Physician Partnering with Others: Traditional and New Options

by Amanda Hopkins Tirrell, MBA, FACHE and Saria Saccocio, MD, FAAFP, MHA | Apr 14, 2021

Physician Partnering with Others: Traditional and New Options

Part 2 of our series “Should I Stay or Should I Let It Go?”

In Part 1 of our series (Medical Practice Consolidation and Physician Practice Viability), we discussed the history of medical practice consolidation in the US and explored how the pandemic’s impact has affected our healthcare system and physicians in medical practice. The pandemic has dramatically accelerated concerns about independent medical practice viability, so we summarized suggested steps for conducting a practice viability self-assessment and recommended performance improvement actions for physicians to “Stay the Course” in their medical practices.

In Part 2, Partnering with Others we outline traditional and novel options for physicians to consider when partnering with others. Historically, physicians increasingly moved from practicing independently to becoming employed by other organizations such as hospitals, health systems and even insurance companies. More recently, with the growth of value-based reimbursement, physician led and built companies backed by private equity investors have offered physicians opportunities to participate in new models of clinical practice that offer an alternative to the fee-for-service treadmill.

PARTNERING WITH OTHERS – TRADITIONAL AND NEW OPTIONS

From Solo to Group Practice – Joining Forces

There are a variety of options for physicians to partner with others. Moving from solo practice to join a group is still a popular and more traditional option. Medical group practices have been able to weather storms like this by joining forces, and as mentioned previously, some medical groups have even spun back out from prior owners to become independent once more.¹⁶

Health Insurance Companies – The New “Payviders”

Health insurance plans have acquired medical group practices to create new “payvider” entities, a combination of payer and provider. There are several examples of health insurers getting into the medical provider business: Optum and ProHealth in Connecticut, Blue Cross and DaVita, Humana and Partners in Primary Care, Blue Cross Blue Shield Illinois and The Blue Door Neighborhood Center.

The rationale for health plans to also become medical providers of care includes expanding their network of providers to improve access; using “big data” analytics to change clinical practice patterns and reduce costs for subscribers and employers; narrowing ancillary service and outpatient diagnostic options to reduce variability and costs; and increasing their market competitiveness.¹⁷ The payvider phenomenon is still a new concept. According to a 2018 American Medical Association Survey, only 2% of physicians nationally work in practices owned by insurers.¹⁸ The pandemic has also impacted payers financially. Over the next couple of years, the ability of payers to keep the payvider trend going by investing in physician practices will depend upon how well health insurance companies weather the current COVID storm.

Investor-Owned Health Services Companies

Large investor-owned health services companies such as Teladoc, CVS/Aetna, and Walgreens are acquiring medical groups, networks, and hiring physicians.

Retail Medicine

Retail medicine is also booming and recruiting physicians, especially in primary care. CVS and Aetna have partnered to support the pharmacy chain’s corner store Minute Clinics and to channel retail pharmacy business. Retail giants like Walmart are building clinics all over the country or are buying existing medical groups, such as Walgreens acquiring Village MD,¹⁹ and investing in these practices. The retail medicine space is highly uncertain however, and physicians need to be prepared for a rollercoaster ride, as these companies’ primary goal always is to support and grow shareholder value for their core retail business.

Telemedicine

Telemedicine has taken off like a rocket thanks to COVID-19. Physicians are finding opportunities to join telemedicine companies or are even striking out on their own as independent contractors with the help of colleagues in organizations like the Institute for Telemedicine Mastery, greatly increasing their independence while maintaining or even improving their income.

Fields of practice in telemedicine have expanded rapidly to include urgent care, family medicine, behavioral health, dermatology, OB-GYN, oncology, and pediatrics. The list of top telemedicine companies²⁰(e.g., Teladoc, AmWell, Doctors On Demand, MDLive, IM-Primary, etc.) is impressive and keeps growing. With the rapid adoption of telemedicine by patients and providers due to the COVID-19 pandemic, investors are accelerating their funding of these ventures.

