Medical Practice Consolidation and Physician Practice Viability

Part 1 of our series “Should I Stay or Should I Let It Go?” 

Medical Practice Consolidation – Pre-COVID-19

Before COVID-19, the environment for medical practice consolidation nationally had been accelerating for both specialty practices and primary care, with more and more physicians moving from independent private practice to employed arrangements. Hospital ownership of medical practices increased by 7% per year from 2004 – 2010¹  while employment of physicians by hospitals increased by 55% from 2003 – 2011 after being relatively constant from 1998-2003.²  From 2010 – 2016 independent primary care practices nationwide declined from 41.6% to 35.3% and primary care physicians working in hospitals or health systems increased from 27.7% to 43.5%.³  In 2018, for the first time nationwide, there were fewer physician-owned practices (45.9%) than employed physician arrangements (47.4%).^4,5

Not all parts of the country have moved as quickly to consolidate medical practices. In the Southeast, for example, in South Carolina specialty practices have been somewhat slower to consolidate.  In 2017, the majority of South Carolina physicians in all specialties were self-employed (54.6%) versus employed (40.7%).  Primary care, on the other hand, has moved more quickly to consolidation South Carolina. In 2017, the percentage of primary care physicians in South Carolina was relatively equal with 47.3% self-employed versus 46.8% employed.⁶

Medical Practice Environment for Consolidation – During and After the Pandemic

As the country adjusts to the “new normal” of living and working with the COVID-19 pandemic, the healthcare industry, including physicians in practice, look ahead to a post-pandemic health care environment of the future. The COVID-19 pandemic has certainly increased the uncertainty of medical practice independence.

Early in the pandemic during the spring of 2020, a Merritt Hawkins survey of physicians predicted significant changes in physician practice patterns. In this survey, sixty-six percent (66%) of physicians reported they would “Stay the Course,” but 32% planned to change practice settings, retire, temporarily close their practice, or opt out of patient care entirely.⁷

During this early peak of the pandemic, there was significant fear of practice closures, with primary care at greatest risk.^8,9  By the fall, nearly 20% of primary care practices surveyed reported practitioners had retired early due to Covid-19.  And as these practices headed into flu season, 56% of practitioners surveyed reported record high levels of mental/emotional stress and exhaustion¹⁰ with no end in sight, making the viability of these practices just as uncertain as during the early days of the pandemic.

Some hospitals furloughed their physicians or cut compensation, and further consolidation has become much more uncertain as some hospitals face a cash crunch.  Yet, there are examples of reverse consolidations or “spin-outs,” as in the case of Mecklenburg Medical and Atrium Health, as well as Steward Physicians and Steward Health’s owners,¹¹ where physicians unwound business relationships with their non-physician group owners.

Assessing Current-State Viability

Given the volatility of the environment, how do physicians assess the current-state viability of their practice?  The following questions should be considered:

• Patient Visit Volumes – Have post-lock down patient volumes rebounded? The Commonwealth Fund reported that in late April 2020, ambulatory care practice volumes plummeted by nearly 60%.¹² How has the practice adapted to the “new normal” for treating patients during a protracted pandemic?  Have different channels of treatment and communication, such as telemedicine or remote care been added to the practice’s workflows? How have patients and staff adjusted to these new processes?
• New Patient Channels – For practices that incorporated telemedicine into the practice during the beginning of the pandemic, do they have the support infrastructure to make this a permanent channel?  Going forward, the percentage of telemedicine vs. routine in-office visits could be as high as 30% to 50% of total office visits. Does the practice have the ability, resources, and desire to include telemedicine and/or remote care as a permanent patient channel?
• Physician-Patient Relationships – How are the physician relationships with their patients?  How do they know?  During this peak of the crisis, many physicians reached out to their patients by phone or video conferencing and they found their “currency” with their patients – their relationship – was strong. As a result, they were confident their patients would return for in-office visits.
• Patient as Consumer – How reliable is the practice’s patient or consumer data?  The “Patient as Consumer” is a key aspect of assessing and managing patient relationships using data. Customer relationship management (CRM) is a tactic more practices are adopting to be proactive in meeting their patients’ needs.  In a pandemic, CRM generated information can be even more helpful to ensure patient retention in the practice.
• Value-based payments – During the lowest point of the crisis for in-person office visits, providers who had value-based payment arrangements already in place were shored up by a steady source of income.¹³ Does the practice have the clinical support and data management infrastructure to accept more value-based payments? This support infrastructure includes an Electronic Health Record (EHR) and Practice Management system, reliable decision-support data, clinical and quality management support staff, and payer contracting expertise.

Improving Operating Performance to “Stay the Course”

Pandemic or not, the ability to improve operating performance is key to any medical practice “Staying the Course” and remaining viable. From patient scheduling to revenue cycle management, to IT services and purchasing, physicians and their teams should continually find ways to improve performance.

Practice Management Services – Targets for Performance Improvement

Elements of practice management services to target for improving performance include patient scheduling, revenue cycle management, purchasing, payer contracting, information technology, and human resources management.

To evaluate patient scheduling for performance improvement, on-site and remote access capabilities, telephony and schedule systems, and customer relationship management functionality should be considered.  Effective and efficient revenue cycle management (RCM) begins from the point of patient scheduling and expands to include all elements of the RCM cycle: coding, charge capture, collections, patient responsibility financing, and clinical documentation improvement.

