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Collaboration is the key to small practice survivial


Is banding together with other medical practices to create an independent practice association the right choice for you?

If there’s a word that solo or small practice physicians would choose to describe their future, it would be uncertainty. What will happen when the Affordable Care Act (ACA) is implemented? Will previously uninsured patients flood your office? Can you afford a new or updated electronic health records (EHR) system?

What will be the impact of the International Classification of Diseases-10th revision? Should you find a partner, hire midlevel practitioners, join a larger group or independent practice association (IPA), sell the practice?

Opinions on the survival of small and solo practices are mixed. It’s evident, however, that the number of independent practices has been declining. A report on practice characteristics released by the American Academy of Family Physicians (AAFP) showed that as of the end of 2011, 60% of physicians who were active AAFP members were fully employed by hospitals or health systems, physician groups, or university-owned clinics or hospitals, while 35% were sole or partial owners of their practices.

Search firm Merritt Hawkins reported that in 2010-11, 56% of its physician search assignments were for hospital positions, up from 23% in 2005-06, and the percentage may be higher now.

Trends driving this shift in practice models include the top five issues affecting physicians in 2013 identified by the Physicians Foundation: ongoing uncertainty over the ACA, consolidation, the introduction of millions of newly-insured patients, erosion of physician autonomy, and growing administrative burdens.

In less than 6 months, an estimated 30 million Americans could begin obtaining health insurance coverage under the ACA. The details surrounding implementation, including aspects such as the insurance marketplace, accountable care organizations (ACOs), the Medicare physician fee schedule, and the independent payment advisory board, frustrate physicians as they ponder their fate.

Hope is not a strategy

“Many small practices don’t have a great strategy. They’re hoping to survive, but the amount of uncertainty out there around the ACA is huge,” says Ripley R. Hollister, MD, a family practitioner in Colorado Springs, Colorado and board member of the Physicians Foundation. The organization’s 2012 Biennial Physicians Survey of nearly 14,000 doctors found that about 77% were pessimistic or very pessimistic about the future of the medical profession.

You can respond to these challenges with a variety of strategies or models to remain in private practice. For his part, Hollister chose to join an IPA made up of nine small practices with about 22 providers. The practice is not alone. In fact, there may be up to 500 IPAs in each state, according to recent reports from the American Medical Association, and the numbers seem to be growing. Why?

“Small practices can’t really survive as such,” says Hollister. “Small practices are going to have to look bigger at some level, but there are ways of looking bigger like IPAs where you have a larger population of patients to manage, you have a larger pot of money to help with patient education and healthcare management team members, case managers, social workers. It would be hard for a very small practice to hire a social worker, for example, but in an IPA where you have groups of like-minded physicians you could go out and do some of those things that make you look very big.”

Further, an IPA is better positioned to enter into financial arrangements with insurance companies that are interested in improving population health and reducing costs and are therefore more willing to help practices offset the cost of data collection, says Hollister. You might get paid, for example, to look at rates of colonoscopies, mammograms, or pap smears.

“There have been some real dollars coming across in contracts from insurance companies to look at those sorts of things,” Hollister says.

Antitrust considerations

There are also legal issues to consider.

Many IPAs could face antitrust issues because they include competing healthcare providers, says Peter Pavarini, partner at Squire Sanders LLP in Columbus, Ohio, and president-elect of the American Health Lawyers Association. “There are no fixed limits on IPA size;  however, Federal Trade Commission and Department of Justice guidelines and policy statements define safety zones in terms of percentages of competing physicians (by specialty) who are included in an IPA, ACO or other kind of provider networker. Non-exclusive networks can generally be larger than exclusive networks,” Pavarini says.

You should check with legal counsel before signing on to an IPA to make sure it abides by antitrust and price fixing laws and management fees are reasonable, says Alan S. Gassman, JD, of Gassman Law Associates P.A. in Clearwater, Florida. “In many states (IPAs) are not regulated and can go belly up, leaving the doctors high and dry and not paid for services rendered,” Gassman says. “IPA participation agreements can often be negotiated, so don’t just sign these or accept a certain rate of compensation without having someone knowledgeable in the area read, negotiate and explain these. You can’t get what you don’t ask for.”

Lloyd S. Kuritsky, DOSan Diego, California internist Lloyd S. Kuritsky, DO, who has been in private practice as a family physician since 1992, has also opted for the IPA model. His practice is aligned with the Sharp Community Medical Group, which in turn is part of an ACO.

“I’m a big fan of the medical group because I think that they are helping us. It would be really hard to be out in private practice these days,” Kuritsky says. “The way I think about it is that it would almost be like being out in the middle of the ocean on a raft, whereas I feel like we’re on a more solid ship that can help us navigate the waters.”

A growing number of  IPAs are converting to ACOs, a model that  requires a more formal legal, management, and leadership structure. ACOs must have shared savings among participating healthcare professionals and meet Medicaid patient-centerdness criteria. Currently there are more than 250 ACOs, with 106 being approved by the Centers for Medicare & Medicaid Services (CMS) in January 2013.

Despite the IPA’s help, survival is constantly on Kuritsky’s mind. He and his partner haven’t stopped seeking ways to trim expenses. They have relocated their practice several times, looking for a site with lower overhead and rent. He employs a nurse practitioner 2 days a week and will consider increasing her hours next year if the anticipated influx of newly insured patients materializes.

