The Coming Changes to Private-Practice Medicine

September 30, 2011

Recently, as part of our virtual trade show, Physicians Practice Live!, I gathered some of healthcare's more perceptive thinkers for an in-depth talk about the future of private-practice medicine.

Recently, as part of our virtual trade show, Physicians Practice Live!, I gathered some of healthcare's more perceptive thinkers for an in-depth talk about the future of private-practice medicine. Each member of the group (consultants and a healthcare administrator) has expertise in different aspects of successful practice management, and each has done a good deal of thinking about how doctors will be affected by the changing business of delivering care.

I wanted to know what a post-reform healthcare industry - one that's designed to value quality over volume, and will pay accordingly - will mean for doctors like you. The paradigm shift is necessary and appropriate, but nobody said it was going to be easy. It will necessitate basic changes in the way you are paid because the goal is to get you to work differently. Does that spell the end for traditional private-office medicine? Does healthcare "efficiency" mean that its delivery must become less local, less personal, more monolithic and institutionalized? If accountable care organizations are the future of healthcare (and I'm skeptical), who will own the organizations themselves? How will the physicians within them get paid? To whom, exactly, will they be accountable, and how will such accountability be enforced?

My panel of experts had a lot to say on those subjects. But one thing became clear during our conversation: there's still far more that we don't know about how reform will unfold than that we do know.

Providing patients with the care they need at the time they need it should be the goal of any well-designed healthcare system, yet it's plain that the economic incentives in our current system are completely warped; that we've vastly overvalued certain specialty services at the expense of primary care; that healthcare has become the Monster That Ate All Our Money; and that the shortest road to ruin is the one we're on.

The problem is clear. But as for the solution, says consultant Susanne Madden, "They jury's still out on whether ACOs are going to be widely adopted, whether patient-centered medical homes are going to be the way to go, or whether a variety of different models" will emerge simultaneously. "So I think education is going to be the critical factor going forward for physicians. What's going on in their market? What are the hospital systems doing? What are the payers doing?" One thing hospitals have been busy doing is acquiring community practices. Yet these arrangements have not freed the physicians within those groups from the normal challenges of managing them successfully. Hospitals, having learned their lesson from their mismanaged acquisitions in the 1990s, are not willing to simply write you a check for your accounts receivable and then put you on salary.

Medicare, meanwhile, has released rules for an ACO program. It starts in January, and healthcare systems and payers are closely watching. There is widespread displeasure with the program Medicare designed, however, and without big revisions it's not at all clear that providers will sign up in large numbers.

But the big questions will focus on how you will get paid, because the old fee-for-service model is becoming obsolete regardless of what actually replaces it. Under case-management models, hospitals and large systems will manage the money coming from payers, then dole it out to the physicians who "perform to a certain standard," said Madden.

"That's where we're going to see the power struggle come in: The physicians may believe that they're the best ones to help develop those programs, and yet it may be the administrators and the business folks within the hospitals systems that end up putting together these deals and writing these contracts with payers," she notes. "That's where we're going to see some real potential for conflict."

Diagnosing healthcare's problem is the easy part: We're gorging ourselves to death. The question is whether we're going to survive the treatment.

Bob Keaveney is the editorial director of Physicians Practice. What are you doing to prepare for reform? Tell us in the comment box below. Unless you say otherwise, we'll assume that we're free to publish your comments in upcoming issues of Physicians Practice, in print and online.

This article originally appeared in the October 2011 issue of Physicians Practice.