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Physician Organization a Must to Prosper under Healthcare Reform


If physicians can create integrated networks, they can control care delivery and earn incentives from cost savings. Here are some steps to achieve that goal.

When I say “organization,” I’m not suggesting picket signs, shop stewards, and work stoppages but rather an organization of physicians designed to manage the care of a defined population of patients with the goal of eliminating duplicated or unnecessary care while maintaining or improving quality. If the organization is successful it should be able to share in the cost savings. These organizations may have names like Independent Practice Association (IPA), Physician Hospital Organization (PHO), or accountable care organization (ACO), but the goal of each should be the same.

If the goals of healthcare reform are to be realized, networks of physicians are critical. The question is who will form and operate these networks. Both insurance companies and hospitals are buying physician practices and employing newly trained physicians with the intention of forming and controlling those networks. Can physicians take the initiative to create and control these panels or will they become a very important cog on someone else’s wheel? It can be done but the window of opportunity is limited.

Two specialists in Florida invited some colleagues to a series of educational sessions focused on risk-friendly networks and, within three months, there were more than 200 dues-paying members ready to negotiate directly with payers.

How should interested physicians approach the development of organizations that will be central to the future care models? These are some steps that might be helpful:

Determine the target number of physicians needed to care for the target population. Are you seeking to care for a large employer, a dominate payer’s members, and/or Medicare patients? The mix of physicians is also important. Every panel needs to have an adequate number of primary-care physicians and specialists in key areas such as cardiology, pulmonology, endocrinology, as well as the cooperation of hospitalists. There are some excellent tools available to estimate the number of physicians by specialty required based on populations and age mix.

Determine your risk tolerance. Are you looking to receive fee incentives for meeting some clinical quality measures such as prescriptive patterns or preventive care compliance? Are you open to modest fee-for-service reimbursement with an opportunity to share in any savings that are generated? Or are you willing to go at-risk for the care of the entire population? This latter approach is similar to global capitation and has the risk to providing care when there is no reimbursement. Most organizations focus on the shared savings model.

Identify like-minded colleagues. Physicians who join networks because they think they can get better reimbursement may not be the best choices. Physicians who understand if they aggressively manage the care of their patients there may be added financial incentive are the ones you want.

Explore care opportunities. Meet with commercial payers in your market or large employers such as school districts and governments or large private employers to determine their interest in creating a narrow-panel program for their members or workers. Many insurance plans, such as Aetna, UnitedHealthcare, and others are aggressively seeking physician partners.

Decide on data needs. This is the most difficult aspect. Although many practices may have an EHR, you need to have the ability to move data between different systems so that a record follows a patient. The complexity of what data you want to share will drive the cost of the solution. Software that supports this interchange is commonly known as Health Information Exchange or HIEs.

Craft legal documents. The government has issued strict guidelines on how a program must operate to avoid problems with anti-trust or Stark regulations. Be sure to get knowledgeable advice on meeting those safe harbor provisions.

Draft protocols. There are many sample protocols designed to provide best-practice models that can be modified to meet local needs. There is little need to start from scratch. Many organizations find that this phase, while it seems complex, is less problematic than creating the culture needed to make care management possible.

Get started. The best way to improve is by practice. Start with a well-defined population and understand that there may be no savings to share during the first year or two years while the panel is learning to share data and control care. Don’t give up because, when done right, there can be ample reward for your efforts.

Please let me know if any of these steps should be the topic of a future blog post.

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