Although CMS and the commercial payers will likely adjust telemedicine reimbursement downward from the current expanded services and increased rates due to the pandemic, telemedicine is here to stay. Consumers expect its availability, chronic care management is enhanced through telemedicine support, and well-organized telemedicine can improve productivity and efficiency in medical practices.

Concierge Plus – Direct Primary Care

Direct primary care (DPC) is another model of medical practice that enables physicians to remain independent versus having to partner or become employed. Concierge medicine has been in place for decades and provides an additional source of income for physicians. For a monthly or annual fee, patients can purchase immediate, first-in- line access to their physician. Out of pocket concierge medicine fees are collected, and, in some models, fee- for-service payments are collected from government and commercial payers.

DPC goes a step further and allows physicians in practice to eliminate the overhead expense associated with revenue cycle management of billing and collecting from government and commercial insurance companies. Direct primary care is a membership fee model where patients (or their employers) pay a monthly and/or an annual fee directly to the practice. Physicians in direct primary care have the freedom and flexibility to establish the price of membership fees either directly with the patient as consumer or an employer. In markets with reduced or limited access to marketplace health insurance, the DPC option is attractive to people who are uninsured or underinsured or desire improved access to a primary care provider and wish to pay the additional membership fee.

Access in these direct primary care practices is often superior to traditional practices, with same day or next day access the patient expectation and norm. DPC physicians can offer a higher level of care to their patients, noting that they are not hampered by the burdens of fee-for-service medicine and the insurance reimbursement treadmill. Physicians in these DPC practices have the flexibility to choose the size of their patient panel, which can be less than half the size of a traditional primary care physician’s panel. Because they can personally spend more time with their patients with this model, DPC physicians do not require additional clinical support staff or extended care teams, which also reduces overhead costs in their practices without sacrificing accessibility. With the reduction in overhead costs, increased physician and patient (and employer) satisfaction, and the preservation of practice autonomy, direct primary care is growing as an option for primary care physicians to remain independent.

Investor-owned Alternatives – “Concierge Plus”

Like direct primary care, but with the government payor paying the “concierge” fee through a Medicare Advantage plan, investor-owned “Concierge Plus” companies like ChenMed, Iora Health and Oak Street Health offering physicians practice model alternatives to the fee-for-service treadmill, either in their independent private practices or employed as part of a health system-owned medical practice. These companies are often enterprising physician owned and led companies that have raised capital from private equity firms to fuel their practices or fund their exit strategies. These investor-owned companies are expanding to build direct care concierge-type practices across the country, targeting seniors and taking risk with Medicare Advantage plans. They are actively recruiting physicians out of private practice and health systems, with the promise of a significantly smaller patient panel (i.e. as few as 450 patients working for ChenMed), brand new clinic or practice facilities, a user-friendly, physician built EMR, and chronic care management resources for physicians and their senior patients. Iora Health for example adds to their holistic care team model which helps to address health inequities resulting in a better experience for both physicians and patients.

There are concerns the ChenMed model may be light on accountable care, using Medicare Advantage as their sole play and there are concerns about their impact on primary care access in general, with dramatically reduced patient panels. However, this model increases physician and patient satisfaction and offers physicians who are burning out in private practice or disappointed with their involvement in health system operated practices an opportunity to jump ship and get on board with a fast-growing health services company. At #51, ChenMed was showcased by Fortune magazine as one of the Top 100 Companies that will change the world:

“Many think ChenMed’s model is the cure for America’s ailing high-cost health system. The primary care provider has focused on helping seniors avoid expensive hospital stays by preventing problems from getting bad in the first place.”²¹

Management Services Organizations (MSOs)

A management services organization or MSO strategy allows physicians to remain independent while reducing some of the operating and/or reimbursement risk. To boost operating performance, especially with the stressors caused by COVID-19, physicians can contract with MSOs that offer practice management services, such as EHR implementation support, revenue cycle management services, and payor contracting support.

