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Healthcare Reform: Smooth Transition or Shotgun Wedding for Private Practices?

By Stewart Gandolf, Chief Executive Officer
lonnie hirsch

Lonnie Hirsch, Healthcare Success

To all in the U.S. healthcare community who have been either too busy or too discouraged to really pay attention to the most fundamental implications of the new healthcare reform law (officially titled “The Patient Protection and Affordable Care Act”), most of the prevailing opinion, including direct comments from White House officials and other government officials as well as unofficial comments from health insurance executives and other health industry experts, seems to agree that the new law will accelerate the trend toward “vertical organization” of providers and physician employment by hospitals and aggregation into larger physician groups.

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.

It’s no secret that hospitals continue to gobble up private practices, both primary care and specialties, and actively recruit doctors as employees as more physicians see no viable alternative to remain independently solvent and profitable in private practice.

Even before healthcare reform became law, the economics of private practice medicine in primary care and many specialties had become increasingly problematic.  The new law is now a catalyst for acceleration of a “strange bedfellows” relationship between hospitals and physicians that played out disastrously the last time hospitals engaged in ownership of physician groups in the early 90s.

Whether physicians resist integration and fight to preserve independence and autonomy over their destiny or choose to coexist with hospitals and health systems as their employers, it’s going to be bumpy ride for all constituencies in the coming years.

Hospital systems that take on ownership responsibilities for physician groups will need a proactive transition strategy to avoid a replay of the ugly conflicts and meltdowns of the 90s in relationships with physician employees who have been used to calling their own shots and are not predisposed to conforming to employee mandates.

Physicians who hope to remain independently viable in private practice will also need a well-conceived plan for financial viability, including a strategy for offering increased choice and higher level customer service for the smaller portion of the patient community who are unwilling to accept the restrictions and compromises in access and service forced by systemic changes in “affordable” healthcare delivery.

For more on this topic, see: Annals of Internal Medicine and Healthcare Success Medical Group and Solo Practice Marketing.

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