Doctors and Hospitals Team Up for Payment Reform

Across Texas, hospital systems are scooping up physician groups and solo practitioners, scrambling to create the kinds of coordinated medical teams that federal health care reform puts a premium on.

“Nobody really knows the right thing to do, but they’re doing something — because doing nothing is like you’re standing in the middle of the highway about to get run over,” says Dr. Norman Chenven, founder and CEO of the Austin Regional Clinic. “Hospitals are approaching physicians, physicians are approaching hospitals. Nobody wants to be left standing at the station when the train leaves.”

But some health care providers say the gold rush-style push is too much, too soon. They say physician groups are cashing in their chips for fear of being left behind and that hospitals are going on doctor spending sprees without knowing how — or even whether — these new medical teams will work.

“My concern is that doctors are rushing, are being enticed, into systems that won’t protect them or their patients,” says Lou Goodman, executive vice president of the Texas Medical Association. “We could have some real disruptions in our system, and all the king’s horses and all the king’s men couldn’t put it back together.” 

Could it be the end of private practice?

The sweeping health care reform bill signed this spring offers hospitals and doctors incentives, in the form of funding and pilot programs, to change their payment models from the traditional and costly fee-for-service system to one that rewards efficiency and savings. One of these models is the Accountable Care Organization, or ACO, a touted partnership between specialists, hospitalists and primary care providers where everyone is responsible for the patient’s outcome and, presumably, everyone shares in the cost savings.

ACOs require a strong financial base and a degree of risk — that's why doctors who want to participate in them need hospitals as partners. They also demand a broad range of medical specialists, including primary care physicians — that's why hospitals need to bolster their ranks with more doctors.

“Ultimately, what everyone is dealing with is the fact that there’s going to be less money in the system,” says John Hawkins, the Texas Hospital Association’s senior vice president of government relations. “Part of the pressure, then, is to align yourself where you’re going to be able to compete for these limited resources.”

In San Antonio, the most extreme example, at least three hospital systems are competing furiously to partner up with established physicians. In Dallas, the massive Baylor Health Care System has plans to become a full-fledged ACO by 2015 and is in negotiations with some physician groups. In Houston, physicians in private practice have been approaching the large hospital systems about collaborations.

Dr. Michael Sills, who manages a 15-doctor cardiology practice in North Texas, is in discussions with Baylor about a possible merger, not sparked by health care reform but by federal reimbursement cuts that have hit cardiologists hard in the pocketbook. But he says that whether doctors like it or not, payment reform is coming: If they don’t integrate with other providers and hospitals, they risk getting left behind.

“I’m a big proponent of, ‘Let’s get in early and help them create this in a way that’s not as specialist unfriendly,’” says Sills, who’s been in private practice for 20 years. “It’s not about whether you like change or want change. Change has happened, so let’s take stock.”

Not everyone is jumping in headfirst. Across the state, some doctors who aren’t enlisting with hospitals are joining forces with each other — to stay competitive in a changing marketplace and to make themselves more valuable if they have to join a hospital system. “They’re trying to set themselves up strategically,” Hawkins says.

Other practices and hospitals are just biding their time. Though some ACO efforts have shown great results in both savings and quality, they’re waiting to see if those successes are enough to redesign the entire system.

Chenven believes the ACO model is the right approach. But he says his practice is having internal conversations, is watching to see what happens and isn’t going to rush into anything. “There’s a little bit of over-eagerness where there should be a lot more, ‘Let’s sit down and think about this,’” he says. “It’s almost as if the whole industry is having a nervous breakdown.”

Greg Hartman, president and CEO of Austin’s University Medical Center Brackenridge, which is part of the Seton Family of Hospitals, says his system is taking the same strategy. “We’re trying not to rush into it,” Hartman says. “It needs to be done right, so we’re taking our time.” 

Goodman says a thoughtful approach is the right one: The research he’s seen shows physicians who go into hospital employment settings stay there for under five years and then want out. He fears patients could be the ones who suffer if formerly independent doctors succumb to the economic pressures of a hospital system.

“There’s a need for protections so the economics of the industry don’t unduly influence the doctor’s ability to take care of the patient,” he says.

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