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

Contributors: Amanda Hopkins Tirrell, WG’86, FACHE and Saria Saccocio, MD, FAAFP, MHA
To learn more about Amanda and Saria, click here.

 

In Part 1 of our series "Should I Stay or Should I Let It Go? Accelerating Partnerships in a Pandemic," we explored how the pandemic’s impact has affected our healthcare system and physicians in medical practice.  With over 35 million reported Covid-19 cases to date in the U.S. and close to 615K deaths, physicians on the front lines have experienced tremendous stress as both practitioners and small business owners. Indeed, the pandemic has dramatically accelerated concerns about independent medical practice viability.

For decades prior to the pandemic, the healthcare industry had been undergoing dramatic changes which made conditions favorable for physician practices to consolidate. In Part 1, we discussed how physicians have increasingly moved from independent practice to employment working for 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.

In Part 2 of our series, we discuss the history of physician partnerships with health systems and the pre-Covid dynamics of these ventures.  From a health system’s perspective, we highlight the strengths, weaknesses and opportunities for medical practice partnerships with a health system today during a pandemic. For physicians in practice, “Should I Stay or Should I Let It Go?” is such an important question even in normal times. To that end, we conclude our series by offering a practical multi-dimensional decision-making framework for physicians contemplating their next steps during these challenging times made even more urgent by the 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. 24 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 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 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.

Physician Partnerships with Health Systems – 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 25

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 close to 615,000 Americans and counting. Frontline healthcare 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 rethinking 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 at 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 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 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? 

DECISION MAKING AND NEXT STEPS – THE MULTI-DIMENSIONAL DUE DILIGENCE (MD-DD™) APPROACH

Decision Making and Next Steps
During 2020, “The Year of Pandemic,” many physicians in private practice were challenged with keeping their doors open and the lights on for their patients. “Should I Stay or Should I Let It Go?” is such a big question, and given the challenges over the years in the healthcare environment, this is certainly not the first time physicians have asked themselves this question. Yet how does a physician decide to take the next steps toward partnership?

When considering a move from autonomous private practice to partnering with others, for example, another provider, medical group, health system or health services company, there are four key elements to evaluate using a Multi-Dimensional Due Diligence (MD-DD™) approach: 

  • The Patient as Consumer
  • Clinical Operations
  • Revenue Cycle Management
  • Organizational Culture Assessment

The Patient as Consumer
Patients are increasingly savvy consumers of medical care looking for ease of access, a positive patient experience, affordable costs, flexible and safe locations, and convenient channels of communication and treatment with their physicians, such as telemedicine.  Patients and their families are spending a record amount of money on co-insurance and deductibles, so they expect “value” for their healthcare dollar. They are increasingly looking for physicians who get great reviews on the Internet and in whom they can place their trust. A recent study showed that 69% of patients select or avoid physicians based on Internet reviews, such as Health Grades.26   How do potential partners stack up when it comes to the patient-as-consumer?

Clinical Operations
Clinical operations in a physician’s current practice may be challenging. However, when joining another organization, it is critical to determine how well run and supported the medical practice is. Are clinical and non-clinical operations efficient?  How are patient panels managed, and are panel sizes realistic?  Are the right patients being seen at the right time? Are the right physicians and their clinical teams working at the top of their license? Is there adequate electronic health record (EHR) support along with useful, easy-to-access data to support clinical decision-making?  Do physicians have input into EHR functionality and upgrades? 

Revenue Cycle Management
Efficient revenue cycle management (RCM) is a basic expectation when considering a new business partner. However, many organizations underestimate the complexity of medical practice revenue cycle challenges.  RCM begins at the moment of contact when a patient reaches out to the organization or is proactively contacted by the organization to schedule a visit with a physician.

How well an organization manages its access services and customer relationships determines how effectively it can bill and collect revenue. And when it comes to payor contracting, are physician payments a priority? Often in larger health systems, high-dollar services (e.g., inpatient admissions, surgeries, high-end diagnostic procedures) are prioritized over smaller dollar physician office visits.  If the physician’s partnership arrangement is based in part on collected revenues in this scenario, s/he may be disadvantaged if the partnership organization does not efficiently capture and collect fee-for-service physician charges. 

The COVID-19 pandemic has accelerated the recognition of value-based reimbursement to shore up and stabilize reimbursement dollars in medical practices. When taking a next step toward partnership, physicians should evaluate the position of the organization on the value-based payment continuum.  A partnership where physicians can be paid for increasing patient access, improving quality, and reducing costs is preferable to an organization that pays physicians solely based on volumes, which is wasteful and increasingly will not be reimbursed or accepted by patients, for whom a volume-based approach means not only more visits and procedures which they may question as well as greater out-of-pocket costs. 

Organizational Culture
Assessing the culture of another medical group, a health system, or a health services company should be at the heart of any due diligence process. Does the organization share the same values as the physician?  Is there a partnership philosophy or is the physician a “hired hand”?  Is there adequate and effective physician leadership so physicians have an advocate at the senior decision-making level? Is there a culture of collaboration and engagement so organizational goals are aligned?  Although it is an important consideration, compensation should never be considered first when making a move. By joining another company, physician salaries can be supported and remain relatively stable, versus the uncertainty and risk in private practice.  Finally, how committed is the potential partner to physician well- being?  A 2019 survey by the American Academy of Family Physicians of 5,000 physicians in multiple specialties showed that only 31% of their organizations prioritized physician well-being. 27 How does the potential partner stack up when it comes to supporting a culture of health and well-being?

Conclusion
The healthcare environment has never been more challenging for physicians and their practices than during this pandemic. The economic uncertainty created by the COVID-19 crisis is unprecedented in modern times and threatens the viability of many independent medical practices. Physicians are questioning whether they can or should remain independent or take the plunge and partner with others. Whether a potential partner is another medical group, a clinically integrated network, an ACO, or the health system of a new, innovative, investor-backed health services company, physicians should carefully evaluate their next steps from more than a single financial angle. Indeed, by using a Multi-Dimensional Due Diligence (MD-DD™) framework, physicians can answer with confidence that critical question: “Should I Stay or Should I Let It Go?”

 
Contact Amanda at:
[email protected]
or visit https://hopkinstirrell.com

Contact Saria at:
[email protected]

 

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