Programs and initiatives created as a result of the passage of the Affordable Care Act and the inherent need for clinical integration has made for unlikely bedfellows in the health care community.
While efforts to stem rising health care costs have been at the forefront for many years now, the passage of the Patient Protection and Affordable Care Act (ACA) in March 2010 catapulted this effort forward.
Since the passage of ACA, both private and government payers have been introducing innovative patient care and payment reform programs focused on improving the quality of care with the expectation that this will ultimately reduce overall health care costs. These programs require providers to work collaboratively with other providers across the health care spectrum, sharing clinical data, best practices and protocols — all with the aim of improving patient care and reducing health care costs for a certain “population” of patients. Payers are offering financial incentives to those providers who are willing to participate and take the necessary steps to clinically integrate.
Due to the very nature of clinical integration, it is not uncommon for physicians to also integrate financially, which translates to sharing risk with other providers. For providers who participate in Accountable Care Organizations (ACOs), for example, Medicare offers the ACO participants a share of the savings that can be achieved as a result of greater coordinated care. Conversely, ACO participants may share in financial losses if savings are not ultimately realized. This is also seen in other demonstration programs that the Center for Medicare and Medicaid Services (CMS) continues to roll out, many conducted jointly with private payers. These programs offer financial resources in various forms to those who participate. One such program is the Comprehensive Primary Care Initiative (CPCI).
Physicians who participate in CPCI are given resources to help them achieve an improved and more comprehensive level of care management. They may also share in savings they generate. While programs such as CPCI may not demand clinical integration with other providers, the best chance for success will most likely be with those primary care physicians who work collaboratively with specialists and other providers. This holds true especially when it comes to providing care for those patients with chronic or acute conditions.
Private payers also have their own incentive programs, such as non-Medicare ACOs. Here the goal is to create more of a “value-based” contracting strategy that moves the delivery system toward increased collaboration amongst providers and greater sharing of risk.
Collaboration and consolidation
The types of programs and initiatives described above and their inherent need for clinical integration has made for unlikely bedfellows. Hospitals are now aggressively seeking to employ physicians and buy practices and alliances are being formed with physician groups who were once in “competition” with each other.
For some time now, hospitals have taken the lead in creating a more integrated approach to providing patient care with the expectation that they would be the drivers (and market leaders) of health care delivery and payment reform. On the other hand, physicians have not acted quite as quickly — at least, not until now. Small- to mid-size practices are being approached by hospitals, larger practices and other integrated delivery systems, each looking to forge relationships that will foster clinical integration and the sharing of risk. Practices now have to evaluate their options and consider which health care delivery model is best suited for them.
The following health care delivery models each provide various levels of clinical and financial integration:
• Hospital employment/sale of practice to hospital
• Practice mergers and consolidations
• Physician Hospital Organizations (PHOs)
• Preferred Provider Organizations (PPOs)
• Independent Practice Organizations (IPAs)
• Physician group sharing arrangements
Hospital employment or the sale of a practice to a hospital generally provides quick and direct access to a clinically integrated delivery system — or at least to a system that has the resources to potentially create one. In this delivery model, the employed physicians now bill for their services under the hospital’s tax ID and are required to follow the hospital’s clinical protocols, policies and regulations. For this reason, physicians employed by hospitals generally relinquish a significant degree of autonomy.
The merger or consolidation of several smaller practices into one larger one, sometimes referred to as a “mega-group” or “super-group,” also provides for a high degree of clinical and financial integration. There has been a significant increase in practice mergers and consolidations in recent years due, to a large extent, that physicians are more likely to retain greater market share and increased leverage in their managed care negotiations than with other health care delivery models. Since the physicians themselves are typically the governing bodies in these large groups, this also affords them a higher degree of autonomy.
The other models listed above — PHOs, PPOs, IPAs, ACOs and physician group sharing arrangements — also provide clinical integration, but generally to a lesser extent than hospital employment or membership in a super-group. These arrangements are less restrictive in nature since the individual practices generally continue to bill under their own tax IDs and follow their own rules of governance. These models may be an option for those practices that want to limit their financial risk and remain financially independent.
Regardless of the particular health care delivery model selected, those physicians willing to make the necessary investments in their practices will have the best chance for success.
Those physicians who are embracing clinical integration and all that it entails understand that they may no longer be able to do it on their own. They recognize that true coordinated care can only be achieved if they work collaboratively with hospitals, ancillary service providers, and other physicians. These physicians have started to transition to electronic medical records and other new technologies that will allow them to begin sharing clinical data across the health care spectrum. They are increasing staffing, both clinically and administratively, to meet the challenges of health care’s new landscape. Put simply, they are investing in their practices with an eye toward the future.
Lee Ferber, CPA, is co-chair of Gettry Marcus’ Health Care Consulting Group and a member of the National CPA Health Care Advisors Association (HCAA), a nationwide network of CPA firms devoted to serving the health care industry. Mr. Ferber may be reached at (516) 364-3390, ext. 206, or via e-mail at firstname.lastname@example.org or HCAA at email@example.com.