MSOs allow practices to remain independent while providing a shot in the arm for overstretched business operations. Companies like Privia in Florida and Equality Health in Arizona are example of MSOs whose strength is often in negotiating at-risk contracts with payors and then supporting practices with other outsourced practice management services, such as revenue cycle management, central call center scheduling, and EMR implementation support. Private equity owned MSOs offer a full array of practice management services to physicians that allow them to remain independent. Using a single Tax ID billing strategy, these types of MSOs lead payor contracting efforts, consolidated payor contracting, and promise superior revenue cycle management performance. In addition, physicians are offered opportunities to participate in value- based care reimbursement arrangements that offer performance bonuses.

Investor-owned private equity backed MSOs also invest in medical practices by infusing capital for recruitment, equipment, facilities upgrades, or practice location expansion. These companies can also help facilitate the owner’s exit strategy, readying the practice for a future merger with another practice or company. Private equity (PE) backed MSOs come with high valuation, profitability, and return on investment (ROI) expectations. With the COVID-19 pandemic, there has also been uncertainty in the PE-backed MSO marketplace, with increasing consolidation trends for these companies which will likely continue.

Coming in Part 3

In Part 3 Physician Partnerships with Health Systems, we discuss the history of physician partnerships with health systems and the pre-Covid dynamics of these ventures. With the arrival and persistent reality of Covid-19, and from a health system’s viewpoint, we highlight the strengths, weaknesses and opportunities for medical practice partnerships with a health system today during a pandemic.

← Physician Partnerships with Health Systems Medical Practice Consolidation and Physician Practice Viability →

ABOUT THE AUTHORS

Amanda Hopkins Tirrell, MBA, FACHE

For over 30 years, Amanda Hopkins Tirrell, MBA, FACHE has partnered with physicians in academic medical centers, integrated healthcare delivery systems and medical group practices across the country. An energetic change agent with a reliable track record in transformation, operations management and establishing a culture of patient service excellence, Ms. Hopkins Tirrell is a knowledgeable advisor and mediator in developing collaborative alliances and partnerships with physicians, hospitals and community organizations.

Based in North Augusta, South Carolina, Ms. Hopkins Tirrell is President and Founder of Hopkins Tirrell & Associates, LLC a health care management consulting practice offering strategic and operational management solutions to health systems, academic medical centers and physician practices. Consulting services include clinical strategic planning, patient access redesign, behavioral health solutions, physician engagement and network development. Physician practice advisory services include business growth, revenue cycle management and contracting strategy, as well as individualized leadership development, career planning and compensation strategy.

Most recently, Ms. Hopkins Tirrell served as technology strategy advisor for Mass General Brigham’s Chief Information & Digital Officer. As a member of the CIDO’s digital transformation team, she focused on senior stakeholder engagement and digital patient experience transformation to include digital front door redesign and CRM technology implementation to support access improvement and call center optimization. Key deliverables included developing the Digital Patient Experience Strategic Plan & Roadmap and Governance Strategy & Implementation Plan.

Ms. Hopkins Tirrell holds an MBA in health care management from the Wharton School and is a Fellow in the American College of Healthcare Executives.

Contact: (413) 427-4714 (cell) — email: Amanda@hopkinstirrell.com

Saria Saccocio, MD, FAAFP, MHA

Dr. Saria Saccocio is the Chief Medical Officer for Essence Healthcare, of Lumeris.

Dr. Saccocio has demonstrated a consistent history of leading award-winning programs and improving patient care and safety across the continuum as a Chief Medical Officer for health care delivery systems, including on the payer and health system environments. She received her Doctor of Medicine from the University of Florida, and her Executive Master of Health Administration from the University of North Carolina-Chapel Hill. She completed her Family Medicine residency at the University of Miami before opening her own solo family practice. She continues to serve patients at the Greenville Free Medical Clinic.

Becker’s Hospital Review has recognized Dr. Saccocio as one of the top 100 Hospital and Health System CMOs to Know and has been elected to the Alpha Omega Alpha Medical Honor Society. Her extensive civic involvement has included serving with many national, state, and local community organizations such as: the Modern Healthcare Women Advisory Board, Pisacano Leadership Foundation, South Carolina Hospital Association, United Way of Greenville County; Greenville Free Medical Clinic, the South Carolina Academy of Family Physicians, and is an Alum of the Women’s Leadership Institute and the Diversity Leadership Institute and Women of Distinction for Women’s Basketball at Furman University.

