Striving to Stay Afloat in Private Practice

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RezaOmarzai_1328894207.jpg - Reza K. Omarzai, MD
Reza K. Omarzai, MD, a cardiologist at Virginia Cardiovascular Specialists, speaks with staff. Despite pressures to integrate, the practice has found innovative ways to remain independent by diversifying and developing partnerships.

With the economic downturn and slashes to the physician fee schedule, more and more practices have integrated with hospitals, despite the possibility of losing autonomy in the process. Those practices that strive to remain independent need to creatively manage budgets and clinical practice to avoid capsizing.

As of June 2011, nearly 60 percent of practices have turned to hospital integration, with some making the change because of fiscal uncertainty. In the long run, will independent practices that buck the trend reach long-term financial stability without the help of the hospital or will they be forced to close up shop?

Surviving despite cuts

Both private cardiology practices and hospital systems are facing cuts and the same grueling task—to maintain profits and offer the highest quality patient care. But with increasing financial pressures, it is often tricky for small private practices to stay buoyant. This is particularly challenging as more innovative and expensive technologies come onto the market, fee schedules are cut and overhead rises.

For private practice physicians, the reimbursement cuts put forth by the Centers for Medicare & Medicaid Services have been backbreaking. Most have reported reimbursement cuts in the 10 percent to 40 percent range. SPECT imaging received the brunt of the hits, taking an approximate 20 percent cut under the 2010 Medicare Physician Fee Schedule.

"Practices and physicians are now trying to provide the same level of care in an age where both health insurance and staff salaries are more expensive," says Patrick J. White, MPH, president of MedAxiom, a service provider and information resource based in Neptune Beach, Fla. "Practices are getting paid less, and this falls right to their bottom line."

For A. Charles Rabinowitz, MD, of South Texas Cardiovascular Consultants in San Antonio, countless changes have occurred over his more than 30-year career as a cardiologist, but the last 10 have been most practice changing. "Reimbursement cuts have been 30 to 50 percent and overhead has increased more than 100 percent," Rabinowitz says. In fact, cuts to reimbursement have put the 12-cardiologist independent practice in the red by more than $100,000, he says.

Due to these downward trends, the practice was forced to slash 30 percent of its workforce, cut all overtime and spend less time with patients. While Rabinowitz says he used to devote a half-hour per patient per visit, the current reimbursement model makes it difficult to spend more than 10 to 15 minutes with each patient.

And despite the fact that joining a nearby hospital would increase physician salaries more than 50 percent and potentially provide a safe haven from future cuts, staff members have put hospital integration on the backburner because they are afraid patient care would suffer, Rabinowitz says.

"Patients don't like going to the hospital to receive care," Rabinowitz notes, and some practices have reported losing up to 30 percent of their patient referrals due to that factor alone.

After integration, many patients see on average an increase of 20 percent in deductibles, higher than the entire bill would have been two years ago before the integration, says Rabinowitz. Hospitals have the capability to tack on facility fees, which can cost patients anywhere from $200 to $400. Additionally, tests are two to four times more expensive than those taken in the practice setting, despite the fact that "it's the same test, done with the same equipment, performed by the same physician," he claims.

"Doctors are being consistently enticed by the fact that they can make a lot more money after integration because of the higher fee schedules within the hospital," Rabinowitz says.

Private practices recalibrate

While cardiologists at South Texas Cardiovascular don't do "anything special" in terms of direct marketing or seeking patient referrals, Rabinowitz says that ensuring patients stay out of the hospital by increasing follow-up is integral. For example, South Texas Cardiovascular's physicians have increased follow-up visits for congestive heart failure patients to every two weeks or monthly to avoid readmissions.

Private practices also face another