There was an interesting article published on nytimes.com over the weekend (see ”New Law’s Demands on Doctors Have Many Seeking a Network“) comparing and contrastng the practice of two primary care physicians, one employed by a hospital and another still in private practice but perhaps concerned about her ability to remain there. The hospital-employed physician touts the pros of hospital employment, including that while he is seeing more patients, he has more free time to work on his farm since he doesn’t have to worry about practice finances anymore. He was able to take a five week leave whereas in private practice, the most he was able to take was one week. The physician in private practice on the other hand is meeting with her state representative to try to come up with a solution to the primary care shortage in the face of the expansion of the state scope of practice of mid-level practitioners. The same article notes that the health system which employs the first doctor recently had its credit rating downgraded due to losses from an aggressive physician employment hiring.
Many lawyers in private practice will readily admit that the idea of being employed (we call it going “in-house”) can be appealing in the right circumstances. In-house lawyers don’t really have to worry about bringing in and keeping new clients, or about billing hours for that matter. But, most of us realize that there’s also some pretty huge trade-offs in going in-house. Perhaps the biggest is loss of security. Getting and keeping clients is tough work, but happy clients will stay with a good lawyer even in a bad economy or if the lawyer has to change firms. In house lawyers generally don’t have a loyal client base to catch them if the economy falters or company layoffs are necessary. Another big trade-off is loss of autonomy. Let’s face it, we all work pretty hard. Being in private practice allows you to work for yourself and your own bottom line instead of someone else’s. You also get to call your own shots — that is, you succeed or fail on your own terms. You reap the rewards and suffer the consequences of your own decisions. Of course, bad decisions hurt — but they really hurt when someone else makes them and you suffer the consequences.
Just like in law practice, I fear that in making the decision to abandon private practice for hospital employment, many physicians could be making some pretty big, and perhaps irriversable, trade-offs. For example, why would a hospital that is losing money on its physician network hire a primary care physician when it could hire a mid-level provider at a much lower cost? Lots of physicians I know could easily answer that question. They would say that mid-levels have less training and therefore can’t offer the same level of care as a physician. That could be true but what if the person making the hiring decision wasn’t a physician? What if it was a person whose job depended on keeping his employer’s bottom line in the black? And by the way, does the average patient really know the difference between the training a physician receives versus that of a physician assistant? I tend to think that patients will become accustomed to the level of care they receive. If mid-levels become the face of primary care, might not the future of primary care physicians be in jeopardy altogether?
Arguably the threat of mid-level practitioners squeezing out physicians is a “down-the-road” problem, but what about job security in the short term? Most hospital-physician employment agreements I review have terms of less than five years (most commonly three or fewer). What happens if (or when) cost-cutting time rolls around at the hospital and someone decides there are too many physicians on the payroll? Go back into private practice? But, will patients follow or will they just change providers so they can continue to go to the same office location out of convenience? And, what if the “formerly-employed” physician signed a restrictive covenant that requires him to relocate – more than likely that means building a practice from scratch.
Without a doubt, hospital employment can offer at least a short-term fix to the administrative and financial woes of physicians fatigued by private practice, but at what cost?
The drive for reduced costs and increased quality in the delivery of healthcare is an almost universally held goal among those in the industry. However, there seems to be little consensus and much confusion over the best model for achieving these improvements. One model believed by some to be able to address both of these concerns is the patient-centered medical home model. This model which seeks to establish primary care providers as a patient’s “medical home” with the goal of improving the delivery and management of care while at the same time reducing costs. However, according to the results of a study published this week in the Journal of American Medical Association, it would appear, at least initially, that the medical home model may not be a panacea.
The study which looked at the Southeastern Pennsylvania Chronic Care Initiative, an early medical home pilot, found that while participating medical practices showed a statistically significant improvement in quality with regard to certain specific disease, they did not show any statistically significant improvement in either utilization or costs. Of course, ne study of one pilot project does not signal the end of the medical home. But, the study at least suggests that the model as originally conceived still needs work.
The recent federal antitrust case of Federal Trade Commission and State of Idaho, Plaintiffs, v. St. Luke’s Health System, Ltd, and Saltzer Medical Group, P.A. highlights an important legal consideration for hospitals looking to acquire medical practices and physicians looking to sell to them. Notwithstanding arguments of cost savings and increased quality and convenience through vertical integration, where such an acquisition would concentrate too much market power in a hospital or health system, the arrangement could run afoul of federal and state antitrust laws. Such was the case with St. Luke’s acquisition of Saltzer Medical Group in Idaho. In the Saltzer case, a federal Court recently found that the acquisition resulted in St. Luke’s having a dominant position in its market (with 80% of the primary care physicians under the St. Luke’s banner) which was likely to increase health care costs. In the Court’s opinion, health care prices were likely to increase as a result of St. Luke’s increased ability to (1) negotiate higher reimbursement rates from health insurance plans that would likely be passed on to the consumer, and (2) raise rates for ancillary services (like x-rays) to higher hospital-billing rates (as opposed to lower in-office rates). As a result, the Court found that the acquisition violated § 7 of the federal Clayton Act and the Idaho Competition Act, and required St. Luke’s to divest itself of the medical group.
