The Rise of the Independent Physician Network

June 6, 2013

IPNs combine big geography, numbers, high technology, payer partnerships, and more, but can they save healthcare?

New Jersey’s Osler Health is busy constructing a high-performing, statewide physician powerhouse of 3,000 physicians, as many as one in five a primary care doctor, using a common, interoperative population-management system that stratifies disease and risk and a handful of other capabilities aimed at substantially reducing the cost of healthcare. Moreover, Osler Health is partnering with commercial payers including Medicare Advantage plans. It also plans to not only meet the triple aim of improved outcomes, patient experience and lowered costs, but set the bar. High.

 

Osler (aptly named after the father of modern medicine, William Osler) has big plans. Once New Jersey is up and operating, the group plans to expand state by state into a national network in partnership with regional and national insurers.

 

“Physicians and insurers share more in common today than ever before,” said Thomas Bellavia, MD, Osler’s president and CEO. “Physicians, with the power of the pen, and insurers, with the power of payment, make a potent combination that can materially reduce costs. Both sides have much to gain by sharing risk and savings, particularly since the consolidation led by hospitals into regional healthcare systems is unbalancing the system toward higher cost.”

The motivation for this consolidation is almost purely reactive according to Bellavia. “We believe that our solution to the requirements the PPACA, the economy and a highly regulated environment that restricts many other options is a prudent survival strategy,” he added.

Dr. Bellavia and his partners believe that insurers, state and federal legislators and regulators are doing what they have to do to control their own costs. Osler is convinced that insurers’ best option is to control their destiny in partnership with physicians, and the insurers are very interested.

Insurers have plenty to gain because physicians, who represent only five percent of the overall cost of health care, determine how 85 percent of the remainder is spent. “For the first time,” Bellavia continued, “they (insurers) will have real time clinical data and will be a part of the solution. Moreover, our model fits their model.” Initial discussions with commercial insurers bear this out.

Osler’s strategy is to use the same suite of software tools that not only optimize care management, but create transparency and competition to negotiate higher cost services from hospitalization to diagnostics to more realistic prices levels, is a compelling solution.  Everyone has a huge, common stake in making this vision work: survival - literal and economic.

“EHR systems collect data,” Bellavia added. “We selected an advanced system that takes that data, and data from a number of sources including claims, and converts into actionable information from a patient to an enterprise level, quantified by actual cost. Further, their patient portal not only engages patients in their self-care, but it empowers them to do so.”

Osler is pinning its short-term success on cutting waste and longer-term success on creating a healthier population by utilizing care coordination, population management, and risk and disease stratification that can do much more than simply manage chronic conditions. Folks at Osler are convinced these tools can stall their progress and even reverse them.

But tapping these financial advantages will not come without a cost. Practice operations will have to transform, patient relationships and encounters will need to be different, care coordination will become the keystone, and practice cultures will need to change. Physicians will need to transition from service providers to clinical managers handling the most complex cases, supervising day-to-day care and management that is provided by mid-level clinicians.

Cultural change at this level requires a financial and emotional commitment. The payoff, Osler believes, is preparing now for the transition from fee-for-service to bundled payments, capitation or a percentage of premiums. Osler believes that its prospects for success are further driven by consumer sensitivities resulting from high deductibles and co-pays.

Transforming hundreds of practices in New Jersey to this new model will be Osler’s true challenge, and it is every bit as big as the company’s aspirations.

“We have the plan, expertise and team to make this happen,” Bellavia concluded.

If he does, Osler will do a lot more than transform the way physician practices operate. It just may transform the entire system.