Contact Dr. Saccocio at: Saria.Saccocio@gmail.com

REFERENCES

Part 2 – Partnering with Others

“Mecklenburg Medical doctors leaving Atrium share details about their new group,” D. Roberts, The Charlotte Observer (June 2018)
“Why Are Health Plans Buying Physician Groups?” K. Terry, Hospitals & Health Networks (January 2012)
Blue Cross joins the doctors practice party, S. Goldberg, Modern Healthcare (May 2019)
Walgreens strikes deal with primary-care company to open doctor offices in hundreds of drugstores, M. Repko, CNBC News (July 2020)
“10 Best Telemedicine Companies,” J. Roland & D. Potter, Healthline (June 2020)
Fortune Special Report: Change the World, E. Fry & M. Heimer, p. 118 Fortune (October 2020)

Physician Partnerships with Health Systems

by Amanda Hopkins Tirrell, MBA, FACHE and Saria Saccocio, MD, FAAFP, MHA | Apr 21, 2021

Physician Partnerships with Health Systems

Part 3 of our series “Should I Stay or Should I Let It Go?”

In Part 1 of our series (Medical Practice Consolidation & Physician Practice Viability), we discussed medical practice consolidation trends and the pandemic’s impact on the healthcare system and physicians in practice. We offered a practice viability self-assessment and recommended performance improvement actions to “Stay the Course.”

In Part 2 Partnering with Others, we highlighted a variety of partnership options for physicians to consider including investor-owned companies that offer new models of clinical practice as alternatives to the fee-for-service treadmill.

In Part 3 Physician Partnerships with Health Systems, we discuss the history of physician partnerships with health systems and the pre-Covid dynamics of these ventures. With the arrival and persistent reality of Covid-19, and from a health system’s viewpoint, we highlight the strengths, weaknesses and opportunities for medical practice partnerships with a health system today during a pandemic.

PHYSICIAN PARTNERSHIPS WITH HEALTH SYSTEMS – PRE-COVID

Physician Practice Integration – The Strategy

Physicians and their practices have been integrating into health systems for many years. Less than twenty years ago in 2000, fifty-seven percent of physicians were caring for patients in independent practices.²² As mentioned previously, hospital ownership of medical practices was relatively constant in the late 1990’s to early 2000’s, but then this phenomenon increased by more than 50% from 2003 to 2011. Then in 2018, for the first time, there were fewer physician-owned practices than employed physician arrangements nationwide.

Historically, a hospital or health system’s rationale for employing primary care or specialty physicians and incorporating their practices helped to ensure downstream referrals to hospital emergency departments and inpatient units, hospital-owned laboratory and radiology testing, diagnostic procedures, and surgery services. Having these practices as part of the health system helped to ensure “brand loyalty” for patients needing surgery, emergency services, or hospitalization. Assimilating medical and surgical specialty practices made hospitals more competitive and protected their market position in the provision of high-end specialty services.

With the growing concern for overutilization of unnecessary services, and the advent of accountable care and value-based care payment arrangements, health systems pivoted to include primary care in their strategy to help drive improvements in cost and quality across the health continuum. However, with the consolidation of medical and surgery practices into health systems, the cost of care often has not improved and has in many markets actually increased. Health systems have much larger overhead and participate in heavily weighted fee-for-service payment arrangements to include facility fees, thereby increasing the cost of provider office visits and not necessarily with demonstrated or related improvements in outcomes and the quality of care delivered.

In more underserved rural communities, the incorporation by rural hospitals of community physicians and their practices has ensured survival of these practices to meet the needs of the community. Faced with increasing downward reimbursement pressures plus rising infrastructure costs (e.g., staff, IT, medical equipment, etc.), many practices had no choice but to partner with local hospital to stay in business. These partnerships ensured the survival of the both the practices and the hospital, not to mention ensured access to care for patients.

