Partnering in a New Paradigm

Aug 13, 2014 at 05:06 pm by Staff


There’s no question healthcare delivery is in the middle of a transformational period highlighted by unprecedented consolidation. While there are a number of factors impacting alignment decisions, Paul Keckley, PhD, boiled the equation down to its simplest terms, “Economics drives behavior.”

Keckley, managing director for Navigant’s Center for Healthcare Research & Policy Analysis, said physicians are having to assess their practices in light of a new reality that requires efficiency, effectiveness and contracting clout to survive.

“If you’re of a view that the economics favors you being independent for the rest of your practice, you go that route,” he stated. However, the noted healthcare expert who has published three books and more than 250 articles on the industry and health reform, said that practice model is becoming increasingly rare.

For many, Keckley said practice decisions take a step-wise progression. Option A finds two small practices within a specialty banding together. Option B brings multiple specialties together to form a large group. Option C has physicians or practices joining forces with a hospital or payer under some type of employment, joint venture, or managed services organization (MSO) agreement.

“I think most doctors are past Option A. I think most doctors realize circling the wagons around a single specialty isn’t realistic,” said Keckley. “Two out of three primary care doctors have already cast their lot,” he continued of aligning with hospitals, payers or very large groups.

“Frontline specialists have already gone to bigger groups. Now they are moving to the next option … most look like they’re going to hospitals,” he added of orthopedists, ENTs and OB/GYNs. As for other specialists, he said the decision to remain independent, merge or consolidate is all over the board and is specialty dependent.

Going forward, Keckley said, “I think we’re going to end up with a very few private doctors in practice independently.” He predicts seeing a few more very large, multispecialty practices. “I think the majority end up employed in the hospitals because of these new payment mechanisms.”

In fact, he noted, “It’s been incentivized for the hospitals to hire physicians.” Clinical integration, outcomes-based reimbursement and bundled payments have created an environment where hospitals and doctors are increasingly co-dependent.

Although hospital administrators and clinicians have always had to work together, Keckley said this new closeness highlights areas that must be addressed to maximize effectiveness. Three key stressors are administrative decisions, clinical performance, and … of course … allocation of money.

“There’s always going to be tension around operations,” he said of administrative decisions. “Each presumes the other’s operating is simpler than it really is,” he continued of the chasm between blue suits and white coats.

With reimbursement tied to outcomes, he said physicians and hospitals face tougher decisions around strategy. One issue is how to address physicians not practicing effectively. “The hospital suits don’t do a very good job of changing the behavior of doctors. It takes peers,” he noted.

The biggest cause of tension is expected to be around allotting payments to each of the partners in a vertically integrated delivery system. “And then you get down to money, and that’s where it gets ugly,” Keckley stated. However, he continued, too often the perception among administrators is that it’s all about the money when it comes to physicians. “If it was just about money, there are a lot of better ways to make money … and easier, by the way. Most doctors don’t go into it to be wealthy. It’s hard work. The average medical career is 30 years, and it’s a hard 30 years.”

That said, he added physicians do want to be successful, have a sense of satisfaction around their career choice and be well compensated for their work. However, Keckley noted, “There’s such a difference between the way doctors think things should be and the way they are.”

Keckley said too many physicians tend to dismiss data as unreliable or believe their patient is an outlier. Yet, he added, “The table stakes are you’ve got to have data. You can’t just have a bunch of opinions.” To bridge that gap, Keckley said he believes it is going to take physicians willing to step into the hot seat and take criticism from their colleagues as the profession adapts to new economic realities.

“I think physician leadership is probably going to be a theme over the next 10 years,” Keckley said. “The medical profession is well respected and well compensated … that doesn’t change … but how that profession plays in the delivery system is very much a work in progress.”

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