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The Resurgence of the Small Practice

By Dr. Martin Lustick

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Historical Trends 

The announcement by KLAS Research this week of NextGen Healthcare as the winner of the “Best in KLAS” award in the Small Practice PM/EMR segment affords the opportunity to speculate on the future of small practices. Much has been made in recent years of the trend away from physician-owned practices. Headlines from the last AMA physician survey were focused on the milestone of employed physicians surpassing the 50% mark for the first time. A corollary to that trend has been the steady move toward larger practices. In fact, that same survey reported a 12.5% drop since 2012 in the percent of physicians in small group practice. With the rise in alternative payment models shifting financial risk to providers, the increasing administrative complexity of healthcare, and the generational shift toward balance between family and career, it’s not surprising that many clinicians seek the predictability and security of employment. 

Small Practices Still Dominant

In the news, that story overshadows a larger truth. The majority of physicians in the U.S., 53.7%, still practice in those small groups of ten or less. And these small group practices predominantly consist of five or fewer providers.  NextGen, in fact, has thousands of licensed providers using its small practice solution, NextGen® Office (NGO). While recent trends suggest these numbers will continue to decline, there is reason to be hopeful that small practices will survive and, perhaps, thrive in the coming years.

Digital Infrastructure Is the Norm

For the overwhelming majority of physicians today, working in a digital environment has become the standard of care. According to a 2019 National Electronic Health Records Survey, 89% of office-based physicians are using an EHR. While the EHR by itself does not ensure success for small practices, it is a critical foundation to enable access to information and resources from throughout the healthcare ecosystem. Small practices can take advantage of feeds from health information exchanges (HIEs) and can connect to services such as revenue cycle management that optimize health plan reimbursement while also relieving the small practice from significant administrative burden.

Interoperability Unlocks Opportunities 

Government requirements combined with integrated solutions such as NextGen’s NGO are accelerating the realization of true interoperability. With a seamless flow of information within their practice and throughout a patient’s entire journey, small practices can be an efficient and effective component of the large and complex healthcare ecosystem.  Eliminating the isolation of a small practice means those providers can see all relevant information about their patient at the point of care and participate as a member of that patient’s overall care team, but maintain their autonomy as a small practice. 

Price Transparency Elevates the Role of Small Practices

Along with interoperability, price transparency will provide small practices with information they need to direct patients to the most cost-effective care. For several years, the Centers for Medicare and Medicaid (CMS) have been placing increasing pressure on providers and health plans to provider greater price transparency. As an example, in the fall of 2020 they announced a plan to require health plans to demonstrate increasing levels of transparency over the next four years. These changes combined with interoperability rules will significantly strengthen the ability of small group practices to drive value by directing their patient to the most cost-effective services that complement their own. That means that small practices will be well-positioned to participate in value-based payment arrangements.

Patient Reported Outcomes and the Rebirth of the Small Group Practice

If and when patient-reported outcomes become the standard for measuring quality in healthcare, then physicians in any practice, large or small, will be able to demonstrate their own value, even as they more effectively help their patients navigate the larger healthcare landscape. Despite recent, substantial movement toward large physician groups, the combination of a robust, interoperable digital infrastructure, price transparency, and patient-reported outcomes might just create a renaissance in small group practice.

Learn more about NextGen Healthcare’s small office solutions here.


Dr. Martin Lustick

Senior Vice President, NextGen® Advisors

Dr. Martin Lustick is a principal and senior vice president with NextGen Healthcare focused on supporting provider organizations in their successful transition from volume to value-based care…

Dr. Martin Lustick is a principal and senior vice president with NextGen Healthcare focused on supporting provider organizations in their successful transition from volume to value-based care.

Dr. Lustick earned a BA in History from Cornell and an MD from Columbia. After completing his pediatric residency at Children’s Hospital National Medical Center in Washington, DC, he was in clinical practice for 17 years with Kaiser Permanente of the Mid-Atlantic States. While there, Dr. Lustick held various management and leadership roles, including chief operating officer for the 800-physician medical group. He oversaw development of their hospitalist program, population health capability, and open access delivery model.

Dr. Lustick then served as chief medical officer for ThompsonHealth—a small health system in Canandaigua, NY—where he provided clinical oversight for hospital, SNF, nursing home, IT, and out-patient physician practices.

In 2005, Dr. Lustick assumed the role of SVP & CMO for Excellus BCBS which covers 1.6 million lives comprised of Medicare, Commercial, and Medicaid. In his 13+ year tenure there he led a variety of strategic initiatives, including a patient-centered medical home program which served as the foundation for the plan’s value-based payment strategy. He also led the implementation of an automated authorization program for care management services, development of a clinical quality improvement strategy, and creation of innovative programs in management of low back pain, screening and prevention, opioid addiction, and chronic disease management.

Dr. Lustick has also been very active in the community, serving on boards and committees confronting issues such as: healthcare capacity planning, Health Information Exchange, mental health, substance use disorders, social determinants of health, and childhood obesity.

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The financial and clinical challenges you face now are evolving rapidly. Here are resources, solutions, and ideas we think will help.

Read Now