Infrastructure Resources and Support for Physician Practices in Health Systems

Hospitals and health systems can offer resources to physicians that they could not afford on their own, to include expanded support teams, human resources, IT support, purchasing etc. However, hospitals have not proven to be experts in medical practice management, and often when a medical practice is brought into the system, the practice must compete for resources with the more lucrative fee-for-service hospital departments. Furthermore, the investment per provider can potentially exceed expenses of private practices, as the business model of hospitals often requires increased overhead due to regulatory modifications to buildings and processes.

At the same time, physicians moving from solo practice into a hospital-owned medical group have found support being part of a team of colleagues, and if they are well represented leading clinical quality improvement efforts, the experience can be rewarding. In addition to a relatively stable salary arrangement, physicians joining a health system can take advantage of a collegial, team-based environment and better work-life balance through nurse triage supported by the hospital and sharing after-hours call with a larger number of colleagues. Care management, pharmacy support, compliance expertise, and coding guidance may also ease the administrative burden. In addition, physicians joining an academic medical center have an opportunity to broaden their work to include teaching the next generation of physicians, in addition to their clinical work with patients.

Practice management services provided by the health system can include IT support, data analytics, and decision- support as well as revenue cycle management services. The capital needs for the practice are also shouldered by the system, including maintenance and equipment.

Partnerships with Health Systems in a Pandemic — Considerations for Physicians

When physicians consider leaving their private practice to join a health system, health systems typically offer direct employment and sometimes medical leadership roles in the organization. Before the pandemic, physicians may have been contemplating partnerships with health systems as a way to reduce reimbursement risk, offer a steadier salary stream, and gain access to more resources that could help take better care of their patients. Where physicians consider placing their alliances or collaborations to help take better care of their patients is important, as is the type of relationship that is offered. For example, is there more of a partnership philosophy or a pure employment strategy? What are the mission, vision, and values of the organization? Do these tenets resonate? Is there more of a focus on “the bottom line,” and does that focus override the quality experience the physician comes to expect? Making sure priorities are aligned is key to partnering with or becoming employed by a health system.

The COVID-19 pandemic has applied significant operational and financial stress on health systems nationwide. Given the pandemic will be with us for a while, physicians considering partnering with a health system should ask how it initially responded and continues to respond to the pandemic. How have physicians who are part of the organization been treated in their relationship with the health system pre-COVID and today? How have all team members been treated regardless of the role they play in caring for patients – a physician, a nurse, or an environmental services worker? The response to the pandemic is an important litmus test for physicians considering joining a health system.

In general, what resources are available for physicians to take the best care possible of their patients? What human resource support is provided? Are IT/EMR support and data analytics part of the package? During the pandemic, was telehealth available or rapidly developed to provide access and continuity of patient care? Readily available and meaningful data is becoming even more important for taking care of an entire population rather than relying on fee-for-service types of transactions. Did the availability of these resources change, or did they have to be redeployed due to COVID-19? Was this support replenished as the health system adjusted to the pandemic and stabilized?

Some health systems are further along than others in the population health and value-based care transformation journey. How integrated and involved are physicians in this transformation? Whether physicians consider joining a health system or an MSO, what is the type of integration happening for the entire healthcare team? That is the lens that is most important as a physician considers the daily experience, the relationship, and what it would look like going forward.

Fast Forwarding Through COVID With Innovation

Fast forwarding through COVID, we have all experienced challenges with the pandemic. COVID did not come and go as many of us anticipated. Across the country, medical practices and health systems have been coping with multiple waves of outbreaks of the virus, which stresses providers and taxes healthcare resources. The pandemic will be an ongoing challenge, but it also provides an excellent opportunity to consider how our health systems, Medical Services Organizations (MSOs), and Clinically Integrated Networks (CINs) have responded and will respond to the ongoing challenges of the pandemic. How are they meeting the needs of patients where they are? For example, as mentioned previously, how have these organizations tackled innovative care delivery options like telehealth and improved access to care for patients?

