Sunday, July 22, 2007

The Future, Predictions - The Future of Large Multispecialty Practices: Implosion or Explosion?

There are several points of view about the future of big practices.

•One is that held by Daniel Zismer, PhD, president of Essentia Health Services Essentia Health Services, and Peter E. Person, M.D., M.B.A., Chief Executive Officer, Essentia Health and St. Mary's Duluth Clinic Health System (SMDC), Duluth, Minnesota. Essentia Health is a not for profit, multi-state health system. It emphasizes fully integrated clinical and business models as an answer to the challenges related to effectively managing patients' acute and long-term health needs across the continuum of care.

In an article in the Group Practice Journal, Zismer and Person argue that large multispecialty clinics in the Midwest have reached a point they need to merge or be acquired by community hospitals to survive financially. These groups, the authors say, simply don’t have sufficient capital to recruit new doctors, retain existing doctors, upgrade facilities, invest in information technology systems, and maintain their place in the market without entering into partnership or ownership relationships with hospitals.

Here is their rationale:

Said simply, the fully integrated model has greater economic leverage. It aggregates more of the total health-care dollar within a unified business model. The potential for margin enhancement is driven by continuous process improvement and effective selection of the clinical services "menu" provided within the total "portfolio" of services. The model has superior capital regeneration potential, and debt markets see the mode as being more stable and credit-worthy over time.

This may be a phenomenon restricted to the upper Midwest, where large multispecialty groups of 100 doctors or more have been around for decades and have reached a maturation point requiring them to align closely with hospitals.

•Elsewhere in the U.S., large multispecialty clinics, and clinics comprised mainly of primary care physicians, are just beginning to evolve and may soon be on a roll. Many of these clinics believe conglomeration into large groups gives them the power to remain independent.

Here is the point of view of emerging large clinics, as explained by Brian Klepper, PhD, health care reformer and analyst, as explained in a July 21 blog

Crabby Doctors and the Explosion of Big Practices

Doctors are a cranky bunch these days, and justifiably so. Their world is changing. Its undoubtedly less fun to be the object of a paradigm shift than its driver or observer.

A recent survey showing healthy 2007 income increases across specialties notwithstanding, physicians are besieged by increasing patient loads, a torrent of new information, Byzantine administrative requirements, demands for new technology investments and the very real likelihood that their incomes will plummet under Medicare and commercial coverage P4P programs. Despite the apparently rosy survey numbers, its clear that many primary care physicians are having trouble making ends meet. Many specialists are seeing their incomes drop as well.

So its striking that, unlike a decade ago, there are relatively few efforts afoot to bring physicians together in new ways that can leverage their market power and provide more satisfying professional lives. My bet, though, is that we’re on the cusp of a new trend in that direction.

Three important market vectors will drive the formation of much larger practices. First is the growing financial infeasibility of small practices. Second is the emergence of new technologies – these were only a dream 10 years back – that allow geographically separate practices to exchange information seamlessly and unify under a common provider ID. And third is the rapid transition to performance-based reimbursements – P4P – that will only pay top dollar for top outcomes, and that will effectively require doctors to use these technologies to achieve them.

We’re going to see the development of large, integrated multi-specialty group-practices-without-walls, linked by IT, contracts and consensus on practice rules.

These new practices – take a look at the Holston Medical Group in Kingsport, TN - will look a lot like Kaiser, but adapted to 21st century physicians. They’ll have the scale to easily invest in the information, diagnostic, treatment and data analytical tools that a modern practice needs to be financially diversified, robust and business savvy.
But, most importantly, they’ll recruit physicians who are, by nature, continuous learners, who understand that practice must change as new evidence warrants, and that the health care marketplace is far more transparent than it was in the past. The inflexible need not apply.

While these trends may dampen medical autonomy and profits, they’ll also result in better, more consistent, transparent and efficient patient care. Compared to today - just look at the low morale of American physicians right now - doctors will lead less stressful work lives. By responding to market forces and taking advantage of the host of increasingly powerful and affordable new tools, they'll also organically help re-establish a more stable and sustainable American health system.

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