Is bigger better when it comes to private medical practices? This is a question I get quite frequently from physicians who are considering whether to merge with other practices. In my experience, the answer is almost always “yes”, but usually for different reasons from those the inquiring physician has in mind.
Quite often physicians believe that the primary or only reason to merge is to gain leverage in negotiations with third-party payers. Aside from the questionable legality of such a motive (think “antitrust”), this mindset misses the point. In my opinion, the reason to become bigger is not to eliminate competition but rather to enable a practice to better compete in a complex and very competitive marketplace.
How does getting bigger make a practice ore competitive? To begin with, being bigger allows for spreading of risk. In today’s healthcare environment, in order to be competitive, medical practices must make significant investments in human resources and information technology. Where these investments might be difficult or impossible for a small practice, they are much less painful when spread among many physicians in a group. Where a small practice might be able to afford only a part-time practice manager, a large practice might easily be able to afford an MBA level CEO. The same holds true for legal and accounting resources, investment in compliance and strategic planning. And, while being a bigger, more sophisticated “business” will not guarantee better third party reimbursement, quite often third-party payors are receptive to paying efficient, well-run practices more than they will pay high cost disorganized practices.
The above paragraph itemizes only a few of the potential benefits of practice consolidation. Other possible benefits include increased patient access (i.e., more locations), increased purchasing power, economies of scale found in consolidating redundant operations such as billing, and the potential addition of ancillary services that might otherwise be too costly of an investment for a small practice.
In my opinion, practices that want to remain private and thrive should actively be looking for strategic alliances, including merger where appropriate. The rest of the healthcare marketplace is consolidating. Those late to the game may find that the most desirable partners have already been taken.
Many physicians still haven’t come to grips with the fact that . More and more frequently the public turns to the internet first when making purchasing choices — even when purchasing health care services and selecting physicians. According to a research paper published this month in the Journal of the American Medical Association, 59% of Americans think online physician rating sites are somehwat important and 1 in 4 people surveyed said they have consulted these sites. (See ‘Most people say rating sites ‘important’ when picking doctors’ on Foxnews.com)
The internet offers tremendous marketing opportunities for physician but also very significant risks. Online physician rating services enable would-be patients to screen potential physicians without ever meeting the physician or stepping foot in his or her office. These sites also give disgruntled patients a place to voice dissatisfaction. For this reason, physicians should develop and guard their online reputation carefully. This means taking steps to make sure the patient experience is positive, encouraging satisfied patients to complete online reviews and taking proactive steps to counter negative ratings. For more information on steps you can take to manage your online reputation, see ‘Six Steps for Managing Your Online Reputation‘ at aaos.org.
CMS announced this week that it is modifying its longstanding policy regarding the release of Medicare physician payment data in response to Freedom of Information Act (FOIA) requests. Since 1980, CMS’ policy has been that, for privacy reasons, it would not release Medicare payment data specific to individual physicians. However, according to a pronouncement in the Federal Register, CMS is now taking the position that it will evaluate FIOA requests on a case by case basis.
The 1980 policy was based on several court cases which found that physicians had a compelling privacy interest in their Medicare payment data. However, in May of 2013, a US District Court vacated one of those opinions and CMS subsequently sought public comment on whether a change in its policy was warranted. Under the revised policy, CMS will make case-by-case determinations as to whether “exemption 6″ of the FOIA applies to a given request for Medicare payment data with respect to individual physicians. Exemption 6 requires CMS to weigh the individual physician’s privacy interest in such data against the public interest in disclosure of the data.
Creative clinical laboratory arrangements seem to be proliferating of late in Pennsylvania these days. Laboratories, like many providers, are eager to find ways to more closely align with referring physicians. Such arrangements can take a variety of forms such as shared space and personnel arrangements as well as various kinds of marketing arrangements.
Providers considering such arrangements should be aware of recent amendments to the Pennsylvania Clinical Laboratory Act which may effectively prohibit many such arrangements. The amendments, which were signed in to law just this month, prohibit, among other things, the following:
1. Paying or receiving commissions, bonuses, kickbacks, rebates or entering into fee-splitting arrangements for patients or clinical laboratory specimens;
2. Clinical labs from leasing or renting space, shelves, equipment or services within a health care provider’s offices;
3. Clinical labs from leasing personnel to perform any services in a health care provider’s office; or
4. Clinical labs from placing paid or unpaid personnel in a health care provider’s office to perform any service, including specimen collection.
