Physicians beware: revisiting the physician practice acquisition frenzy

This commentary compares the current physician practice acquisition frenzy to that of the mid-1990s and reflects on lessons learned. The bottom line: Physicians must understand that there were no "white knights" in the 1990s, and there really aren't any today. This article delineates five main factors that both physicians and hospital executives should thoroughly explore and agree on before an alignment or acquisition. Agreement on these issues is the glue that holds the deal together after the merger. These factors eliminate both buyer and seller remorse and delve into the true cultural alignment that must take place as the healthcare industry addresses the challenges of the future.

Are your physician-integration strategies sustainable?

Before embarking on a physician-integration strategy, hospitals and health systems should perform a detailed analysis of the following four critical areas to ensure that the strategy is competitive and sustainable: Strategic objectives; Financial resources; Requisite experience and functional capabilities; Organizational structure, culture, and commitment.

Integrated delivery systems

It's been assumed, and now MGMA member stats bear it out--more and more practices are hospital-owned.

What are we without risk? The physician organization at a crossroads

The managed care market in Chicago is experiencing rapid change. As health maintenance organization (HMO) enrollment flattens or even declines, and capitation becomes less sustainable for many, physician organizations are reevaluating their continued participation in risk-based contracts and are struggling to define their future roles. Physician organizations are looking for new ways to provide value to their physician members. Physician hospital organizations (PHOs) in particular are reassessing how the organization can continue to serve the interests of both the physicians and their hospital partners. To better understand the concerns of physician organizations, The Lowell Group surveyed Chicago area provider executives on their top issues. Three major concerns emerged: (1) protecting the financial health of the organization; (2) predicting the future of the managed care industry; and (3) evolving the physician organization to meet changing market conditions. Ultimately, physician organizations must make business decisions that support their true goals-serving patients and purchasers of care, physician members, and the organization's owners.

Something old, something new: recent developments in hospital-physician relationships

OBJECTIVE

To describe recent developments in hospital-physician relationships in 12 metropolitan areas.

METHODS

We analyze qualitative data from a third round of biannual site visit interviews conducted in 12 randomly selected metropolitan areas from 1996 to 2001. The study interviewed 895 respondents during the third round of site visits, conducted in 2000 and 2001.

PRINCIPAL FINDINGS

As HMO enrollment and capitation contracting has failed to grow in local markets, hospital executives have returned to a strategic focus on improving relationships with specialists in pursuit of fee-for-service revenue. Yet, 65 percent of hospitals interviewed in 2000 and 2001 continued to own primary care physician practices, with ownership more prevalent in highly concentrated hospital markets. A majority (55 percent) of hospitals have decreased the size of these practices in the past two years.

CONCLUSIONS

Interest in forming integrated delivery systems has waned. The potential for quality improvement through these organizations systems--by emphasizing primary care and coordinating hospital and physician services--has not been realized. The new emphasis on hospital-specialist partnerships may improve the financial status of hospitals and participating specialists in local markets, and may improve quality of care in selected service areas, but it may also increase health care costs incurred by employers and consumers.

Strategic health system development and managed care delivery

For the past quarter century major hospitals and physician groups have actively developed competitive health systems. Their compelling motivation has been fueled by the onslaught of managed care. Successful initiatives have been driven by mutual strategic system planning, effective management, and enhanced quality of care.

Reevaluation of capitation contracting in New York and California

We obtained detailed quantitative and interview data from Aetna U.S. Healthcare and six physician organizations to examine changes between 1998 and 2000 in the scope of capitation contracting and delegation of responsibility for claims payment and medical management in New York and California. The physician organizations in New York included Benchmark (Continuum), Montefiore IPA, and Lenox Hill Healthcare Network. In California they included Brown and Toland Medical Group, Monarch Healthcare, and Santa Clara County IPA. In both California, where global and shared risk capitation have been common, and New York, where they have not, we find movement to reduce the scope of prepayment and a rethinking of the delegated contractual relationship by physician organizations and health plans. This represents a departure from the 1990s, when many industry participants and analysts expected capitated and delegated relationships to spread across the nation.

Practice unwinds and disengagements

Many employed physicians are being forced to consider entering the private practice arena as physicians networks and groups are contemplating total or partial divestitures. Still other physicians are evaluating the possibility of leaving their current practice or hospital based network and opening their own practice. This article is designed to better prepare a physician for this situation ad proactively plan for their future.

Organizing and managing care in a changing health system

OBJECTIVE

To examine ways in which the management and organization of medical care is changing in response to the shifting incentives created by managed care.

DATA SOURCES

Site visits conducted in 12 randomly selected communities in 1996/ 1997.

STUDY DESIGN

Approximately 35-60 interviews were conducted per site with key informants in healthcare and community organizations; about half were with providers.

DATA COLLECTION

A standardized interview protocol was implemented across all sites, enabling cross-site comparisons. Multiple respondents were interviewed on each issue.

PRINCIPAL FINDINGS

A great deal of experimentation and apparent duplication exist in efforts to develop programs to influence physician practice patterns. Responsibility for managing care is being contested by health plans, medical groups and hospitals, as each seeks to accrue the savings that can result from the more efficient delivery of care. To manage the financial and clinical risk, providers are aggressively consolidating and reorganizing. Most significant was the rapid formation of intermediary organizations, such as independent practice arrangements (IPAs), physician-hospital organizations (PHOs), or management services organizations (MSOs), for contracting with managed care organizations.

