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How independent practices can survive by working together.
Many independent practice owners today are in a difficult bind. By training and temperament, they are fiercely devoted to maintaining their autonomy. But survival in today’s environment requires the financial resources and access to patient data that doctors usually can get only by being part of a hospital system or some other large organization. Moreover, federal antitrust laws prohibit them from working together to obtain more lucrative contracts with payers.
So how can these practices stay in business without sacrificing their independence?
One solution lies in creating, or joining, an independent practice association (IPA) and/or a clinically integrated network (CIN). IPAs provide practices with many of the clinical support services, technological resources and group purchasing advantages enjoyed by hospital systems and large multispecialty practices while allowing their members to remain independent. Approximately 300,000 physicians are in an IPA, according to the Independent Practice Association of America.
In a CIN, participating practices form an “umbrella” corporate structure — usually a limited liability company (LLC) — under which they aggregate quality and cost data with the goal of demonstrating the network’s ability to provide high-value care. The LLC can use that data to negotiate value-based contracts that apply across its member practices.
Practices that aren’t able to maintain their quality levels can be removed from the network.
Quality and accountability are keys to success
Demonstrating and maintaining quality is key to keepinga CIN on the right side of antitrust laws, explains Allen Dobson, M.D., FAAFP, former president and chief executive officer of Community Care of North Carolina and Medical Economics® editor-in-chief. “If you’re working to enhance quality and hold each other accountable, then the law says a CIN can sign contracts on behalf of all the members and operate as one.”
Guidelines for how independent practices can legally cooperate were laid out in a 1996 joint statement from the Federal Trade Commission and Department of Justice. For example, the statement designates the percentage of specialists in a geographic area that can be included in a physician network (20% for exclusive networks and 30% for nonexclusive) without drawing government scrutiny.
“The guidelines represented the agencies’ compromise between the need to guard against price fixing and desire to allow independent practices to engage in limited forms of cooperation,” says William Maruca, J.D., a health care attorney with the law firm Fox Rothschild in Pittsburgh.
“As a general rule, the antitrust laws create pretty difficult barriers for independent practices to coordinate any relationships with payers,” Maruca adds. “And that hasn’t changed much since 1996.”
Benefits to physicians
Still, if organized properly, a CIN offers benefits to both payers and physicians, Dobson says. “For the payer it means now they’ve got one signature covering all these small groups and holding them accountable for their costs and quality. And it allows the practices to participate in value-based contracts because now they’ve got scale and technology and support.”
Tom Banning, CEO of the Texas Academy of Family Physicians in Austin, views CINs and IPAs as frameworks within which doctors can work together to prepare for the end of fee-for-service medicine and its replacement by forms of value-based care. He has spent much of the past decade preaching that message, he says, with mixed results.
“Some groups have understood that value-based care was the direction the system was moving and jumped at the opportunity. Others tell me they are waiting for a sign before they pull the trigger. I tell them when they see that sign, it’s an 18-wheeler about to run them over.”
Much of the resistance, he believes, stems from the culture of medicine. “Most doctors have been trained to work in silos, and that’s how they’ve practiced,” he says. “Physicians were expected to be the team leader and do everything, and that sort of thinking hamstrings their ability to think outside of their proverbial box.”
Antidote to practice consolidation
One physician who has embraced Banning’s message wholeheartedly is Christopher Crow, M.D., CEO and co-founder of Catalyst Health Network, a CIN based in Dallas. Crow, who founded a family practice in 2000, had grown alarmed by the growing consolidation of primary care practices under the umbrellas of the region’s two major hospital systems.
“My practice had grown into a level 3 patient-centered medical home (PCMH), and through my PCMH contract I got to see data showing how much less it costs for independent physicians to care for patients compared to a large health system,” he recalls. “If this consolidation continues, it will send health care costs through the roof, so we’ve got to do something about it.”
Crow met with 30 or so like-minded primary care colleagues and developed the framework for the entity that became Catalyst. They were quickly able to recruit several hundred more, enough to enable Catalyst to enter into value-based contracts with national payers on behalf of its members. The contracts pay physicians on a fee-for-service basis but include opportunities for shared savings, along with monthly per-capita care management fees. The latter, Crow explains, is used to pay for business operation and clinical support services the CIN provides to its participating members, such as revenue cycle management, IT support, care coordinators and pharmacy technicians.