Payer contracting capabilities include the practice’s abilities to contract with payers for traditional fee-for-service payments as well as value-based payments arrangements, which are increasing. Provider enrollment effectiveness and credentialing operations efficiency should not be overlooked, as payers are increasing their reliance on narrow network strategies to control costs, and long lag times to credential providers impact collections of non-government payer reimbursement.

The importance of adequate and well-managed medical practice infrastructure in information technology (IT), purchasing and human resources cannot be understated. Before the pandemic, effective vendor contracting for durable medical equipment (DME) and supplies was standard. During the pandemic, a medical practice’s purchasing power and supply chain access have become a critical priority, especially related to reliable and affordable purchasing of personal protective equipment (PPE) and medical supplies.

In addition to the human resource (HR) management basics of payroll and benefits coordination, HR management effectiveness for recruitment, retention, and managing medical leave for staff became even more critical during the pandemic.

With the advent over the past ten years of EHRs, well-performing information technology support is a given in medical practices, with IT support needed from EHR and practice management systems implementation, training, maintenance, and upgrades. The EHR itself has not kept up with a physician’s need for helpful and accessible clinical data to support patient care. Does the practice have capabilities to implement clinical and business decision-support tools to help physicians care for their patients?  During COVID, the IT capabilities to rapidly implement and support telemedicine solutions became critical. Maintaining responsive and effective IT capabilities will remain key to sustain the practice throughout the pandemic and well into the future.

Smaller independent practices that are struggling to keep up with the technology and infrastructure expense demands of these services, especially with the added pressure of the new COVID-19 reality, have outsourcing options working with management services organizations (MSOs). Although the tendency in a crisis may be to go into cost-cutting mode, practices do not want to be “penny wise” and undercut their ability to operate in the long term. MS’s can offer “a la carte” or “all-in-one” support to medical practices to enable them to retain their independence and viability.

Effective payer contracting is a key aspect of medical practice operations, and physicians should assess whether they have enough contractual expertise to negotiate with payers for value-based payments. Payers nationally and in the Southeast are working to accelerate value-based payment arrangements to help reduce costs and improve quality, as well as support physician practice independence and viability. Blue Cross and Blue Shield of Minnesota and Minnesota Healthcare Network, a group of 47 independent primary care practices in Minnesota and Wisconsin, came to an agreement to accelerate the transition to value-based payment and provide financial resources for long-term stability.¹⁴ Blue Cross Blue Shield of North Carolina is also accelerating value-based payment arrangements to physicians but requiring practices to remain independent.¹⁵       

Conclusion – Part 1

We conclude Part 1 of our series Should I Stay or Should I Let It Go? Accelerating Partnerships in a Pandemic noting how significant Covid-19’s impact has been on the healthcare system in our country and especially on physicians  in practice. To date, in the US there are 28 million Covid-19 cases reported with more than half a million deaths. Physicians in practice on the front lines have experienced tremendous stress as both practitioners and small business owners.

The pandemic has dramatically accelerated concerns about independent medical practice viability.

Coming in Part 2

In Part 2 of our series Should I Stay or Should I Let It Go? Accelerating Partnerships in a Pandemic,  we will 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.

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 1 – Medical Practice Consolidation and Physician Practice Viability

1. MGMA/ACMPE State of Medical Practice Report, Medical Group Management Association & American College of Medical Practice Executives (January 2012)
2. Reforming America’s Healthcare System Through Choice and Competition, US Department of Health and Human Services, et. al. (December 2018)
3. Ibid, p. 28
4. “Updated Data on Physician Practice Arrangements: For the First Time, Fewer Physicians are Owners Than Employees,” American Medical Association, AMA Economic and Health Policy Research, C. Kane PhD (May 2019)
5. “Employed physicians now exceed those who own their own practices,” T. Albert Henry, American Medical Association (May 2019)
6. South Carolina Area Health Education Consortium (AHEC) in the South Carolina Office for Healthcare Workforce based on 2017 licensure data, K. Gaul (July 2020)
7. Survey: Physician Practice Patterns Changing as a Result of COVID-19, Merritt Hawkins & The Physicians Foundation (April 2020)
8. “Primary Care Practices Need Help to Survive the COVID-19 Pandemic,” P. Grundy, MD, K. Terry, The Health Care Blog (May 2020)
9. “1 in 3 primary care doctors fears having to close practice over coronavirus,” M. Moench, San Francisco Chronicle (May 2020)
10. Quick COVID-19 Primary Care Survey, Larry Green Center & Primary Care Collaborative (May 2020 & September 2020)
11. “Physicians Acquire Steward Health from Private Equity Firm,” S. Livingston, Modern Healthcare (June 2020)
12. “The Impact of the COVID-19 Pandemic on Outpatient Visits: Practices Are Adapting to the New Normal,” A. Mehrotra, M. Chernow, et.al., The Commonwealth Fund (June 2020)
13. “COVID-19 May End Up Boosting Value-Based Payment,” S. Livingston, Modern Healthcare (June 2020)
14. Blue Cross and Blue Shield of Minnesota press release (September 2020)
15. N.C. Blues to pay primary-care practices to stay open, join value-based care, S. Livingston, Modern Healthcare (June 2020)