CONCLUSIONS

Managed care appears to have only a modest effect on how healthcare organizations deliver medical care, despite the profound effect that managed care has on how providers are organized. Rather than improving the efficiency of healthcare organizations, provider efforts to build large systems and become indispensable to health plans are exacerbating problems of excess capacity. It is not clear if new organizational arrangements will help providers manage the changing incentives they face, or if their intent is to blunt the effects of the incentives by forming larger organizations to improve their bargaining power and resist change.

Remembering the specialists. After spending billions on primary-care networks, hospitals are cozying up to top revenue generators

After hospitals and practice management companies spent the better part of this decade snapping up primary-care doctors, they suddenly remembered the specialists. You know, those guys in white coats who generate much of the revenues.

The grass wasn't greener: hospital-physician partnering in the post-PPMC world

With the crash of a number of leading PPMCs nationwide, it's time for hospital, health system, and physician executives to reconsider what partnering will mean going into the future. The author argues that the new dynamics of the marketplace offer a whole range of opportunities through which savvy hospital system and physician group leaders can find common ground.

[Virtual workshop for hospital management]

Due to a survey of the CKM insufficient communication among different professional groups is one of the main causes for unused quality reserves and neglected potentials of efficiency in German hospitals. An essential reason for this insufficiency lies in the traditional concepts of education which are designed for the specialties of the different professional groups. With this these concepts only impart key qualifications such as social authority, ability for communication and ability for problem-solving in a small amount. The goal of the virtual workshop is to train students and trainees in communication and interdisciplinary problem-solving early by working together on a practical case in a Virtual Workshop team. On the other hand all relevant persons to talk to are involved in order to support a qualified preparation of decisions: employees of the project hospital, partners from industry and members of universities.

Managed care and processes to integrate physicians/hospitals

This article describes the extent to which hospitals use different integrative processes to assimilate physicians and assesses the extent to which their use is associated with managed care penetration and hospital characteristics. Results from a national survey of 1,495 community hospitals indicate that these integrative processes are quite prevalent. The use of integrative processes tends to be more prevalent in hospitals that are large, urban, involved in teaching, and members of hospitals systems. Use of particular integrative processes also appears to be associated with different thresholds of managed care penetration.

An off year for consolidation. 1997 hospital mergers, acquisitions, joint ventures and long-term leases

Because of a significant drop in the number of major corporate mergers and acquisitions, total hospital consolidation in 1997 was well off the record-setting pace of previous years. The number of hospitals involved in dealmaking dropped 18% to 627 compared with the previous year, according to Modern Healthcare's fourth annual roundup of consolidation activity. And there were only four corporate deals, compared with 11 in 1996.

Doctors on the move

We surveyed your colleagues to find out how they're responding to health-care turmoil. Our comprehensive findings show them selling, merging, relocating, or joining up.

Managed care, capitation, and the future of nephrology

Within the next decade, it is predicted that more than 90% of the United States population will receive its health insurance through managed care. Capitation will be the reimbursement mechanism to health care providers as the major way of controlling costs. Currently, managed care has had little experience with capitation payments for chronically ill patients, who consume large financial and physical resources. The end-stage renal disease (ESRD) population represents a vulnerable group of patients, and their care may be compromised in a capitated environment. Nephrologists will need to serve as advocates for ESRD patients through a mechanism of quality of care, driven by a continuous quality improvement model. Cost-effective delivery of care will occur as nephrologists join together to form Independent Practice Associations (IPAs). In this article, the role of a nephrologist in a capitated environment is outlined in detail, and background for the basis of managed care growth is provided as a framework for understanding the change in our health care delivery system. After formation of a nephrology IPA, there will most likely be a linkage with a management service organization (MSO). A business plan driven by the highest principles will allow nephrologists to work together as a cohesive force in accepting global risk capitated contracts. The starting point is for ESRD care, and the future includes pre-ESRD care.

Emerging trends affecting ambulatory care: findings from an environmental assessment

Deloitte & Touche LLP, in conjunction with VHA, Inc., conducts an annual environmental assessment of trends affecting the health care industry. The annual study assesses the impact of these trends on both providers and purchasers. This article focuses on specific trends from our current study that suggest the need for significant change in the way ambulatory care is delivered. The article examines 10 key trends in overview, takes a closer look at four critical areas with special impact on ambulatory care, and concludes with a discussion of how the industry is responding.

Ambulatory care growth: implications for academic organizations

This article discusses the implications of the dramatic growth of outpatient activity in academic health care organizations, and, more broadly, in all forms of joint physician-hospital outpatient care. The authors describe several economic, operational, and regulatory factors that influence the success of ambulatory care expansion in the academic environment. A case study of the Metropolitan New York Medicaid managed care environment illustrates the impact of these factors and highlights the specific challenges confronting teaching hospitals and physicians. The attributes of ambulatory care providers that have successfully addressed these challenges are also discussed. Finally, the benefits of the model ambulatory practice structure, employed at a number of teaching institutions across the country, are explored.

Physician-hospital organizations and PHO executives. What lies ahead for the PHO?

The 1996/97 Profile of Physician-Hospital Organizations and PHO Executives, jointly conducted by the American Association of Physician-Hospital Organizations/Integrated Delivery Systems (AAPHO/IDS) and Tyler & Company, takes a closer look at the PHO and trends within the health care system. In examining contracting, enrollees, staff size and experience, compensation, incentives, and projected salary increase for CEOs, the survey found that the PHO is in the midst of transformation into an integrated delivery system. As physicians and hospitals form a team to deliver more efficient and cost-effective health care to patients, they are paving the way to the integrated delivery system. The survey also focuses on the details of the PHO and PHO executives, including an in-depth look at all aspects of compensation for the CEO.