How Can Private Practice Survive Hospital Onslaught?

Kenneth Terry, MA


June 21, 2012

In This Article

The IPA/ACO Solution

If you practice in an area where the hospitals have scooped up many of the local physicians, you may be finding it increasingly difficult to survive. However, you need not go it alone. To counterbalance the power of hospitals, you and your colleagues can form a larger single-specialty group, an independent practice association (IPA), or some other clinical integration vehicle.

As hospital competition grows, Kenneth Hertz observes, more and more physicians are dusting off decades-old alternatives to employment, such as IPAs, physician-hospital organizations, and group practices without walls. Simon Prince believes that small practices must unite or accept diminishing revenues. "Small practices are getting squeezed, and as the health system gets a bigger piece of the pie, that leaves a smaller slice for the independent practitioner," he says.

This is what Prince has done. He has formed an IPA that includes about 250 physicians in Nassau and Suffolk counties and Queens. The Beacon IPA, of which Prince is president, recently created an Accountable Care Organization (ACO) that has applied to the Medicare shared-savings program. As the IPA becomes clinically integrated and shows it can provide value, he says, the organization should also be able to secure better terms with private payers.

The reason is that "the payers want competition in the market," says Prince. "So they want to see an independent physician group survive and thrive." Some plans are already lending financial support to the IPA, he states. When the organization becomes clinically integrated and puts its ACO infrastructure in place, he notes, "We plan to negotiate more meaningfully with the payers so we can compete with the hospitals."

Kennedy, however, is skeptical about this game plan. Although clinically integrated IPAs exist and have been successful in certain areas, he said, they're not feasible in other places. "In many markets, there aren't enough independent physicians left to form an IPA that's relevant. An IPA can be a good way to address the contracting fears you may have about health system dominance. But it doesn't get at the recruiting issues, the IT issues, or some of the expense control issues."

In addition, it’s not always feasible to form an IPA. For example, Ma doubts that this is possible in Peoria. The hospitals there are forming ACOs, he says, and the remaining private-practice physicians are too independent to work together.

Prince is more optimistic. "If we didn't believe our IPA could be successful, we'd sell to a hospital right now and cash in our chips," he says. "But there's still a need for private practitioners. We perform a role. It's not as gloom and doom as some people make it out to be."


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