Best Practices

Seeking safety in numbers

Reimbursement changes inspire practices to connect and unite.

By Derek Preece

Derek Preece is a principal and executive consultant with BSM Consulting, an internationally recognized health care consulting firm headquartered in Incline Village, Nevada and Scottsdale, Arizona. For more information about the author, BSM Consulting, or content/resources discussed in this article, please visit the BSM Café at www.BSMCafe.com.

The nation’s largest health insurance company recently announced plans to make major changes in the way it pays doctors. Currently, United Healthcare (UHC) pays out $20 billion a year to doctors and hospitals under what it calls accountable care contracts. These types of payments replace typical fee-for-service payments with reimbursements partially determined by quality and cost-efficiency measures.

UHC expects its accountable care contracts to more than double in the next three to four years, with payments reaching $50 billion a year by 2017. The reason for the increase is simple: the company’s experience with accountable care contracts has shown a cost reduction of about 4% compared to traditional fee-for-service payment arrangements. Much of this savings can be attributed to 16% fewer emergency room visits and 17% fewer inpatient hospital days.

Clinical integration trend

Fearful of being left out if they do not sign new provider agreements, many doctors have sought safety in numbers, joining forces with other practices or becoming employees of hospitals in an attempt to ensure their future. The rising costs of medical practice operations – including compliance with new and complicated regulations and increasing demands to install expensive electronic health records – have added to the sense among many doctors that there is security only in larger organizations. This trend of combining with other practices or health-care entities has been called “clinical integration.”

It’s happening in many specialties. In the last few years, urology practice owners have been in a virtual stampede to merge practices. Now the top 100 urology practices in the United States provide more than 20% of the care for that specialty. Dermatologists are selling their practices to privately held practice management companies. Also representative of the trend is the high numbers of primary care and hospital-based practices that are looking to hospitals to acquire them and provide some protection.

Options to consider

So, what is an ophthalmologist to do? The answer will depend on conditions in your local market, but here are some of the options you may consider in the future:

1. Join with other ophthalmology practices to form a larger practice entity that may have greater influence in the local area.

2. Become acquired by or contract with a multispecialty practice that has leverage in contracting with local payers.

3. Approach your hospital regarding a possible acquisition. Hospitals tend to be less interested in employing ophthalmologists than some other specialists, but we have seen a few acquisitions of ophthalmology practices by hospital groups.

4. Remain independent but well-connected to payers and other providers. This will hopefully avoid you getting cut out of contracts. Maintain relationships with local physician groups and insurance companies so you are at the table for discussions on which practices will be able to provide services to specific groups of patients.

To grow and succeed

As you study the alternatives available for your practice, you will need to chart a course that gives you the best chance at protecting your future. Being aware and involved in your local medical community will help you identify threats your practice faces and opportunities for continued growth and success. OM