Physicians Say White House Should Not Write Off Small Practices

August 24, 2010

August 24, 2010 — In a newly published article, the White House is advising physicians to accept a life in Big Medicine — as a hospital employee or member of a large group practice — in the wake of healthcare reform.

Some leaders of organized medicine, however, are objecting to the government message.

"We're not ready to write off the small practices," J. Fred Ralston Jr, MD, president of the American College of Physicians, told Medscape Medical News. "We think there needs to be more than one delivery model."

"America is not a one-size-fits-all country," added M. Todd Williamson, MD, a neurologist from Lawrenceville, Georgia, and spokesperson for a coalition of medical societies opposed to the new healthcare reform law, now called the Affordable Care Act.

Dr. Ralston and Dr. Williamson were responding to an article by 2 White House officials and 1 ex-official about the implications of healthcare reform for medicine that was published online August 23 in the Annals of Internal Medicine. The authors are Nancy-Ann DeParle, JD, director of the Office of Health Reform; Ezekiel Emanuel, MD, special advisor for health policy with the Office of Management and Budget; and Robert Kocher, MD, who stepped down in July from the National Economic Council.

"The economic forces put in motion by the [Affordable Care] Act," the authors write, "are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups." Physicians who embrace the changes and opportunities created by the law "are likely to deliver the greatest benefits to their patients, the health system, and themselves" and "will be rewarded in the future payment system."

What does it mean to embrace "vertical organization?" This business catchphrase refers to enterprises with a hierarchal structure and centralized management. An integrated delivery system that owns hospitals, medical practices, and other healthcare services is a prime example. Other examples are the military and the federal government.

The growth of vertical healthcare organizations, as well as large, independent group practices, has slowly dismantled medicine as a cottage industry. The percentage of physicians in solo practice declined from roughly 41% in 1983 to 25% in 2007 - 2008, according to data from the American Medical Association. According to an oft-quoted study from the Center for Studying Health System Change, the percentage of physicians who are solo practitioners or are practicing in groups of fewer than 6 physicians fell from 53% in 1996 - 1997 to 42% in 2004 - 2005.

The White House officials say healthcare reform will further the trend toward aggregation. The new law lays the groundwork for financially rewarding providers based on the quality of the care they render through accountable care organizations (ACOs) and patient-centered medical homes. ACOs consist of physician practices and hospitals that take joint responsibility for meeting performance measures for quality and cost, and they either earn bonuses or incur pay cuts depending on how they perform as a group. In a medical home, a patient receives holistic, long-term primary care from a multidisciplinary team usually led by a physician, with insurers paying extra for coordination of care with outside providers.

In these new models, there needs to be information technology — as in electronic health records — and administrative personnel to "track quality measures, account for and manage shared financial incentives, and oversee care coordination," the authors write. Accordingly, the healthcare system will gradually organize itself around either hospitals or physician groups. Traditionally, only hospitals or health plans could afford the computer firepower and management to take a bean-counter approach to medicine. However, ever-larger medical groups also are investing in healthcare information technology and management prowess.

Past Experience With Hospital Employment Not Encouraging

Dr. Ralston of the American College of Physicians has no quibbles with the basic goals of healthcare reform. However, he argues that the jury is still out on exactly how to achieve them.

Dr. Ralston points to the unhappy experience that physicians had when droves of them went to work for hospitals in the 1980s and 1990s. Many of those marriages broke up.

"Most doctors who were employed by hospitals found the arrangement lacking," he said. The well-being of medical practices took second place to the well-being of the hospital, and the loss of independence proved painful. "Physicians were burned when they had to send in a requisition to the hospital for a new fax machine."

Physicians in small practices can enjoy the benefits of larger organizations without giving up their independence, Dr. Ralston said. Computer technology, for example, can allow small rural practices to share common employees who tackle quality-improvement chores. And computer technology allows independent practice associations (IPAs) to function as group practices. A case in point, said Dr. Ralston, is the Mesa County Physicians IPA in Grand Junction, Colorado — a community celebrated for improving patient care while lowering costs. "The key is having large-practice resources available to everyone."

