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Study provides key insights into the strategies and attributes of the best performing independent practices of 2020.
Data from a survey of over 3,500 independent practices in late 2020 revealed noteworthy insights into the drivers of independent practice resilience over the last year.
The 33-question survey was fielded to a diverse universe of approximately 250,000 practitioners by OvationLab, a strategic consulting firm in the health, wellness, and nutrition space through its VirtualPractices.org initiative. The targeted practitioners represented several professional disciplines (i.e. MD, DO, NP, and ND), but nearly all were independent practice owners engaged in root cause-oriented primary care (e.g. functional, integrative, lifestyle medicine, and membership-based medical practices).
The timing of the survey enabled the findings to be analyzed alongside other large physician surveys posted over the course of the last 9 months, most notably, the American Physicians Survey that was sent to approximately 500,000 physicians in late July and received a nearly identical number of respondents.
As of summer 2020, approximately 14.5% of all independent physician practices had either temporarily or permanently closed as a result of the pandemic, and roughly 7% of the remaining independent physicians anticipated the closure of their practices before the fall of 2021.
In stark contrast to these numbers are the closure rates observed within the OvationLab sample. Of the independently practicing MDs and DOs in this sample:
“The research produced a number of fascinating insights around the key attributes of practices that will be most successful in the COVID era and beyond,” says Tom Blue, co-founder of OvationLab.
In addition to the focus on root causes as a discernable orientation of the provider, the practice attributes that made the most positive difference fell into three key groupings:
Signaling a Root Cause Orientation to Consumers
The one attribute that the OvationLab cohort shared was a root cause orientation in their patient care. Focused on the intersection of health and lifestyle factors, these patient relationships proved significantly less likely to be disrupted by the pandemic.
The sample represented a number of providers with varying levels of functional, integrative, and lifestyle medicine training, as well as practices that offered a variety of service offerings that may have signaled to patients that the provider had a root cause focus. However, it was recommendation of nutritional supplements as part of patient care plans that appeared to be the common indicator of a practice’s root cause orientation.
While nearly 100% of the cohort recommended nutritional supplements to patients, 20% of physicians were not yet, at the time of the survey, providing the products for sale to patients. This proved to be a practice vulnerability linked to the first of the three attributes above – antifragile revenue sources.
For the 80% of physicians that had implemented supplement dispensing in their practices, the revenue stream provided a stabilizing effect, and in many cases grew during the pandemic due to the increased consumer focus on immune system support and options for preventing or blunting the effects of COVID-19.
The only other revenue source that proved similarly antifragile over the last year was bio-identical hormone replacement therapy (BHRT). While the percentage of physicians in the sample offering BHRT was far smaller (16%), practice revenue associated with BHRT was almost unaffected by the disruption of the pandemic.
The performance of BHRT as an uninterrupted revenue source speaks to the second of the key practice attributes above – adaptive patient engagement approaches.
The practice adaptation that has gotten the most attention over the last year has been the shift to virtual visits using tools ranging from Zoom to a host of telehealth platform options. In the high-performing OvationLab sample, virtualization proved to be important – provided that it was not forced on patients.
The best performing practices reported performing a maximum of about 40% of their visits virtually during 2020. The majority of patients in root cause focused practices maintained their preference for in-person visits.
More important to patient engagement and revenue retention, however, was the use of clearly articulated, patient-participatory care plans. BHRT offers an example of one such care plan in that patients very clearly understand the cadence of their interactions with practices and clearly prioritized their adherence to those plans despite the obstacles presented by the pandemic.
Beyond BHRT, however, practices that reported they consistently provided patients a clearly articulated plan of care reported the lowest levels of patient attrition.
Revenue Models and Patient Retention
Regardless of any other practice characteristic, the primary practice revenue model proved to have the most dramatic effect on how practices fared in 2020. Four revenue models were well-represented within the physician cohort of the study:
Membership-based practices (e.g. concierge and direct primary care) within the cohort had a 0% closure rate, and 24% reported higher revenues in 2020 than any prior year. 40% of membership practices reported that their revenue had not been impacted by the pandemic.
In contrast, 76% of the insurance-based practices in the cohort suffered losses in revenue, and only 5% were able to out-perform their 2019 revenues.
The only other practices that were completely protected from closure were those generating the majority of their revenue from the sale of bundled lifestyle medicine programs targeting specific health objectives (e.g. reversal of diabetes or diabetic neuropathy, migraine, IBS, etc.).
“The performance of value-based revenue models in 2020 shines a light on something that is well-understood by these physicians,” said Blue. “The structure of the financial relationship established the nature of the larger relationship between the practice and the patient. Fee-for-service is transactional. Membership implies a continuous, active relationship. Bundled programs imply a collaboration to achieve a specific health objective.”
“It turns out that a pandemic is a terrible time to sever ties with your doctor, and patients in membership practices gave their doctors time to react and adapt to the crisis. Patients in the fee for service model, to their own detriment in many cases, simply stopped going to the doctor.”
It may be intuitive to attribute the differences to an assumption that patients willing to pay cash for practice memberships and other services were more educated and affluent than the others, and therefore they were more likely to remain engaged with their medical care. However, the study revealed that the most fragile practices in the cohort were the cash-based fee-for-service practices that did not participate with health plans.
“Membership, bundled program, and cash-based fee-for-service practices cater to a very similar type of patient in terms of demographics and prioritization of health,” said Blue.
“Both serve patients who are willing and able to invest their own money in their healthcare, yet the membership practices flourished while the cash-based fee-for-service practices struggled more than any other practice type in the study. The structure of the financial relationship with patients is far more important than most people realize – not only to the health of the practice, but to patient health outcomes as well.”
The findings of the OvationLab study appear to speak loudly to the opportunity and compelling rationale for independent practices to remodel themselves to better align with the values of a growing segment of modern healthcare consumers – the seekers of root cause focused healthcare.