What types of data have been made available to address gaps in care as well as to address the needs related to COVID? The pandemic has been a challenge for us all and watching and observing how organizations react and respond to COVID is an excellent exercise to consider other pivot points, and stress opportunities with performance. What does the relationship look like? Was there a change, positively or negatively, in the partnership with their physician leadership or others who are part of the healthcare team? How did the system respond and how were they received within the community? These are all very important questions to ask as physicians consider who their best partners might be. And how or when is the ideal time to consider that jump or transition if you are considering alignment with another partnership?

What can we expect for the future? COVID is not behind us, as it is still in front of us and has changed healthcare overall for all going forward. For example, what kind of ongoing resources and platforms are available for telehealth connections? How about remote monitoring devices for patients who are in a practice or in acute care? How will we take technology to the next level and ensure this progress will continue going forward?

How will the pandemic change physician-health system partnership strategies? What is on the horizon?

“We really thought that this pandemic was going to be a short-lived phenomenon, but we are finding that this “new normal” will transform how we deliver care in the future permanently.” ~ Saria Saccocio, MD, FAAFP, MHA ²³

The strengths and weaknesses of physician-health system integration have been highlighted by the reality of living and working with a deadly pandemic that, to date has killed more than 500,000 Americans and counting. Frontline health workers have put their lives on the line like no other time in modern healthcare history. Shortages of testing resources, personal protective equipment, and, during its peaks, of hospital beds have shaken the industry. Medical practices were forced to close altogether or greatly reduce their capacity to see patients. Many patients have not yet returned to doctors’ offices even months later, and there is growing concern that especially those with chronic conditions will lose ground in managing their care in partnership with their physician.

Primary care practices and selected specialty practices within health systems experienced the same challenges as their colleagues in the community during this time. However, health systems with adequate resources and stronger balance sheets were able to avoid or minimize layoffs and salary reductions for their providers. Some were not so lucky. Rural hospitals and the practices in these communities have suffered disproportionately, not unlike the communities they serve.

Since the pandemic, some hospitals and health systems are questioning once again their strategy to integrate medical practices into their systems, while others are more resolute to continue and even accelerate physician practice integration to be successful with their value-based care efforts.

The benefits of partnership between a physician and a health system for salary support were highlighted or demonstrated a weakness, with some organizations having to layoff providers and/or reduce their salaries. These issues were short-lived in many cases, with volumes rebounding to pre-Covid levels and sometimes higher.

The explosion of telemedicine in medical practices has had health systems rethink their master facilities plans. Telemedicine adoption by consumers and providers reached a peak in the early months of the pandemic but has settled into a more routine channel for patients to communicate with and receive treatment from their providers. Early estimates during the outset of the pandemic predicted as many as 30% to 50% of traditional in-office visits would shift to virtual visits. As systems have adjusted to the pandemic, in-person visits have rebounded, and telemedicine visit volumes medical visits are settling in at a lower rate (e.g., 15-20%). Telemedicine utilization rates for mental health and behavioral health are staying much higher (e.g., 85%). Exactly where telemedicine volumes land will depend on the area of the country, broadband capabilities (e.g., rural vs. urban), and, most importantly, provider and patient adoption. In the meantime, health systems are pondering how they will adapt their bricks-and-mortar facilities and space planning to the new reality. What will be the best way to utilize thousands of square feet of potentially unused exam room space?

Coming in Part 4

In Part 4 – Accountable Care and Physician-Health System Partnerships, we will describe the impact of accountable care and value-based reimbursement on health system-physician relationships. The health-system sponsored Clinically Integrated Network (CIN) is one option for physicians to remain independent and still participate in the accountable care movement. However, physicians can participate and succeed in value-based care transformation by joining non-health system driven Accountable Care Organizations (ACO’s). Physician-led, private equity-backed ACO’s have become increasingly viable options for physicians and their practices to remain independent and be successful in improving care and reducing health care costs.

← Accountable Care and Physician-Health System Partnerships Physician Partnering with Others: Traditional and New Options →