Physician Practice & Hospital Integrations: Cardiologys Inescapable Future

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 The current pace at which U.S. cardiology physician practices are merging with hospitals and integrated delivery networks (IDNs) has only quickened since the massive CMS cuts, which took effect at the beginning of 2010. According to a recent American College of Cardiology (ACC) survey, 54 percent of practices reported integration is being actively pursued or on the horizon. Executives and cardiologists from Minneapolis Heart Institute (MHI) and Piedmont Heart Institute (PHI)—two geographically different practices, with varied models of integration, governance, physician compensation and vendor contracts—came together to discuss these issues, along with an attorney, who has brokered many integrations on behalf of physicians.

Roundtable speakers included:

  • Kevin J. Graham, MD, President and Director, of Preventive Cardiology, MHI, Minneapolis
  • Christine Bent, Chief Operating Officer, MHI, Minneapolis
  • Michele Molden, President and Chief Executive Officer, PHI, Atlanta
  • George Vellanikaran, MD, Cardiologist and Director, PHI, Atlanta
  • William T. ‘Mike’ Carlson, Jr., Attorney, Maynard Cooper & Gale, Birmingham, Ala.

Could you briefly describe your integration process?

Graham: In 1995, MHI integrated its group of 21 cardiologists with Abbott Northwestern Hospital, part of the Allina Health System, in an attempt to form what is today called a cardiovascular accountable care organization. We sought a business and clinical unit that could avoid the trappings within the developing IDNs, while providing improved patient care. Over the last 15 years, this partnership has created a stable platform, allowing us to recruit, develop a care network, serve 33 sites in Minnesota and Western Wisconsin through outreach, and form a diagnostic system throughout the upper Midwest.

Molden: From November 2007 to July 2008, we merged three cardiovascular groups in Atlanta to form a 62-member group. Integration was the clearest way to benefit from our ambulatory and in-office practice environments, while advancing quality and technology without being in constant conflict and competition with the hospitals. Over the last year, we have grown to 77 employed cardiologists and 17 affiliated physicians, allowing us to add cardiovascular surgery, vascular surgery and thoracic surgery. We still are trying to figure out how to create a uniform approach across our 31 practice sites. While MHI has benefitted from stability, we still have some rolling chaos as we figure out how to manage this large footprint.

What do you see as the driving force behind practices’ decision to integrate with hospitals?

Vellanikaran: For us, it was apparent that the Atlanta groups were fragmented, growing at their own pace and wasting a lot of time and money competing with each other and the hospitals. Our group is located on the south side, away from Atlanta, so we felt we had geographic and cultural differences that prevented us from joining PHI during the initial integration. We were a smaller group with a suburban practice, and PHI seemed like a huge city-based group of 60-plus physicians. We have since overcome those initial cultural concerns. Another driving force is the recent Medicare cuts that have largely affected cardiology, and merging seemed like the best way to protect our future.

Carlson: In the early days of integration deals, hospitals wanted to employ cardiologists and practices were not driven by reimbursement cuts. Often, it was cardiology groups whose financial or organizational performance had caused the group to become unstable and the hospital was concerned they would lose specialists who were important to their financial health. Over the last several years, these parties have begun exploring the accomplishments that can be achieved collaboratively. Especially since the 2010 CMS cuts to imaging reimbursement, financial motivation has become the largest incentive. While reimbursement cuts may initially bring cardiologists to the table, the savvy entities also understand there is an opportunity to address patient care and quality of care issues.

Graham: Mike, what percentage of physician groups are integrating or in the process? What’s your best estimate in two years?

Carlson: At ACC.10, Jack Lewin [MD, the college’s CEO] said that by December 2011, roughly two-thirds of all cardiologists would be in some type of integrated relationship. That figure sounded high, but it is amazing to see the number of groups that are seeking these discussions.