Healthcare reformers, he said, need to gather more evidence on how large and small organizations perform in the new framework of quality goals and financial incentives.

"Let's test the various models of delivery," he told Medscape Medical News.

Dr. Williamson, the past president of the Medical Association of Georgia, is less sanguine about the future of small practices under healthcare reform.

"I agree wholeheartedly that the law will push physicians into larger groups," said Dr. Williamson, who also is a spokesperson for the Coalition of State Medical and National Specialty Societies, which campaigned against the Affordable Care Act. "I don't think that's the role of the federal government to be doing that."

Dr. Williamson said the law will only add to the regulatory burden that has forced small-practice physicians to seek refuge in a hospital or mega-group. Many physicians, he predicted, will not accept the new paradigm and will instead leave patient care, leaving medicine even more short-handed.

He conceded that some vertical organizations in healthcare, such as the Veterans Health Administration, perform well. "But we need pluralism," said Dr. Williamson, a member of a 3-physician practice. "We need soloists as well as groups."

IPAs Show a Way Forward for Small Practices

The Annals article by White House officials, and its vision of Big Medicine, struck Dennis Smith, a former director of Medicaid under President George W. Bush, as another example of big government meddling.

"If a physician's only choice is to join a large corporation, we're going down the wrong path," said Smith, a former healthcare analyst with the Heritage Foundation — a conservative think tank — who now works at a Washington, DC, consulting firm. "We have the greatest healthcare system in the world because physicians have been independent. How many of the latest medical discoveries occurred because a physician tried something different?"

Similar to Dr. Ralston, Smith told Medscape Medical News that inexpensive information technology could allow independent physicians to form virtual groups for the sake of improved patient care. "We have 2 competing trends — the centralization of authority, which the healthcare reform law personifies, and the power to decentralize authority through information technology."

On the leftish end of the public policy spectrum, Paul Ginsburg, PhD, president of the Center for Studying Health System Change, said he welcomes the shift to larger provider organizations because they are best suited to achieve the patient-improvement and cost-control goals of healthcare reform. However, Dr. Ginsburg agrees with Dr. Ralston and Smith about the possibility of small practices surviving if they can hook up with each other electronically.

"The game is not over for small practices," Dr. Ginsburg told Medscape Medical News, "but it's over for small practices operating in a bubble on a piecemeal basis, ignoring the rest of what's happening to their patients. They can't just be cottage industries."

Echoing Dr. Ralston, Dr. Ginsburg said IPAs show small groups a way forward. "IPAs are keeping medical practices viable in California," he said. He noted that their record of success has occurred in a state where managed care remains vibrant. There, managed care has pioneered the use of pay for performance, which figures prominently in the new healthcare reform law.

AMA Urges Washington Not to Favor Large Provider Groups

IPAs have long been touted as a means for physicians to gain strength in numbers and still remain entrepreneurial, small-business owners. Organized medicine, however, worries that federal antitrust laws may prevent IPAs and their small practices from participating in ACOs in the new era of healthcare reform, thus tilting everything toward large, vertically integrated organizations.

Right now, IPAs are barred from collective bargaining with insurers unless their physician members share substantial financial risk through capitated payments and the like, or are "clinically integrated." That means delivering coordinated care based on practice guidelines, sharing patient data electronically, and holding themselves accountable for meeting (or missing) performance goals. Otherwise, the IPA must take a weaker role in negotiations.

Over the years, the Federal Trade Commission has prosecuted IPAs deemed guilty of collective bargaining. In light of this history, the American Medical Association sent a letter earlier this month to Donald Berwick, MD, the new administrator of the Centers for Medicare and Medicaid Services (CMS), urging the government to create explicit antitrust exceptions for physician organizations participating in ACOs.

"We urge that CMS...do everything possible to facilitate participation by all the provider structures authorized in the law, and not inadvertently bias participation in favor of large health systems and hospital dominated networks," the AMA writes.

Ann Intern Med. Published online August 24, 2010.

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