Why the time may be right to add satellite offices

Senior physicians can be freed from administrative tasks as larger groups bring them into the practice.

By Jerry Helzner, Senior Editor

With senior and solo MDs faced with the prospect of installing electronic health records systems and adopting ICD-10 codes, not to mention uncertainties over the implementation of the Affordable Care Act, many are actively looking for a way they can continue to practice without the pressures, headaches and administrative responsibilities a fast-changing health-care landscape can bring.

Meanwhile, larger practices are looking to add satellite offices, and these smaller practices present unique opportunities for larger groups to open new offices without starting from scratch. This article will provide guidance on current opportunities for expanding a practice in a rapidly changing health-care environment, and explore how physicians looking to cut back and practices looking to expand can find common ground.

Practice leaders who have been successful in adding satellite locations note the importance of clear, attractive signage, as these offices in Mesa, Ariz. (left) and Rock Island, Ill., attest.

BOTH PARTIES CAN BENEFIT

More deals are being done

Mark E. Kropiewnicki, JD, LLM, president of the Health Care Group in Plymouth Meeting, Pa., arranges eyecare practice buyouts. He says he is currently involved in a number of transactions in which ophthalmologists and optometrists in their 60s want to continue to see patients but don’t want the burden of running a practice in a rapidly evolving regulatory environment.

“I am seeing more senior docs being willing to be absorbed,” says Mr. Kropiewnicki. “They don’t want to worry about administrative tasks. They want to be taken care of by a larger practice. If they have a desirable location and an established patient base, they will be able to sell their practice and continue to work. They can work out a deal that can transition the practice to new ownership over a period of several years. This allows the senior doc to slow down or give up surgery entirely and become a medical ophthalmologist.”

Mr. Kropiewnicki notes that a large number of independent ophthalmologists are currently in the 59 to 70 age group and tend to have older patient bases as well. This presents good opportunities for larger practices looking to expand, he says.

“The older doc can refer surgical patients and cases that require subspecialists to other doctors in the group,” Mr. Kropiewnicki says. “He can be a good feeder for the larger practice that he joins. The same situation can apply to older optometrists who can be great referrers.”

THE ALTERNATIVE TO BUYOUTS

PPMC redux?

Instead of acquiring a practice outright, Barnet Dulaney Perkins Eye Centers, a statewide practice in Arizona that operates 14 locations, including eight ASCs, takes a slightly different approach, according to practice CEO Mark Rosenberg; one not unlike the physician practice management companies (PPMCs) that gained some traction in the mid-1990s.

“Our approach is to affiliate with specific practices that we find desirable as partners,” Mr. Rosenberg says. “We provide IT support, human resources and essentially take over all administrative responsibilities. We charge a fee for those services and the practice gets the advantage of being part of a bigger organization.”

The Barnet Dulaney Perkins office in Flagstaff, Ariz., serves a part of the state with a high percentage of native American patients. Many of these patients are treated for glaucoma or diabetes-related eye diseases.

Barnet Dulaney Perkins recently affiliated with a practice that has $3 million a year in billings. The practice obtained the infrastructure support it needed and Barnet Dulaney Perkins expanded its footprint.

A ‘feeder’ system

Because Barnet Dulaney Perkins has eight ASCs, Mr. Rosenberg wants the satellite practices to not only provide basic eye care but also to serve as key feeders for the practice ASCs and surgeons.

“We are a surgical practice,” Mr. Rosenberg says. “An ideal affiliation for us is a practice headed by a medical ophthalmologist or an optometrist that is well established and has an older patient base. When the patients in a practice are primarily over the age of 55, you have a significant amount of pathology that will require surgery. This is a desirable patient base in a surgical practice.”

Barnet Dulaney Perkins has little interest in expanding into fast-growing suburban area with a high percentage of young families, Mr. Rosenberg says. “With a younger demographic you are going to get some LASIK and some pediatric patients,” he noted. “You will probably get more Medicaid patients as well, but the reimbursement for Medicaid is reasonable in Arizona, so we are okay with that. Overall, we prefer the geriatric population in terms of expanding the practice.”

INCORPORATING THE NEW SATELLITE

Giving the doctor staff support

The transition of the larger practice taking over the administrative burden from a solo or senior practitioner will only be successful if it is well planned and the larger practice provides significant support.

