How Healthcare Reform will Influence Private Practices

This year’s MGMA conference in San Antonio offers several sessions on different strategies practices can use to thrive in uncertain times. To help attendees and readers gain more insight into how healthcare reform will influence private practices, Physicians Practice spoke with two of this year’s MGMA presenters.

Internist and rheumatologist Chuck Peck is president and CEO of Health Inventures, LLC. He has more than 30 years of healthcare experience as a clinician, scientist, medical school
faculty member, administrator, medical director, and partner in a worldwide healthcare consulting company.

Peck will be presenting session F11: Hospital Employment: Not the Only Alternative for Physicians on Tuesday, October 23 at 3:30 p.m.

Deborah Walker Keegan, PhD, FACMPE, is a nationally recognized healthcare consultant,keynote speaker, and author. With more than 25 years of experience, she assists clients in resolving a wide range of challenges facing today’s healthcare organizations. Keegan earned her PhD at the Peter F. Drucker Graduate School of Management and is a Fellow of the American College of Medical Practice Executives.

Keegan will be presenting preconference workshop PRE110: Mastering the Revenue Cycle: Avoid Potholes in the Road to Getting Paid on Saturday, October 20 at 1 p.m. and Sunday, October 21 at 8 a.m. She will also be presenting session A2: Staffing for the Future Now on Monday, October 22 at 10:15 a.m.

Physicians Practice: How do you think health reform will influence private practices?

Peck:  It will force continued consolidation of smaller practices and increased partnering of specialty practices with hospitals. It may also cause significant financial distress among both primary and specialty-care practices requiring an even greater emphasis on cost containment and efficiency.

Keegan: Healthcare reform has already had a significant influence on the fiscal health of private practices. Many practices have made important decisions regarding the purchase of electronic health records, adoption of e-prescribing tools, and whether or not to participate in the Physician Quality Reporting System (PQRS). Each of these initiatives provides financial incentives or penalties, depending upon a practice’s decision to participate and the success of that participation. 

Beyond government payer strategies, private payers have developed an expanded array of “managed care” requirements and increasingly, are tying reimbursement to specific targets and goals, impacting the financial health of today’s private practices.  

Driven by payment reform, structural reform is taking place at unprecedented levels. The new structural models have already changed many markets, with the healthcare landscape fashioned by accountable care and collaborative care networks, thereby effectively integrating the financing and delivery of healthcare. These new structures cannot be easily unraveled, regardless of politics, and they are expected to move us in the direction of regional systems of care.

Driven by payment and structural reform, there are also exciting changes in the delivery system itself. Virtual medicine, involving secure, e-mail messaging with the care team, virtual consult capability between primary and specialty-care providers, medical home models of care, shared decision-making with patients, improved care coordination across the continuum of care, and 24/7 access to care are dramatic changes for most private practices as they take part in this pivotal time in the healthcare industry.

Physicians Practice: What do you think is the biggest change private practices will encounter?

Peck: A requirement to partner with someone bigger than themselves without necessarily understanding the “price of equity.” By this I mean that becoming part of something bigger requires changes in behavior and practice. It requires doing things for the betterment of the whole versus an individual practice. It means facing new economic realities. It means winning some and losing some. It requires an entirely new set of competencies, especially those related to business.

Keegan: Likely the biggest change will be working in a value-based reimbursement environment. Today the United States is in the midst of a massive experiment as it tests out a multitude of reimbursement methods, including per member per month payments, pay-for-performance, shared savings, bundled payments, care warranties, and others.

Private practices need to be able to effectively position themselves to manage with variable revenue streams, some of which have competing requirements related to clinical practice. For example, traditional fee-for-service reimbursement supports high patient face-to-face visit volumes, while per member per month reimbursement supports nontraditional patient access, such as virtual visits or telehealth. Living in a transition state involving multi-channel reimbursement models is not an easy task. Transitioning from traditional fee-for-service reimbursement methods to value-based reimbursement focused on quality and cost outcomes is a landmark change for private practices.

Physicians Practice: What are some things practices should be doing now to ensure that they can thrive in the coming years?

Peck: Look for potential partners now - doing this as a fire drill later is fraught with high risk. Look for additional efficiencies within your practice. Utilize all government-supplied opportunities for new technology acquisition, understand cost of care and be able to demonstrate with data that you are cost effective and produce high-quality results.

Keegan: A medical practice needs to effectively demonstrate and promote its value to potential community and regional partners, as well as payers. To accomplish this, medical practices need to develop the infrastructure and data analytics to effectively analyze their costs and outcomes of care. Armed with this data, a medical practice can demonstrate its value - defined as high quality and low cost - from a position of strength.

Each medical practice should have an understanding of its costs to include not only cost per visit, but also cost per diagnosis and per episode of care. Equally important is to understand quality and care outcomes. Practices can start small and grow this competence over time. For example, if a practice is not yet participating in PQRS to measure targeted care interventions, start now. 

Medical practices that have developed these internal capabilities are in a better position to take on financial risk and are able to agree to meet an ever-expanding list of performance measures.  If a practice has not had experience in changing internal processes, documenting performance, and ensuring targeted goals are met, it will be met with a steep learning curve.

Physicians Practice: If you could provide a small independent practice with one piece of advice, what would it be?

Peck: Look at all of your options. Listen well. Get educated about reform from trustworthy sources.

Keegan: With the changes in today’s healthcare environment involving care delivery and reimbursement, it will be difficult to remain a small, independent practice without developing a well-defined intentional strategy to remain independent. Begin to identify alignment strategies to better position your practice for the changes still to come. This can take the form of closer alignment with other medical practices, participation in clinically integrated networks, hospital professional service agreements, preferred payer arrangements, and other options that retain practice autonomy.

Note that these strategies are well short of direct employment arrangements with systems, hospitals or payers, which are also viable options for a small, independent practice. By starting now to identify valued partners in providing accountable care, a small independent practice can position itself to remain independent or transition to another structural model for long-term advantage.