Many physicians pay very little attention to their managed care participation agreements. In fact, some simply sign these agreements without ever reading them. I think this apathy stems from the fact that managed care plans generally refuse, at least for smaller practices, to “negotiate” their fee schedules. But, even if a payor won’t negotiate fees, participation agreements typically include other significant legal provisions worthy of review and, in some cases, negotiation. Here are just a few:
Definitions. State law may mandate that plans adopt specific definitions for certain key terms such as “medical necessity”, “clean claims”, covered services” and emergency services”. It is important to review and understand these and other critical terms used in the agreement and make sure they confirm to state law if applicable.
Billing for non-covered services. If you want to be able to bill patients for non-covered items and services like completing forms or preventive care, knowing how and when this is permissible may be spelled out in the agreement.
Benefit plans and programs. More and more often managed care companies are contracting out their network to various other benefits plans. In addition, through mergers and consolidation, plan affiliates and subsidiaries change quite frequently. In order to know how much you are entitled to be paid and who is responsible for paying you, it is important to know what plans, programs, and affiliates may be covered by the particular agreement.
Policies and procedures. Many participating agreement reference and incorporate a host of policies and procedures (sometimes referred to as a provider manual). Because these are usually made legally binding on participating physicians by virtue of incorporation into the agreement, physicians should be sure to obtain and review these.
Overpayments. Some participation agreements give the payor the unilateral right to recoup overpayments from future payments to a practice. This can cause significant confusion when it comes to reconciling payments as it is not always clear when a payment has recouped or to which patient the recoupment relates. Moreover, the practice does not have an advance opportunity to review and challenge the overpayment determination. When it comes to overpayments, my recommended approach is to require payors to notify the provider an an overpayment and allow the provider a period of time to review and dispute it. No recoupment should occur until any disputes are resolved.
In recent months I have had a number of physician clients contact me to tell me that they have unexpectedly been dropped from one or more Medicare Advantage plans with which they have participated with no issue for, in some case, years. These physicians are left somewhat bewildered because these terminations are being done without cause and without explanation. A recent article on cnn.com (Docs say insurers dropping them in hopes their costly patients follow) perhaps offers an explanation for these abrupt terminations, and highlights what may be another unintended consequence of Affordable Care Act. At least according to some accounts, plans may be dropping network providers as a means of weeding out high cost patients. Many physicians and providers I work with have become complacent with the managed care environment, in many cases accepting participation agreements without even reviewing them or considering the consequences for their practices. Although it will take a long time for all of bugs and kinks of the Affordable Care Act to come to light, one certainty is that managed care companies are proactively taking steps to minimize their own exposure under the law. Consequently, physicians and other providers should be paying close attention to their managed care arrangements in the months to come.
We all witnessed the disastrous rollout of the Healthcare.gov website which crashed almost immediately after going live. The reason according to the Department of Health and Human Services was the huge demand for access to the insurance exchange. I expect that the website issues (or many of them anyway) will eventually get fixed, but then what? Is the delivery system ready or will it crash too? Consider the article published on NYTimes.com today “Medicaid Growth Could Aggravate Doctor Shortage“. And, the Medicaid expansion is only a small part of the problem. Those of us familiar with the healthcare delivery system have known for a long time that there’s an impending and massive physician shortage on the horizon, particluary in primary care. This was the case even before the passage of the Affordable Care Act and was largely due to the expected healthcare needs of the Baby Boomer generation. It’s a pretty fair bet to assume that adding 30 million more insured patients to an already stretched system will result in some kind of system failure, but what is that likely to mean?
Patients who do not have insurance or those with insurance but who can’t wait for the next available appointment with their physician have historically gone to the local emergency room. Most commercial insurance provider agreements prohibit physicians from discriminating against patients, so under Obamacare, participating physicians will likely not be able to turn categories of patients away. All patients will have the same access to the limited number of patient appointments each day. This means longer waits for appointments for everyone. Those who can’t or won’t wait for one of those appointments will likely head to the ER or one of the many urgent care centers now popping up around the country. Physicians will still not be required to participate in Medicaid (although hospitals may require their employed physicians to participate), so ready access to regular primary care for the many newly insured patients under the Medicaid expansion program is not guaranteed. Where will those folks go if they can’t find a private practice physician who accepts Medicaid? Just a guess, but I imagine many of them will end up at the local ER.