What’s a Doctor to Do in this
Time of Uncertainty

Never in our memory has there been so much uncertainty as to what will happen to healthcare and healthcare reimbursement. Physicians are scrambling for cover by going to work for hospitals, insurance companies and other healthcare related companies. Some are even considering positions in medical research or academia thus ceasing to practice altogether. The following is an opinion article based on 30 years of experience in the healthcare field first as a medical biller, a CPA specializing in working with healthcare providers, Executive Director of a 237 multispeciality physician network in Washington, DC who took on capitated/risk contracts and now a Healthcare Consultant for the last 12 years, working with all types of healthcare organizations.

You must position your practice and yourself for what is coming and this must be done in the next year or two. Some ideas include:

I believe it is going to be very difficult for a solo practitioner to survive past the next few years, unless they change to a non-par or retainer-based model for their practice. Concierge/Retainer-based practice start-ups are going to surge. This model works well for established physicians with loyal, higher income patients. These patients can afford to utilize out of network insurance benefits, pay up front and collect from their insurance later, or are willing and able to pay an annual fee for their care. We would expect that there would be a number of these types of practices opening due to the affluence in the D.C. area.

Smaller and solo practices must connect in some way to enable themselves to have leverage with the carriers, purchase Practice Management and EMR systems that are sophisticated enough to do what the government will require to achieve meaningful use and other reporting requirements, hire management talent to lead the practice through the maze of new laws and regulations and receive the government incentives that will be available.

Merger groups that combine a number of practices together into a new entity to form “Mega Groups” (groups of 30+ Drs) are a good choice in that they allow physicians to maintain much of their autonomy in a “divisional” approach while still having leverage for vendor discounts, carrier negotiations, purchasing of sophisticated technology, and management talent. This is a solid approach but may be the most difficult to do since physicians must give up some of their individual autonomy in the process. One important component of these groups is the level of integration they achieve. The government is looking at these groups closely to ensure they are truly integrated groups with centralized functions including billing, accounting, HR, and benefits. These groups are popping up all across the country, and some of these groups include 100+ physicians.

Hospitals in our area and across the country are forming ACO’s or are in the process of putting the framework in place to do this in the near future. They are hiring primary care physicians and certain specialists that they know can help them manage their census and their costs. The concern for physicians under this scenario is that the government or private payors will pay a lump sum amount to the owners of the ACO’s and the ACO will have the authority to distribute that money and the incentive money any way they see fit. The big concern here would be whether the physicians get a fair amount of money for the work that they are expected to do. Without physician-led initiatives to manage patient care and outcomes, which in turn can control costs, the system cannot work. The million dollar question is whether the hospitals will appropriately share the rewards with the physicians, who are such an integral part of the success of the program.

On the other side, the insurance carriers are also forming ACO’s. Carefirst of DC and Maryland have recently started a Primary Care Medical Home (PCMH) program, which is basically the beginning of an ACO. Patients with high cost health risks and/or chronic diseases are identified and are put into the PCMH program. Services are offered to these patients to keep them as healthy as possible, under the supervision of their PCP. Carefirst offered their physicians a substantial reimbursement increase for ALL of their patients if the practice elected to join this program. The program started in January 2011, so the results are not in yet and we are unsure as to whether this program will work or how the physicians will ultimately be rewarded for controlling costs, in addition to their initial fee increase.

With the advent of the ACO model, one of the models that I believe physicians should look into is a Physician-led, Physician-owned ACO or Co-Op model. Physicians must lead this process, so it might make sense for the physicians themselves to form their own ACO’s. Starting with a strong primary care base (to include internists, family practitioners, pediatricians, geriatricians, and probably OB/GYN physicians) a group should be formed in a similar manner as the physician networks formed back in the mid 1990’s. As the ACO is formed and the initial set-up is in place, specialists can be added by contracting with large mega groups or on a practice by practice basis. The goal is to develop protocols for high cost diagnosis groups and to manage that care as efficiently and effectively as possible. The cost savings on this model can be phenomenal if done correctly.

The government ACO model includes only Medicare patients to start with, but I believe that individual states will follow suit very quickly for their Medicaid patients. Private carriers will follow soon thereafter, if the results are successful. Carefirst is ahead of the curve with their PCMH program.

The last option available to physicians in the coming years which might be a preferred model for some physicians is to join a Kaiser type model, where they are employed and managed in a captive HMO model. This model works very well for some physicians who just want to see patients and not have to worry about the business side of medicine. They want and value job and compensation security, and are not interested in managing their practice but want access to sophisticated IT systems and high level management.

Most importantly if you decide to go it alone, the most essential key to success over the next 3-5 years is to make sure that you are running your practice as effectively and efficiently as possible. Leave no stone unturned when it comes to this. Look at your Revenue Cycle in every respect.

Practices need to run lean, smart and efficiently to succeed in this new age. Look at your Expense side very carefully:

Practices need to know what it costs them to render a service from the rent to the staffing to the supplies. In this new age this is the only way a practice will be able to decide if they can accept a contract or not— whether it be with an ACO, a carrier or another at-risk group.

Physician/NPP Compensation:

Electronic Medical Record Systems:

The next 2-5 years is going to be a challenge for all healthcare providers and organizations. It is important to keep informed about what is happening, and what is coming down the line in order to stay in control of your own destiny as much as possible. GHD is committed to staying on top of all of these issues and has extensive experience in Mega Group merger development, ACO (IPA) development as well as helping practices remain autonomous, if that is what they prefer, in a traditional practice model or a concierge model. Give us a call at 586-772-8100 if you would like to discuss any of these models for your practice/group.