Editor’s Note – In roughly a ten-year period beginning in 2000, hospitals began buying up medical practices at a feverish pace. Figures from the American Hospital Association showed that during that period the number of physicians employed by hospitals grew by 34 percent. In the past few years the pace seems to have slowed dramatically. What has happened, where do we stand today and what does the near future look like? For answers Memphis Medical News turned to Methodist Le Bonheur’s Bill Breen who has been involved with physician alignment for more than a decade and the subject of this publication’s Healthcare Leader in October, 2012. Because he remains one of Memphis’ top experts on this subject we have turned to him again.
What once was a lengthy flurry of endeavors by hospitals to acquire primary care providers and physicians apparently has slowed to an occasional attempt or two during the past few years, judging by recent headlines – or the lack thereof.
Is that really the case, or are acquisitions so commonplace as to be simply less newsworthy now?
Bill Breen, senior vice president, physician alignment at Methodist Le Bonheur Healthcare, shared his perspective on the issue, noting that while the rate of practice acquisitions may have slowed, “I don’t think you’re ever going to see it go away.”
Although the complexities of integrating practices into major healthcare systems are demanding, and conscripting the sheer manpower to make some of the acquisitions happen was often a challenge, during the six years since he assumed responsibility for Methodist’s physician alignment initiative Breen saw the partnership-development pace pick up rapidly from 2010 to 2014.
“The pace we were setting in 2010 through 2014 was pretty difficult for everybody,” he recalled. “But although it did slow down in 2014 and 2015, we’ve seen a slight acceleration in the latter half of 2015 and the early part of 2016.”
He points to three practices acquired since January 1, 2016 — contributing to a total of about 85 primary care providers, about 55 non-academic specialists and about 150 adult academic physicians who have joined Methodist’s allied physician partnership family to date.
“I think you’re going to see constant pressure on the marketplace for these partnerships to continue to grow,” he said. “The complexity of the marketplace is going to keep the fire burning. With MACRA and the sunsetting of the SGR formula and the introduction of ever-more-complex ways that people are going to be paid as providers, it’s going to place a lot of pressure on independent groups to either consolidate — find resources that are currently very scarce — or look for acquisition partners in health systems.”
Growth may not match the pace seen from 2010 to 2014, but the same levels of pressure are still there to drive future pursuit of partnerships, he believes.
Even during his previous 19 years with Health Choice (a division of Methodist), Breen’s focus was on improving the practice of medicine for physicians and patients through better-managed care agreements and relationships.
Breen believes that teams of aligned partners are better able to create a superior brand experience. “Where previously physicians may have lacked the technology and sometimes the resources, together, as aligned partners, we are able to formulate a better experience for the patient," he said.
“Our physician partners play a huge role — we couldn’t do it without them. They do an amazing job of adapting to a new environment — a whole new family” and “a whole new language. Many times they’re putting in an EMR what they might previously have done on paper.”
But utilizing an infomedics tool that can be complicated has its reward in a greater body of patient information that adds up to greater value and improved care for the patient.
“For the most part what we’ve taken out of the practices is the scutwork of running the practice itself — the payrolls, having to have a separate accounting relationship, worrying about paying the bills. We scoop that up and bring it to the corporate office; what we want to leave in the practice area is that which benefits the patient — direct patient care.”
Alignment, he said, is not a “one and done” effort, but a continuing process. He describes four stages: acquiring, integrating, managing and transforming. “These are four things that we’re actively involved in at all times, depending on the practice.”
Although “alignment” is not necessarily a synonym for “employment,” and various levels of partnership are possible — ranging from employment on the medical staff to medical directorship, joint venture partnerships (in a surgery center, for example) or clinical co-management — Breen finds that most people tend to gravitate toward the employee business model, because that’s where they have greater flexibility.
“Right now,” he said, “about 35 percent of the market is employed, and that might be creeping up closer to 40 percent.”
As newly qualified physicians and providers enter the market, many are going to look for a similar healthcare-aligned relationship, rather than a berth with an independent practice, he believes.
In the “old days” when a partner in a physician practice was ready to retire and they wanted to replace him or her with new talent, “they had to come up with an income plan,” Breen said. “Generally, they had to make some cut to their own salaries in order to come up with that money, because the new physician might not have patients on day one. The recruitment process was complicated because they were using their own money.
“I think in the long run it’s going to be harder and harder to recruit to a private practice,” Breen said. “Therefore employee practices are probably going to get bigger, and the number of independents is probably going to go down — but it will never go away.”
Does the expiration of independents’ contracts or PSAs (professional service agreements) pose a threat to healthcare systems? Might aligned physicians opt not to re-up?
“I think some of them are definitely checking their options and making sure they understand their agreements,” Breen said.
But he believes at this stage,not enough people have reached a potential termination point to determine a trend, and he does not anticipate any expiration crisis. In retrospect, reviewing his years of work in creating acquisitions and building successful partnerships, what surprises him most?
“I think that if you put together a good program and you go after the right physicians and you let them lead, they can accomplish wonderful things,” he said. “I’m surprised by how quickly we are making strides, quite frankly. We’re very pleased.”
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