Reform Rekindles Hospitals' Interest in Multispecialty Groups

Rodolfo "Rudy" Zaragoza , MD

Vice President of Transformational Care

Published July 04, 2014

Since the passage of the Affordable Care Act (ACA) in 2010, there's been an incredible amount of discussion among the CEOs of large hospital systems about the importance of integrating physicians into their organizations.

Specifically, leaders hope that aligning their organizations with a broad physician network will allow them to take advantage of the transition from a fee-for-service reimbursement system to one based on value. Other potential incentives for alignment include the possibility of bundled payments and population health incentives — first from Medicare and potentially, as seems likely, from private payers as well.

Many physician groups have responded to this trend by diversifying their service lines, forming larger multispecialty groups. In doing so, these practices seek to align themselves with hospitals that are striving to improve care coordination, while meeting the requirements of modern healthcare reform.

The Challenge of Physician Integration

There are various ways that hospitals can work with physician groups — particularly multispecialty groups — to enhance care delivery:

They can contract with independent practices that wish to align yet remain autonomous.
They can align with independent groups to form an accountable care organization (ACO) or managed care network.
Where permitted by law, hospitals can employ physicians directly, often by acquiring and managing their practices.
Or they may create independent medical foundations that organize and manage physician practices.

Each of these models has implications related to physician engagement and performance. After all, integration isn't always a comfortable idea for physicians. As a profession, we're trained to be self-motivated, autonomous and performance driven. We often resist hitching our stars to other organizations — particularly those that don't respect our autonomy or share our culture and care philosophy.

As a physician leader within a democratic, multispecialty group, I strongly believe that practices like ours can best help hospitals meet their quality and cost goals when providers are allowed to maintain a measure of independence while cultivating strong alignments and shared goals with the hospital facility or system.

Why Multispecialty Groups? And Why Now?

Multispecialty physician groups have been around for many decades, and their popularity has generally ebbed and flowed based on reimbursement trends. For example, these practices enjoyed a popularity surge in the 1990s as insurance companies emphasized capitation, managed care and tight referral pathways for medical specialists.

During the early 2000s, growth of PPOs and loosening of utilization rules made it easier for patients to see specialists. This weakened the competitive edge of multispecialty groups, and their numbers declined (though they continued to thrive in areas with a strong managed care environment, such as Southern California).

"It's one of the models that will continue to be viable. I don't foresee the disappearance of multispecialty groups."

— Stephen Shortell, professor, University of California, Berkeley, 2002

In 2010, the ACA swung the pendulum again with incentives for organizations to voluntarily participate in capitation and population health programs.

The Medicare Shared Savings Plan was created to assist hospitals in moving voluntarily toward accountable care organization (ACO) status. The ACO program rewards organizations both for care quality and for minimizing Medicare spending. Implicit in this goal is a need to improve covered patients' health and reduce preventable hospital stays.

In addition, Medicare's value-based purchasing (VBP) program has increased pressures on hospitals to improve care coordination and efficiency.

Given these developments, hospitals are demonstrating renewed interest in allying themselves with physician groups. And multispecialty practices are uniquely positioned to help hospitals and healthcare systems meet the challenges of reform through collaborative alignment and an emphasis on high performance and excellent clinical outcomes. All of which are best attained when medical professionals are allowed and motivated to excel in a team-oriented environment.

Benefits of Multispecialty Physician Groups

A major thrust of the ACO and VBP programs is greater care coordination. By their very nature, multispecialty groups are incentivized to provide a continuum of care for their patients — often in highly innovative ways. (For example, Crystal Run Healthcare, a multispecialty physician group and pioneer ACO, embedded a care manager at each of its hospitalist sites to assist with care transitions.)

But do multispecialty groups really do a better job of caring for patients while controlling costs? Results of a 2010 study led by William B. Weeks, MD, of the Dartmouth Institute for Health Policy suggest that they do.

Weeks and his colleagues compared cost and clinical outcome data between small practices and large multi-specialty practices. Their study spanned two-years and encompassed care delivered to over 700,000 Medicare beneficiaries.

They found that the large multispecialty groups:

Delivered more evidence-based care
Had fewer avoidable hospital admissions
Spent an average of $272 less per patient, including lower spending on physician care, inpatient care and home health.

The team concluded that if all physicians performed at this level in treating Medicare patients, it would save the program an estimated $15 billion per year.

Challenges of Ownership as a Path to Integration

Some hospitals and health systems are focused on clinical integration in an attempt to capitalize early on quality incentives and manage the health of their patient population while also striving to hold themselves financially accountable for meeting cost and outcomes goals.

Others find themselves in varying states of readiness — caught in the old fee-for-service model while scrambling to prepare for a future in which they will be held accountable for quality and population health.

There are several ways that hospitals can align themselves with physicians — and multispecialty groups in particular — to achieve better clinical integration and care coordination.

One trend that has emerged is toward hospitals purchasing physician groups.

These hospitals hope that the owned groups will better position them to take advantage of population health incentives and bundled payments.

Some also plan to launch their own managed care plans and believe the owned groups will help create broader, more attractive networks.

The problem is, physician groups are very expensive to run, and physician practices do better on their own by and large. And until hospitals have an opportunity to successfully perform with regard to population health and managed care arenas, purchased physician groups are unlikely to provide a return on investment.

However, despite these risks, many hospitals and health systems view physician employment as an investment in the future.

How Independence Adds Value

In my opinion, contracting with multispecialty groups, rather than employment, is an ideal way for hospitals to achieve physician integration when hospital leadership chooses to:

Partner with groups that are aligned with its goals.
Actively collaborate with physician leaders.
Allow providers to have input on the direction of relationships, processes and initiatives.
And provides resource support to facilitate appropriate, efficient, high-quality care.

All of which culminate in an organizational culture that's focused on best practices and safe and satisfying, patient-centric care.

A contractual arrangement has many benefits and is the arrangement that produces the highest level of motivation on behalf of providers to produce, engage, communicate and collaborate. Culturally, independence feels more comfortable to physicians, increases their engagement and relieves their natural concerns about conflict of interest. As valued partners who have a seat at the decision-making table, they are personally invested in the hospital's goals and driven to excel — especially when their contract includes performance incentives or hinges on improving the patient experience.

Greater autonomy also allows for more agility and innovation on the group's part. An independent group can more quickly enact changes that increase quality and benefit patient care simply by voting them in, while working and executing collaboratively across service lines to improve clinical outcomes.

It's been my experience that a special synergy emerges when a physician group and hospital work toward a common goal.

"When you hold doctors accountable to their peers, you'll begin to see medicine at its best."

- Arnold S. Relman, former editor, The New England Journal of Medicine

In conclusion, multispecialty groups such as Vituity are uniquely positioned to help hospitals meet today's clinical integration challenges while capitalizing on tomorrow's opportunities of healthcare reform. Groups like Vituity, bring to the table strong physician leaders who are empathic, collaborative and skilled at team building and management.

Hospitals and physicians need to carefully weigh the type of relationships they engage in. In most cases, a contractual relationship between highly motivated, independent organizations provides the best foundation for strong provider performance, alignment and successful care coordination.

Partnering to improve patient lives

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