Practice integration in gastroenterology
Consolidation is occurring at every level of health care. When we (at Minnesota Gastroenterology) began in 1996 to build a single large practice from three smaller ones, the concept was rare if not unique in gastroenterology. The vast majority of GI specialty care was delivered by physicians in small (less than five physicians) practice settings. Now, there are over 25 large or "mega" practices throughout the country, and more are developing each day. In this article, Dr Cohen has teamed up with two attorneys who have experience in practice mergers. They have written about the risks and benefits of consolidation and provided a detailed "roadmap" that you can follow.
John I. Allen, M.D., MBA, AGAF Special Section Editor of the "Practice Management: The Road Ahead" Section of CGH
In response to the shift in market forces, doctors have increasingly combined with other physicians1 to achieve the benefits of scale. Both single and multispecialty group practices are aggregating with centralized business offices to provide their members with a wider array of ancillary services and to negotiate with third-party payers as a single entity.
This article examines the trend toward practice consolidation and integration within the specialty of gastroenterology and has two primary objectives. First, it reviews the potential benefits and pitfalls of physician integration. Second, it provides a step-wise, practical approach for successfully merging practices into an efficient and well-organized operation, while avoiding antitrust, anti-kickback, and anti-referral compliance concerns.
Practice integration: A response to the challenges of health care reform
The practice of gastroenterology is poised to undergo sweeping changes as federally funded health programs and private payers begin to implement the Patient Protection and Affordable Care Act of 2010. Achieving the "triple aim" of health care reform – higher quality, lower cost, and improved population health – will require a significant transformation of our current model of health care. The adoption of electronic medical records and outcome registries will be nearly universal. Widespread use of electronic health records will provide payers with an opportunity to assess patterns of resource utilization and clinical outcomes among an increasingly broad swath of practitioners. The accountability and transparency that result will foster competition among providers who, it is hoped, will become motivated to reduce the cost of services and improve quality. The dominant method of payment for physician services will also shift from fee-for-service to a risk-sharing model, wherein doctors assume some financial risk for the outcome of their services. Last, greater emphasis will be focused on efficient and cost-effective management of chronic diseases, end-of-life care, and the delivery of preventive care services.2,3,4
In the new health care landscape, many doctors will belong to large networks of physicians that are closely aligned with hospital systems. Integration will be accomplished through information technology systems. The emphasis will be on patient-centered, clinically integrated care through the continuum of inpatient and outpatient settings. Performance measures, designed to assess quality and cost efficiency, will be captured and closely monitored. Compensation to individual physicians will include shared financial risk that is based on patient outcomes.To succeed, practices will have to invest both time and money. Solo physicians and smaller group practices that are unable or unwilling to make such commitments may want to consider other options such as hospital employment or practice consolidation.
Group integration may begin either with the merger of several solo practitioners or the consolidation of physician groups. Some achieve a critical mass at inception, whereas others begin smaller with an expectation that additional physicians will join them later. To achieve sufficient scale and a reasonable likelihood of success in larger markets, however, a group should strive to ultimately attain sufficient size to have a voice in the strategic decisions involving their specialty within that market. With increased market size and presence, integrated groups have been able to negotiate professional fees from private payers that are significantly higher than those offered to smaller groups. Integrated groups may also experience additional benefits:
• Greater purchasing power and lower operating costs.
• Increased efficiency of administrative services operated through a centralized business office.
• Reduced administrative burden for member physicians.
• Greater access to capital.
• Greater opportunity to develop and offer new service lines and complementary ancillary services to their patients.
There are also challenges in forming an integrated group practice (IGP), including reaching consensus for its short-term and long-term mission and goals, the development of a governing structure, drafting organizational documents that correctly represent the desires of the IGP, and implementing the necessary details to move forward.
