ACCA: The changing face of physician-hospital integration
CHICAGO—Numerous conflicting forces are impacting the traditional hospital/physician integration model, and administrators need to have a good sense of the issues and what the physician values before employing additional physicians, according to a March 23 presentation at the American College of Cardiovascular Administrators (ACCA) annual meeting.

Hospitals administrators now utilize a variety of models in their interaction with cardiologists, including traditional employment, co-management agreements and group practice subsidiaries, said Anthony Long, director of healthcare strategy at Navigant, based in Houston.

In 2009, the drastic cuts to reimbursement up to 40 percent drew many independent practices toward hospital alignment or integration. “The increase in volume associated with taking on the expenses of an independent practice can be burdensome to the hospital, especially in an environment where providers are being tasked with reducing costs across the board,” he added. Also, revenues associated with cardiovascular services continue to decline.

Adding to these pressures, Long pointed to nationwide efforts to drive down utilization and the push toward accountable care.

Also, there is a trend of payors entering the market by aligning directly with physicians. “If this tactic is effective, then these two forces could be a formidable combination that could approach the hospital about pricing and payment,” he added.

Despite the decreased revenues to the provider, compensation for cardiologists has continued to increase. Specifically, cardiologists had compensation increase between 11 percent and 13 percent in 2011, according to Medical Group Management Association data; however, Long speculated that the compensation increase is actually significantly higher in many facilities.

Due to the willingness of practices to sell and the resulting buying spree in the past few years, many providers have not planned for how to pay for the increase in expenses, he said. “In the post-integration era, there is an increase work RVUs [relative value units]—usually driven by the contract, as opposed to a sudden desire to work harder. Previously, there was a perception that the workload of physicians goes down after employment, but that is not reflected in the data yet.”

Long cautioned that this may still occur, as there is typically a few years of data lag.  

Due to the all these conflicting forces, Long recommended that administrators get a comprehensive sense of the holistic financial picture before renegotiating contracts or employing additional physicians.

Finally, Long stressed the importance of administrators having a good understanding of what the physician views as successful, as it may be very different from what an administrator defines as successful. “While it may seem too common sense-oriented, it is important to communicate with the physicians,” he said. “We spend a great deal of time educating each other on clinical benefits, and the business decisions need as much attention.”