Physicians Group Up

Hospital systems aren’t the only ones consolidating

Rabidly independent. That’s how some would describe the typical physician. True, many doctors have agreed to sell their practices to the neighboring hospital system or IDN. Yet others are following a different track. They are joining forces with other practices to form large integrated physician groups. Some call them “supergroups.”

Consolidation is definitely heating up, says Denise Wittmer, director of physician practice integration, Joseph P. Melvin Co., Philadelphia, which facilitates and guides the integration of physician practices throughout the country. “Many see it as a way to maintain some stability in their world,” she says. They fear losing their autonomy if they were to be acquired by a hospital system, whereas, in a practice – even in a large one – they can maintain their independence and make the same day-to-day decisions they always have.

Most physicians would prefer to avoid being employed by a hospital, fearing a loss of independence and the ability to run their practice, says Penny Noyes, CEO and founder of Health Business Navigators, Bowling Green Ky., whose mission is to assist medical practices in sustaining independence and achieving an improved bottom line through payer contracting and credentialing solutions. “Most doctors want to feel they make a difference, and it may be harder to find that satisfaction in a hospital-owned practice.”

Discussions about merging with other practices aren’t new, she continues. But today, physicians are moving beyond the “interested” stage and are actively exploring their options, and the requirements and consequences of exercising those options.

“In my experience, physicians are ferociously independent,” says Bill Pickart, CEO, Integrated Medical Partners LLC, and Integrated Radiology Partners LLC, Milwaukee, Wisc. “When they allow their practices to be acquired by the hospital, it’s an indication they didn’t envision any other viable option to remain independent.”

Doctors in group practices want their practices to survive and thrive for the long run, he says. To do so, they need to generate more – and more comprehensive – data about patient outcomes. “The model we are promoting in the marketplace allows them to maintain independence, but also provide analytics and information back to the hospital systems they serve.”

Wittmer, Noyes and Pickart spoke about physician practice integration at the 2014 Annual Conference of the Medical Group Management Association.

Cost. Quality. Both?
Rather than using the term “supergroup,” Wittmer and her firm believe a more accurate moniker is “physician integrated group.” In fact, Joseph P. Melvin works with integrated groups of many sizes – from 20 or 25 doctors, up to 150. “The size really depends on the market, the specialty and their goals,” says Wittmer.

Many physician groups join forces to generate new revenue streams and provide services that they might not be able to perform as small, 3-to-5-doctor practices, continues Wittmer. A large, integrated urology group, for example, might build a radiation therapy center for prostate cancer. It can also increase efficiencies and eliminate redundancies in its operations, including locations.

Information systems are key, she adds. Small practices can face difficulties affording good systems to measure quality. But large groups can share the cost of electronic systems to set up quality measures and then measure performance against them. “Ultimately, [integrated physician groups] can make themselves more appealing to large insurance companies, who are also trying to figure out how to measure quality among physicians,” she says.

Traditionally, physician groups have come together to seek financial leverage, says Pickart. They have sought to use their increased size to obtain discounts for products, equipment and services, as well as to improve their bargaining position with payers. “But what we believe will become more important – and one of the key drivers to the formation of the supergroups we facilitate today – is banding together to provide information on the clinical studies, outcome studies, and the research around them.”

“It needs to go beyond financial integration,” says Noyes. “They must clinically integrate.

“Most [consolidated groups] are still too new to prove their effectiveness, and payers are not as ready as they perhaps should be to roll out and test some specialty models beyond the meager metrics related to, ‘How many patients of a certain age or sex had ‘X’ test done,” she says. But large groups should be prepared to gather more robust information about prevention and efficiency in their treatment protocols.

Overcoming mistrust
Considering many physicians’ fear of losing their autonomy, some consultants are guiding them to a structure that is something short of a full-blown merger. The question, as Pickart stated prior to his MGMA conference is, “How can groups accustomed to operating independently align themselves for sustainability?”

On the one hand, groups have difficulty swallowing the concept of merging with competitors, points out Wittmer. “Once you start talking about a full merger, it scares the heck out of them.” On the other hand, they fear the loss of autonomy should they sell their practice to an IDN.

That’s why Wittmer and the Melvin staff steer their clients toward an integration model. An LLC allows each of the founding groups to maintain their identity, decision-making authority, billing systems, etc. “They are still running their own businesses. The model provides an initial step that enables members to collaborate and eventually move to a full merger.”

Says Noyes, “Most times, physicians have run their businesses for a very long time, doing things their way.” For them, consolidation amounts to nothing less than “letting go of the baby they raised.” Practice managers in the consolidated practice may experience difficulty as well. “Most seem to retain their positions but may have a new non-clinical boss to answer to,” she says.

But in most cases, physicians in the newly consolidated practice continue to work in their current physical locations. Doing so is convenient for them and for their patients. That said, they may consolidate specialty testing and procedures requiring costly equipment. Additionally, they may seek savings by using a single practice management system and revenue cycle management process.

“Banding groups together is difficult, because there is the necessity to merge cultures,” says Pickart. The new group may bring together practices that have been competing with each other for years. Yet participating members are told that transparency and trust is important to the success of the new entity.

To overcome some of the barriers caused by mistrust and fear, Integrated Medical Partners advocates a structure that allows groups of physicians to band together and collaborate without forcing them to deal with culture and valuation issues, says Pickart. “We have developed a legal structure and supporting analytic capabilities that underpin the formation [of a large group], yet sidestep some of these very difficult matters.” Participating groups can continue to bill under their individual tax IDs. This gives them time to build trust and transparency, so that in the future, if they want to form a practice under a single tax ID, they can. “Our model promotes the highest degree of sustained clinical, financial and operational independence by allowing physicians to come together, take advantage of scale, pool outcomes data, and provide sophisticated patient outcome results for the betterment of care.”

EMR: A must-have for integrated groups

Healthcare providers are looking at the prospect of getting reimbursed for their services based on the quality of the care they provide, not the quantity. Generating quality data calls for automated systems as well as people who can analyze it. That’s why the electronic medical record is “one of the foundational elements” of the integrated groups with whom Integrated Medical Partners works, says CEO Bill Pickart.

“We are on the very front end of payers structuring reimbursement programs that pay based on outcomes,” he says. That gives practices some time to build their information systems and develop the tools to analyze the data they generate.

But systems that provide the predictive and prescriptive patterns the industry is searching for are expensive, he says. So are the people who manage and support them. “It requires a significant amount of scale to make the investment in people and the underlying technology platforms to secure the data and provide the analytics that groups require going forward.”

Large integrated groups and, says Pickart, collaborative groups facilitated with the assistance of Integrated Medical Partners, may be the only ones able to generate that kind of scale.

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