“When you layer that support on a value-based incentive program to improve care and lower costs, then you’ve built a structure where independent physicians can thrive and everyone wins,” Crow says. “Our business model is to keep people healthy. That means the physician is being rewarded for providing better care rather than just seeing more patients. The patient wins by being kept healthier, and payers win because costs are lower.”
Providing a lifeline
The network has proven especially useful during the COVID-19 pandemic, Crow says, by helping practices pivot to telehealth, obtain supplies of personal protective equipment, and set up drive-through clinics — actions that few would have been able to accomplish individually. “We were a lifeline for a lot of them,” he says.
Blue Cross and Blue Shield of Texas (BCBSTX), one of the region’s major payers, supports Catalyst’s model of bringing independent practices together to improve value, says Rick Haddock, vice president of network management at BCBSTX. “We saw the value of trying to aggregate independent physicians to manage total cost of care while improving the quality of care by providing data in a nonrisk-based environment,” he says.
Today Catalyst includes about 1,000 primary care doctors, Crow says, adding that rather than having to recruit members, practices now are asking to join. “When we started this, the attitude of some docs was, ‘I don’t want to deal with data, and I don’t need anyone to help with my patients.’ But many of them have come around and now say, ‘This is exactly what I need.’”
Pediatrician George Rogu, M.D., has a story similar to Crow’s but on a smaller scale. The owner of three pediatric practices and a pediatric urgent care center on Long Island,New York, Rogu had watched with dismay as nearby pediatric practices joined hospital systems or closed their doors because they could no longer compete financially.
In response, Rogu began organizing informal meetings with fellow pediatricians to brainstorm ways they could cooperate to strengthen their individual viability without breaking antitrust laws. “We all had the same goals: to practice good medicine and take care of our patients,” he recalls. “But everyone was afraid to even speak to anyone elsebecause we thought it might look like collusion. Also, it meant overcoming the habit of seeing each other as competitors.”
From informal discussions to clinical integration
At first, Rogu’s meetings focused on sharing best practices for dealing with common practice management challenges. But they soon evolved into discussing ways the participants could work together more formally. The result: In 2018 the Independent Pediatric Collaborative of Long Island (IPCLI) was created; the CIN is headed by Rogu and today includes about 50 providers in 10 practices.
A key to the collaborative’s operation, Rogu says, has been the ability to monitor the quality of care provided by its doctors. It does so through use of a “clinical dashboard” — a software program that synthesizes quality data taken from participants’ electronic health record systems and, with some massaging from information technology staff, organizes and presents the data as though they were coming from a single organization.
“The dashboard lets us quickly see how the organization is doing as a whole and breaks the data down by practice and even by individual doctor on a particular measure,” he says. He cites the example of a doctor in the network who was having trouble meeting measles, mumps and rubella vaccination metrics for her patients. “We were able to suggest a few simple tweaks that brought her numbers to where they needed to be,” he says. “Our thing is to provide good clinical care and share resources for the benefit of our patients.”
Using that quality data has enabled the collaborative to sign a value-based contract with a Medicaid program, and it is negotiating similar contracts with two other payers, Rogu adds.
IPCLI has also helped its participating practices lower overhead costs by creating greater bargaining power with vendors. For example, prior to forming the collaborative, each had used the same vendor for medical waste disposal. But the greater size of IPCLI enabled it to contract with a different company and pay substantially less. Disposal costs for Rogu’s practice dropped from $1,500 per month to $150.
“With IPCLI negotiating and managing the contract, everyone benefits,” he says. The collaborative’s group purchasing power has also reduced participating practices’ costs for vaccines, malpractice insurance and some employee benefits.
Asked what advice he’d offer to others thinking of forming a CIN, Rogu says, “It takes a lot of time because docs aren’t used to working together. The mentality used to be, ‘Whoever has the most patients wins.’ Now it’s, ‘If you win, I win.’ But getting to that point is a long, windy road.”
Still, he adds, the time and effort are worthwhile if the only alternative is joining a hospital system. “The hospitals around here are knocking on our door constantly, but I just can’t do it,” he says. As part of a hospital, everything is five levels of bureaucracy. When you’re independent, if it’s a good idea, you just do it.”