Physician/Hospital Partnerships - What's in it for me?

Thursday, July 12, 2012 | Joel Sauer

In truth the main motivation behind the significant migration of private cardiology practices into integrated hospital models was financial. Private groups were seeing major erosion of reimbursement on all the things that historically made money, such as ancillary services. At the same time, costs kept growing. The net result was decreased physician compensation. That’s not a pleasant place to be. And the fix worked. Integrated cardiologists were able to replace income lost from the trends noted above. Looking at the most recent 2011 MedAxiom survey data, the median income for cardiologists in a private practice was $421,500. By comparison, those in an integrated (employed) model had median compensation of $535,500. That’s a 27 percent delta! However, there are substantial benefits beyond just money; for all parties. Think just for a moment of all the redundancies that inherently exist when healthcare is compartmentalized into different entities. A patient first has to register at the cardiology office, then start all over again if they are admitted or need testing at the hospital. There are additional unseen registrations if radiology, anesthesia or pathology are involved. Each of these is very necessary in the silo world so each can collect their respective fees for services. In the integrated model, these are nothing but redundant costs, bringing no value to the entity and certainly none to the patient. I just picked on registration as one example, but the list of others is long and distinguished. Scheduling, compliance, medical records, transcription, billing and collections, accounts payable, and information technologies are all either oversized or completely duplicative in the non-integrated world. These are all operational in nature, but quality too is impacted by the segmented world. Simple things like making sure all the pertinent patient clinical information is in the right place at the right time is a real challenge, even when electronic. Systems must be connected and the data normalized in order to make it useful. This is a big job with a big price tag, so getting the payback to sync for separate entities is nearly impossible. When combined into an integrated cardiovascular service line (CVSL), incentives are much more aligned to attack these inefficiencies. This connection is even stronger when the physicians are in the role of managing the CVSL and have real compensation dollars at risk for doing so expertly. Certainly hospitals and health systems benefit from reducing costs; it’s a direct bottom line issue. Physicians benefit directly through compensation, but also by remaining a valuable partner in the integrated model. Keep in mind: contracts have to be renewed! Historically (and still largely today) physicians were paid for ringing the bell (think work RVU). Each clang produced revenue. Not surprisingly, physicians got very good at bell ringing! Healthcare is now in the midst of a paradigm shift that some have labeled a migration from volume to value. Value is not just about quality. It also considers experience and cost. Together the three (experience, cost and value) are called The Triple Aim. It’s hard to imagine successfully impacting The Triple Aim in a fragmented world. In addition, this pursuit is going to put tremendous pressure on volumes – at present the only revenue generating activity in a private practice. Volumes have also been depressed by the economy, a meteoric rise in patient out-of-pocket expenses, the implementation of Appropriate Use Criteria (AUC), and technology successes like statins. Given all of this, physicians are wise to show value beyond just simple volume production. Bringing disparate parts together in a CVSL is a challenging proposition and doesn’t just happen organically once the agreements are all signed. Thus, expertly managing it and showing tangible results from all the opportunity available is of tremendous worth. As the single largest controller of healthcare costs, physicians are uniquely situated to drive positive change toward increasing value. For the first time the integrated model allows physicians to create this value without hurting their own incomes. So what’s in it for you? The ability to impact positive change for patients, the system and you. Now that’s a trifecta!

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