Are Independent Medical Practices Sustainable and/or Realistic? And More and More Unaffordable!

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I had an interesting discussion with a CFO of our local hospital system. He affirmed my thoughts regarding the future of healthcare and private practice. With advent of the All-Payer System, that is paying the hospitals or large health care systems yearly to “run” their system. And the future payments of patient activities based in the diagnosis codes….ICD-10 codes…procedural payments will be bundled and “sent” to the hospital or health care facility for distribution. If you are an employee, you are included, heck, you are salaried. If you are not, you are paid after all other parts/expenses of the delivery system are “covered.” So. The private practitioner and especially the solo practitioner loses again. How can the private practitioner exist in this health care delivery system? But it is a wonderful system where the government single payer system can exert ultimate control!

In a recent article Alicia Gallegos further discusses the issue of the future independent medical practice in her article in “Dermatology News Digital Network” stating that sustaining an independent practice in today’s medical landscape isn’t easy, but it’s possible with the right care model, strong partnerships, and solid negotiation power.

There is no one-size-fits-all approach to maintaining independence, said David W. Hilgers, an Austin, Tex., health law attorney who specializes in advising independent practices and integrating systems.

“It depends on the market you’re in and the specialty you’re in,” Mr. Hilgers said in an interview. “It all comes down to how much leverage you can have, if you’re willing to consolidate to get that leverage, and if you’re willing to spend the money to have the technology that you need.”

It’s no secret that more physicians are becoming hospital and health system employees, in large part to escape a growing burden of government regulations and reimbursement woes. A 2015 physician survey by national staffing company Jackson Healthcare found the top reasons that doctors leave private practice include the high cost of maintaining a medical practice, reimbursement cuts, and a desire to focus on practicing medicine and patient care – rather than administrative hassles. Another study, released July 8 by the American Medical Association, found the share of physicians who worked directly for a hospital, or in practices that had at least some hospital ownership, increased from 29% in 2012 to 33% percent in 2014. The number of doctors who owned a practice fell from 53% to 51% during the same time period.

However, the AMA data show the majority of physicians (61%) were still in small practices of 10 or fewer physicians, and that practice size hardly changed between 2012 and 2014. Experts say the findings point to a strong desire by doctors to remain autonomous.

“There are benefits to being employed by a hospital or health care system as far as a steady income, but there’s also something very satisfying to physicians about controlling their own destiny,” said Heather F. Delgado, a Chicago health law attorney, who specializes in compliance and regulatory matters. Ms. Delgado and Mr. Hilgers recently spoke at an American Bar Association (ABA) conference about how physicians can sustain an independent practice.

To retain autonomy, physicians in smaller practices may want to consider changing their care delivery model to a less traditional structure, such as the concierge model, Mr. Hilgers advised. Primary care physicians may be more suited to this model than other specialties, he noted.

“For a very small practice, if you want to stay in practice, you need to look at concierge care and see if you can make that work,” Mr. Hilgers said in an interview. “If you’re in a larger town, you’re going to have a very difficult time remaining independent. If you’re in a small town, you may be able to continue because the insurance companies need you, but your income is going to be limited.”

Starting or joining an accountable care organization (ACO) is a good option for mid- to large-sized practices, Mr. Hilgers said. Doctors will want to analyze the type of technology they need to efficiently operate an ACO, he noted. Successful ACOs must possess an information technology infrastructure with specific competencies to support governance, operational, and clinical goals objectives. It also helps to have a stable patient base to bring to the ACO.

“If you’re in a larger practice, you need to expand your reach so that they can’t do without you,” Mr. Hilgers said in an interview. “The insurance plans have to have you. You need to perhaps [participate in] your own Medicare Advantage plan so that you are generating revenue from the federal government and insurers directly. You need to start looking at being more than just a medical group, but taking advantage of these alternative types of insurance plans.”

Consolidating with other physicians can also help secure a more stable place in the market, added attorney Albert D. Hutzler, a financial analyst at a health care valuation consulting firm in Delray, Fla. Adding more doctors can give a practice more leverage with insurance companies and better negotiating power to set rates. But once a practice grows, it’s vital to pay attention to ongoing recruitment, said Mr. Hutzler, who also spoke during the recent ABA meeting.