Amir Arbisser, MD, founder of Eye Surgeons Associates PC, in Bettendorf, Iowa, has opened a number of satellite offices. When bringing an older, established solo practitioner into the group, he advises you provide him or her with a “tech-savvy” assistant who does the patient work-up and probably a scribe as well.

“You have to devote real time to bring electronic health records to your peripheral locations,” Dr. Arbisser says. “These older docs are a valuable pool and can help the larger practice to maximize ASC volume, but they are going to need months of help.”

The economics work

Although staffing the satellite office with an assistant who can deal with electronic records and a scribe increases staffing costs for the new office, Dr. Arbisser says “the economics could absolutely work.”

“Bringing your electronic records system into a new satellite office doesn’t have to be a huge expenditure,” offers Mr. Kropiewnicki. “Today, with laptops and tablets, the staff at the satellite can log in remotely and won’t need the in-house servers and other expensive equipment that the main office might have.”

ROTATING SUBSPECIALISTS

Patient volume drives staffing

Mr. Rosenberg favors rotating subspecialists through the satellite office, with patient volume dictating how much time each is allotted to individual offices.

“Our subspecialists cover all of our locations,” says Mr. Rosenberg. “For instance, we may have a retina specialist in our Flagstaff office once a week or once a month depending on demand. By having the subspecialist in an office on a regular basis, you can build up that demand.”

Mr. Rosenberg notes that the Flagstaff location in northern Arizona has a large population of native Americans. “That means in Flagstaff we are seeing more diabetic patients, more cataracts and more glaucoma,” he says. “So absolutely we want our subspecialists to rotate into the Flagstaff office.”

Subspecialist as teacher

Mr. Rosenberg also points out that having subspecialists rotate through an office provides the doctor and staff in that office with significant educational opportunities.

“Regular interaction with our subspecialists is stimulating and motivating for them,” he says. “It also helps foster the idea that we are all part of the same team and no office is going to be neglected or seen as second-rate. For that same reason, we do not furnish our satellite offices with hand-me-down equipment. We want everyone in our network to feel a sense of pride.”

An opposing view on subspecialists

Dr. Arbisser takes a different view. He rotated subspecialists through the practice’s various offices for years before virtually eliminating rotations.

“Do you really want your subspecialists out of the main office, where they are comfortable and productive, or do you want them on the road where they are losing productive time?” he asks. “I now look at rotating your subspecialists through all of your offices as more marketing than anything else. Besides, most docs don’t like doing it and you have to take that into account.”

One alternative to rotating doctors is to make each satellite more of a full-service facility, Dr. Arbisser says. “A satellite should be able to perform OCT imaging,” he says. “It depends on patient volume, of course, but each of your offices should be expanding the services it can offer on its own.”

RUNNING THE NEW OFFICE

Not the new doctor

One staffing issue on which Dr. Arbisser is adamant is his belief that a new office should never be headed by the most recent physician hire.

“Many practices do this, but you don’t put your newest doc in a new office because he or she is not known and doesn’t represent the hard-earned reputation and values your practice has built up over the years,” he says. “The only way a new doc works in a new satellite is if you have an established OD in that office who has built up the patient base over the years.”

Adhere to practice formulary

Dr. Arbisser also believes that a multi-location practice runs more efficiently and more safely if all the offices use a common formulary for medications.

“Not all generics are as good as the branded drug, so we don’t allow switches from the formulary even though patients — and even some of our own surgeons — may balk at the extra cost to patients of branded drugs,” he says. “We consider this a safety issue.”

WHY BIGGER IS BETTER

Spreading capitation risks

As CEO of a large, statewide practice, Mr. Rosenberg sees expansion as a means to play a significant role as larger, often hospital-based, networks emerge and where obtaining managed-care contracts is an important key to sustaining a flourishing practice.

“When you take on managed-care contracts based on capitation, you need to have a large base to spread the risk around many patients so that the contract can be profitable,” he says. “Our plans are to not go beyond Arizona in terms of expansion but a possibility exists that we may wind up as part of some larger network that will be formed in the future. There’s no magic in being independent.”

Dr. Arbisser agrees. “The satellite concept will change as hospitals and larger networks will provide more competition for eyecare-only practices,” he says. “Ophthalmology practices are used to opening a satellite office to cover a new area. That has worked in the past, but the larger organizations they are going to compete with are going to direct patient flow to their own satellites. You may not see that as much in the bigger cities but it’s happening now in the less-populated areas of the Midwest and West.” OM