Continuing consolidation within the healthcare industry and a changing regulatory landscape are forcing solo and small physician practices to consider giving up their independent status and teaming with a hospital or affiliated clinical group.
According to Kaufman, Hall & Associates, the number of hospital deals that were announced in 2015 was up 18% from 2014 to 112, and 70% higher than in 2010. For independent practices that could be an opportunity, but one that comes with certain costs.
At the same time, the Medicare Access and CHIP Reauthorization Act is establishing new reporting requirements for Medicare value-based payment models created by the law.
In April, the Centers for Medicaid & Medicaid Services released a 962-page proposed rule implementing the new payment structures, and physicians have just six months to prepare for the Jan. 1, 2017, start of the first performance period.
Given these pressures, physicians in independent practices are finding it increasingly hard to remain independent.
Many are looking to join larger practices and hospitals because they don’t have the infrastructure to report the data that’s necessary under MACRA, says Chet Speed, vice president for public policy at the American Medical Group Association.
“Even larger practices — 100 doctors or more, standalone variety where they’re physician-owned — when you think about the requirements to take on risk, that requires a lot of infrastructure that needs to be purchased … and finding capital is difficult," Speed said. "So I think even large groups are looking at possible consolidators.”
But change often involves some pain, and onboarding physicians into a larger organization is no exception.
Solo and small practices operate that way because they value the autonomy that allows them, says Speed. In a large organization, they risk losing that freedom. “They believe a hospital CEO is going to tell them how to practice medicine, that sort of thing,” he says. “There is a morale and culture issue.”
So what should physicians look for when onboarding with hospitals and large health systems?
One of the things AMGA frequently hears from its members is that they want to ensure long-term satisfaction. Smaller practices need to look at larger organizations for “culture best matches,” Speed says, making sure that both sides share the same mission, philosophy and doctor-led culture.
In the end, it may be wiser to choose an organization whose culture mimics yours than to go for the highest bidder, he adds. “Medicine’s becoming a team-based (enterprise), and you want to be happy to be part of that team.”
For hospitals and other organizations that are onboarding previously independent physicians, the key is to set clear expectations, Speed says. These should include expectations around performance, productivity, quality, safety, patient experience, care coordination, and cost.
Jim Pizzo, managing director of Kaufman Hall, says health systems should be doing “a lot of screening” to ensure that a doctor is a good fit not only from a quality and a marketing perspective but also from a culture perspective.
“Will they work well in a group? Will they be willing to begin to accept predetermined criteria and standards of operation? Sometimes the highest producer may not be the person you want to hire, because under a value-based concept, they may over-utilize, they may not spend enough time with their patients, get high enough patient satisfaction, etc.,” he tells Healthcare Dive.
Most of the better-performing hospitals and health systems will also have a model for transitioning new physicians following a merger or acquisition, Pizzo says. For example, prior to the deal closing, they will make sure that all of the credentialing is done and that the physician understands the network he or she is joining.
“So many people wait so long [to credential] that they can’t drop their bills immediately upon a physician’s arrival,” he says.
Because onboarding physicians often have their own electronic medical records, practice management systems and population health tools, a technology transition team is also in order. Pizzo says such teams often go into a physician office over a weekend to do the technology enablement, conduct dry runs and staff training before the system goes live the following Monday.
“The goal there is to make it so that the patients don’t know the difference other than signage will have to change according to CMS regs and other things,” he says.
Once a practice is up and running, hospitals should look at whether the physician could operate more efficiently or whether they could benefit from a different operating model with more mid-level support, Pizzo says. “So if it’s a heavy Medicare practice, would a mid-level help them with patient education so that they could see more patients? If it’s a peds practice, could a mid-level come in and do a lot of the follow-ups for ear infections, strep, some of the real basic things?”
Finally, hospitals need to think about how to incorporate the physician into their value dynamic, he says. For example, if they have incentives in the contract for utilization or quality or patient satisfaction or access, they need to work with the physician to ensure he or she can support those goals and that they can support the physician in attaining them.
One of the toughest discussions at this point is usually access, Pizzo notes. The traditional nine to five, Monday through Friday with maybe Wednesdays off office schedule is out, and patients expect some evening and weekend access. So one of the issues is to figure out how physicians can provide extended access to patients so that they don’t opt for the local CVS or Walgreens clinic instead.
“If you start out of the gate right, where you can schedule the patients, see the patients, get them out, bill them properly, make sure they do the patient satisfaction surveys and follow-ups and extend the access, integrate the medical records—those things may sound like basics, but that’s 80% of successful partnership going forward,” Pizzo says.
Speed agrees. “When you buy a practice, that’s a very large investment, and you’re going to lose money for the first couple of years. You need to make sure that investment you make in that practice works. “