Other forms of collaboration

Less structured collaborations can also help small practices weather transitional times. Jennifer Brull, MD, a family practitioner in rural northwest Kansas, is a member of a group of six small or solo practices that initially collaborated on staffing, billing, and purchasing, and have progressed to jointly purchasing and implementing an EHR system and attesting to meaningful use. They recently submitted documentation for recognition as a Patient-Centered Medical Home.

“We have done things as a group even through we all like to maintain our independence as solo practices,” says Brull. The group has three locations in the county, an arrangement that lowers staffing costs since personnel can be shared. The collaborative approach was also beneficial with EHR implementation; the learning curve struck the offices at different times, and those who had gone through it could share what they had learned.

The collaboration offers flexibility in scheduling, Brull says. For example, an individual’s decision to take a few days or even a few months off won’t adversely affect the finances of the group as a whole. “My time is my own, and I’m the one who has to be worried about my share of the expenses,” she says.

To make this model work, she recommends being open and willing to discuss the details, particularly finances. However, she advises partnering on various projects, as her group does, rather than viewing the arrangement strictly in monetary terms. This fosters the feeling of a group with shared interests and goals.

This style works well for Brull, who says she is not facing insurmountable obstacles. “I really don’t feel like I’m surviving; I feel like I’m thriving. Sometimes we paint a bleak picture. At least where I am and the culture I’m in, it hasn’t been difficult or challenging, it’s been good.”

Madalyn N. Davidoff, MDSolo cardiologist Madalyn N. Davidoff, MD, who practices in Warner Robins and Macon, Georgia, is enthusiastic about her practice style while acknowledging the stress that comes with it. “I’m like an old-time doctor. I have the best practice ever, and this is something that we should aspire to retain. I proctor students and residents, and they always tell me that I’m one of the only happy doctors they encounter,” she says.

Davidoff both participates in efforts to educate legislators about the unintended consequences of prior authorization, limits on the frequency of certain tests, and prescription formularies-which, if changed, could benefit small practices-and takes action at the practice level.

She recommends staying in the forefront of technology and trends, such as EHRs and e-prescribing. Davidoff also emphasizes a “lean and mean” attitude toward practice operations. The electronic receipts are deposited in her account every day, and she reviews them before passing them on for billing. “I watch everything like a hawk,” she says.

Look at revenue

You also need to have systems in place to make sure you are paid fairly for everything you do. Davidoff has trained her staff to be exceptionally diligent about precertification, asking questions, having patients sign releases, and sending for records from other practices, which pays off in terms of a very low rate of denials.

Another helpful strategy is pursuing the incentives offered for complying with a new mandate, such as meaningful use or quality reporting. “While the healthcare delivery model is being defined, go out for every bit of incentive money that you can use to help you solidify your practice and your income until you know what’s going on,” Davidoff recommends.

You can also explore relationships with hospitals that could lead to payment for responsibilities that are not currently reimbursed. Hospitals have begun acknowledging the burdens placed on physicians by providing indigent care and quality reporting requirements and are offering to share the load. “There is no real independence for physicians who have any hospital work,” Davidoff says. “We have to do this together.” 

She also copes with the demands of a solo practice by being overbooked by eight to 12 patients a day and is willing to keep up that pace for now. Decisions about a new work environment will wait until there is more clarity on how healthcare will be delivered and the outcomes of innovative pilot projects are known.

If your dream practice model runs in the opposite direction of the trend toward larger groups and employment, solo family practitioner Pamela Wible, MD, in Eugene, Oregon, has adopted a style you might consider. Based largely on community input, she established her own clinic in 2005, operating out of an intimate, homelike setting and working part-time. She spends up to 1  hour with each patient and sees only one at a time rather than have patients “stacked up” in exam rooms.

With no employees, Wimble does all the tasks performed in even the smallest practices by a nurse or medical assistant. She also handles billing and coding. When patients have difficulty with payments, Wible is more likely to ask them to give something back to the community than call a collection agency.

“People want a humanized experience,” Wible says, and her patients reward her not only with payment for medical services but “tips.” Cash or checks are sometimes tucked into a holiday card, a bonus for her attentive approach.

However, she doesn’t accept Medicare and therefore is not bound by its many regulatory requirements.

Be flexible, adaptable

Rebecca Jaffe, MD, MPH, FAAFP, of Wilmington, Delaware, has seen the pendulum of healthcare trends swing in many directions in more than 30 years as a family practitioner. “But this time, especially in the electronic era, I’m not sure the pendulum will swing back again,” she says. “It’s a whole new paradigm, and although it’s not easy to get used to, one can see the benefits in the organization, so one must adapt. But it is a very expensive endeavor to do it correctly, which is probably the biggest struggle as a very small practice, doing it right and not having lots of providers to share the cost involved.”

Jaffe and her two colleagues have been talking to other small practices to see if sharing resources might help with managing EHR as well as other complex facets of their work. For example, purchasing immunizations through a consortium might have benefits.

Hold onto autonomy

Like many of her peers, Jaffe is trying to figure out how to manage a larger patient base while not losing the feel of the small, independent practice. “It’s daunting to put your trust in other people when you’ve independently navigated the waters for so long,” she says.

As she waits to see how the future unfolds, she recommends keeping communications open with other healthcare providers in your community, including hospitals. In this way, you can learn about new opportunities, gather enough information to make good decisions, and learn strategies for negotiating in a changing environment.

“It’s helpful to share best practices and keep up with other physicians’ experiences,” says Jaffe. “We have to learn from other peoples’ mistakes, otherwise we might not survive.”

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© National Institute for Occupational Safety and Health