Viability of the Private Practice
If you think radiologists are spooked by the physician-acquisition trend among hospitals, then consider the unease it provokes among practice executives. The subject of practice independence was a running theme throughout the RBMA Summit in Colorado Springs this past week, in the session rooms—but also in sidebar conversations. In a particularly relevant session titled “The Captive LLC: Gaining Strategic Alignment While Retaining Independence,” Medical Management Professionals’ Ed Gaines and David Myrice posed this line of reasoning for negotiating a co-management agreement or a captive LLC: If integration can be achieved without dissolution of the practice, why wouldn’t you at least try that option first? Before describing two non-employment approaches to radiologist–hospital partnership, Gaines and Myrice provided context for the practice-buying binge: gain-sharing, bundling, ACOs, and hospital quality measures usually not tracked by practices (but for which hospitals are now at-risk). One model they put forth was the co-management agreement, a model in which physicians are engaged through a contract to provide management services for hospital programs or service lines. A fixed fee for services and performance incentives are usually involved, and the practice maintains independence. “Shared governance structure is the basis of co-management,” explains Myrice. “You are literally sharing the running of radiology, but also utilization, and in some cases you will become the RBM for the hospital.” Performance metrics in the form of evidence-based protocols and quality measures for baseline and readjustment, are the linchpins of such agreements and will be critical—along with independent fair-market value analysis—in surviving OIG scrutiny. The captive PC or LLC, by which practice and hospital form a separate entity to fulfill the managed services agreement, represents a tighter alignment but also a greater threat to practice independence. “ “Now when you are meeting, there is a new person at the table: a hospital administrator,” Gaines says. “The co-management agreement is where you want to go, you don't want to get to the captive LLC stage.” Increasingly multiple private practices that serve a health care system are being told by the hospital that they only want to deal with one entity, an issue that will only be exacerbated by the hospital consolidation trend. Keith Chew, senior consultant with McKesson’s practice management solutions arm, told me how he worked with eight practices serving the Advocate Health System in Chicago to develop a team model to meet Advocate’s needs. “They wanted to do that in a way that was not integration, but was cooperative, and that’s what gets us to the raise-all-ships mentality,” Chew explains. The groups formed a council to develop quality metrics and push standardization, formalized in a general LLC that operates under a board of directors. The individual practices remain intact, but they operate under the name Integrated Imaging Consultants. “You can’t measure if you have extreme variability in a system, so you have to standardize,” Chew notes. With proven quality metrics in hand, Chew says, the council can demonstrate to payors why they merit better compensation. A key to preserving independence, it appears, is giving the hospital what it needs to remain itself viable.