“A stable physician base is very important,” he said in an interview. “You need the ability to recruit others. That way if things don’t work out with somebody, you’ve got to have others in the pipeline.”

Physician-hospital partnerships – rather than employment relationships – also can provide strategies to stay independent, said Ms. Delgado. For example, doctors could opt for a clinically integrated system in which they maintain their office practice but become a preferred provider of a hospital. Other options include entering into a medical directorship or management services deal with a hospital or agreeing to staff a hospital clinic several days a week, she said.

“Maybe you enter into an agreement with a hospital that wouldn’t mean you are employed, but gives you a relationship with them so that you can work with them,” Ms. Delgado said in an interview. “That way, you are able to remain independent, but [are] able to get some benefits from the hospital.”

Doctors determined to retain their private practice must also be mindful of their collections efforts, Mr. Hutzler said. Most practices are going to have some debt on their books, he noted, but it should not grow out of control, nor should physicians constantly be borrowing against the practice. Additionally, practices should ensure their contracts with insurers are firm and that they are receiving payment as outlined in their agreements.“You don’t want lose out in private practice just because you do an ineffective job collecting from payers,” Mr. Hutzler said in an interview. “You need a solid business office to make sure you’re getting everything you can out of your payer contracts.”

“You don’t want lose out in private practice just because you do an ineffective job collecting from payers,” Mr. Hutzler said in an interview. “You need a solid business office to make sure you’re getting everything you can out of your payer contracts.”

Whether it’s worth it to remain independent depends on the physician and his or her goals, Mr. Hutzler said.

“They both have their pros and cons,” he said. “You have to decide which set of risks that you want” to take on.

Some wise suggestions, which are simple efficient financial business strategies. It still leaves some doubt regarding private practice, but most importantly doubts about the future of the solo practitioner who can’t afford the computer hardware, software and additional staffing to meet the requirements of the “new” health care delivery model.

More and More Unaffordable

Dr. Jane Orient the Executive Director of he Association of American Physicians and Surgeons stated in a blog post that health insurers throughout the U.S. are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected, writes Robert Pear. The rate requests are the first to reflect a full year of experience with the new insurance exchanges and federal guaranteed issue/community rating. In Oregon, claims exceeded revenue by more than $100 million.

Jesse Ellis O’Brien of the Oregon State Public Interest Research Group said: “Rate increases will be bigger in 2016 than they have been for years and years and will have a profound effect on consumers here. Some may start wondering if insurance is affordable or if it’s worth the money.”

President Obama said consumers should complain to state insurance regulators.

Only the billions of dollars in subsidies keep premiums remotely affordable for some. And just as predicted, low-risk individuals are shunning the Exchanges. Just 250,000 people took advantage of a special enrollment period earlier this year to purchase coverage. The law’s boosters envisioned that five times as many might do so, writes Sally Pipes. More than 6 million taxpayers paid the fine for not having qualifying insurance.

Enrollment figures show why ObamaCare in its current form isn’t “here to stay.” It is fiscally unsustainable, writes Robert Laszewski. “The proportion of the population that is signing up for Obamacare is concentrated in the very lowest income categories while Obamacare is obviously unattractive to everyone else.” The real question for Americans is whether their hospital and their doctor are here to stay as health plan mega-mergers shift power and profits to cash-rich plans, which are no longer risk-bearing entities. “The whole model of healthcare has changed in the past twenty years to have the provider taking the risk,” states Robert Fuller, J.D. former chief operating officer of Downey Regional Medical Center in Los Angeles.

“Seventeen states have a single health insurer with a commercial market share of 50% or more,” states AMA president Steven Stack, M.D. “The dominant market power of big health insurers increases the risk of anti-competitive behavior that harms patients as health insurers substitute corporate policy over good clinical decisions.”

One innovation that is making care affordable is the spread of direct-pay practices, writes Paul Hsieh. M.D., and laws in 13 states that have now declared that direct pay practices will not be subject to inappropriate insurance regulations.

Next let’s continue to look at other health care systems!!

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