Should I Stay or Should I Let It Go? Accelerating Partnerships in a Pandemic – Part 2

Part 2 – Partnering with Others

 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.

ABOUT THE AUTHORS

Amanda Hopkins Tirrell, MBA, FACHE

Based in North Augusta, South Carolina, Ms. Hopkins Tirrell is President and Founder of Hopkins Tirrell & Associates, LLC a consulting practice offering medical practice operations guidance on patient access redesign, performance improvement, business growth, revenue cycle management and contracting strategy, as well as individualized leadership development, career planning and compensation advisory services for physicians.

For over 30 years, Amanda has partnered with physicians in academic medical centers, integrated healthcare delivery systems and medical group practices across the country. An enthusiastic and energetic change agent with a reliable track record in transformation, clinical strategic planning, 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.

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. For more information about Hopkins Tirrell & Associates and the Multi-Dimensional Due Diligence (MD-DD™) partnership method, contact:  Amanda@hopkinstirrell.com.

Saria Saccocio, MD, FAAFP, MHA

As the Ambulatory Chief Medical Officer for Prisma Health, Dr. Saria Saccocio supports population health initiatives that span across all departments and specialties in the outpatient space, striving for optimization of quality, patient experience and efficiency of healthcare delivery.

Dr. Saccocio has demonstrated a consistent history of leading award-winning programs and improving patient care and safety as a Chief Medical Officer for health systems in the southeast. 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 Free Medical Clinic and precepts family medicine residents at the Center for Family Medicine in Greenville, South Carolina.

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 and community involvement has included serving in many ways including:  The Modern Healthcare Women Advisory Board, board member for the South Carolina Hospital Association, United Way of Greenville County; Big Brothers Big Sisters of the Upstate, the South Carolina Academy of Family Physicians Board, and is an Alum of the Women’s Leadership Institute and the Diversity Leadership Institute at Furman University.

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

REFERENCES

Part 2 – Partnering with Others

16. “Mecklenburg Medical doctors leaving Atrium share details about their new group,” D. Roberts, The Charlotte Observer (June 2018)
17. “Why Are Health Plans Buying Physician Groups?” K. Terry, Hospitals & Health Networks (January 2012)
18. Blue Cross joins the doctors practice party, S. Goldberg, Modern Healthcare (May 2019)
19. Walgreens strikes deal with primary-care company to open doctor offices in hundreds of drugstores, M. Repko, CNBC News (July 2020)
20. “10 Best Telemedicine Companies,” J. Roland & D. Potter, Healthline (June 2020)
21. Fortune Special Report: Change the World, E. Fry & M. Heimer, p. 118 Fortune (October 2020)