Clinics of Doctors of Medicine

 
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SIC 8011

This industry consists of offices and clinics of licensed medical doctors, excluding doctors of osteopathic medicine (covered in SIC 8031: Clinics of Doctors of Osteopathy). These establishments are engaged in general or specialized medicine or surgery. This category includes the offices of the following types of medical specialists: anesthesiologists, dermatologists, gynecologists, neurologists, obstetricians, oculists, ophthalmologists, orthopedic physicians, pathologists, pediatricians, plastic surgeons, psychiatrists, psychoanalysts, radiologists, medical surgeons, and urologists. Clinics covered in this category are free-standing—not associated with hospitals—such as ambulatory surgical centers, freestanding emergency medical centers, primary care medical clinics, and outpatient psychotherapy and women's health clinics.

NAICS CODE(S)

621493

Freestanding Ambulatory Surgical and Emergency Centers

621491

HMO Medical Centers

621112

Offices of Physicians, Mental Health Specialists

621111

Offices of Physicians (except Mental Health)

INDUSTRY SNAPSHOT

According to the U.S. Department of Labor, Bureau of Labor Statistics, in 2001 there were 856,350 people serving as healthcare practitioners and technicians, including 66,700 family and general physicians; 42,420 surgeons; 41,370 general internists; 19,500 anesthesiologists; 18,200 general pediatricians; and 13,970 obstetricians and gynecologists. On average, a physician sees over 100 patients each week, with general and family physicians averaging slightly more than specialists.

The operation of office- and clinic-based physician practices has been strongly influenced by ongoing changes in the entire healthcare industry. Increased healthcare costs, coupled with decreased federal funding, has pushed practitioners to closely evaluate their practices and patient base. At the turn of the twenty-first century, physicians were also adjusting to new options in technology that could finally convert multiple filing tasks into automated computerized systems that, although expensive to install, were expected to provide better quality-of-care and overall cost savings.

ORGANIZATION AND STRUCTURE

This industry is organized mainly according to the type of practice or medical specialty performed at an establishment. The 1980s introduced another classification within this industry based on whether a doctor was working completely independently or through a group, such as a health maintenance organization (HMO) or a preferred provider organization (PPO). Managed care also cultivated the increase of practice consolidation by putting added pressure on solo and small group practices. Smaller practices did not have the ability to negotiate sufficiently favorable managed care contracts to keep them in business. The proportion of physicians with managed care contracts increased from 56 percent in 1986 to 83 percent in 1995, with little variation between specialties.

In the past, most physicians were self-employed and ran their offices in a partnership or group, sharing office help and medical assistants. During the 1980s, some physicians started to franchise, which involved paying a franchiser to handle administration, such as billing and insurance claims. The number of self-employed, patient-care physicians in solo practices dropped from 40.5 percent in 1983 to 26.3 percent in 1995. The number of self-employed physicians in group practices fell from 35.3 percent in 1983 to 28.3 percent in 1995. The number of physicians employed by a health care company, however, rose from 24.2 percent in 1983 to 45.4 percent in 1995.

Of those physicians employed by an outside agency in 1995, 31 percent worked for physician groups and 8 percent for staff-model HMOs. Many staff-model HMOs were quite large in 1996, with as many as several thousand physicians. By the late 1990s, many physicians either merged with larger medical groups or sold their practices to hospitals. This trend led to the development of physician-hospital organizations (PHOs) and management services organizations (MSOs).

PHOs far outnumbered MSOs in 1995, creating a partnership between physicians and hospitals with equal management weight to each. Also a hospital partnership, MSOs require physicians to purchase shares in the MSO, which provided management services and equitable management to both hospitals and physicians. In MSOs, physicians could later sell their shares in the organization for profit.

Physicians who sold their practice in 1995 received generous compensation. Specialty and multi-specialty practices had the highest median value per physician at $244,000, plus a base salary. More than 80 percent of the physicians who sold their practices could also receive bonuses in future years. The largest number of physicians who sold their practices in 1995 were primary care physicians, especially family physicians and internists.

Doctors' offices and clinics play an important role in the overall operation of the health care industry. Doctors usually work with one hospital and refer patients to that hospital for tests and treatment. For this reason, the relationship between doctors and hospitals is often regarded as a buyer-seller relationship, in which hospitals approach local doctors for their patients. In addition, doctors are also buyers in their relationship with pharmaceutical companies.

BACKGROUND AND DEVELOPMENT

While the convention of doctors working in some institutional or hospital-like establishment dates back to ancient Egypt, doctors' offices as independent establishments emerged in the Middle Ages with barber-surgeons. These independently employed doctors worked in their offices or in patients' homes and received payment for their services as they were provided. Doctors who cared for patients in hospitals received no payment from their patients or the hospital. In the nineteenth century, however, hospitals began paying doctors, and the profession grew rapidly.

During the twentieth century, the role of the physician changed with economic, government, and societal pressures, along with technological advances. In the early part of the century, doctors in the United States were a highly autonomous group, which was held accountable to the standards defined by the profession itself and not the general public, according to Harold M. Swartz and Ann Barry Flood in Money, Power, and Health Care.

The gap in salaries between primary care physicians and specialists grew significantly in the twentieth century. As a result, there was a general shift from primary care physicians to specialists. The use of HMOs and provider networks to cut medical costs also changed this profession from wholly self-employed doctors to those working on salaries for hospitals, HMOs, and provider networks. By 1995 the average share of physicians' revenues from managed care rose from 11 to 27 percent, with a higher proportion going to primary care physicians.

Technical advances in this industry were abundant during the twentieth century. From 1900 to the 1950s, the development of antibiotics and public health initiatives—such as water treatment—increased physician effectiveness in many parts of the country and simultaneously decreased the need for doctors in many respects. Wars and increases in population and fatal crimes offset this pattern, however.

During the second half of the twentieth century, technical developments increased doctors' roles in health care; many diseases, such as Hodgkin's disease and leukemia, were now treated with chemotherapy. Moreover, detecting disease became more practiced with new technologies for diagnosis. The development and use of these technologies, however, was regulated by governmental bodies and insurance companies.

The second half of the twentieth century also witnessed a growth in freestanding clinics. By the end of the 1980s, there were 23,000 licensed clinics in the United States, according to the General Accounting Office (GAO). These included outpatient ambulatory care facilities, outpatient surgical centers, psychiatric and psychotherapy clinics, and obstetric/gynecological clinics.

The rapid proliferation of clinics posed problems for state regulators of these facilities. According to a 1989 GAO report, state health regulators were concerned about the complex appeals systems between patients and clinics and were disturbed to find that roughly one-half of the states did not have any means of resolving patient complaints against clinics.

The government acknowledged the growing need for psychiatric outpatient care in 1989 when it increased its...

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