I have long held the conviction that pediatricians, either in unison or in partnership with hospitals, have the potential to catalyze positive transformation within health care. The vision is clear: pediatricians leading the way, safeguarding health care from detrimental influences and steering it towards a brighter horizon. Yet, despite the rallying cries for innovation—be it through maintaining private practices, embracing direct primary care, or advocating for physician-owned hospitals—there is an undercurrent of escalating costs, declining outcomes, and growing disillusionment among both patients and clinicians.
As someone who has served as the chairman of a physician-hospital organization, who has tirelessly championed clinical integration, and who has taken on academic roles to foster alignment across service lines, I’ve confronted the primary obstacle firsthand. The challenge lies within us, the physicians. Too often, we find ourselves entrenched in a blame game, eroded by mistrust, and resistant to the notion that our professional landscape is shifting. The stark truth is that the largest barriers to scalable success in any of these collaborative health care models often stem from our own ranks. It is incumbent upon us, the doctors, to bridge divides, foster trust, and coalesce around shared goals if we are to reshape the future of health care.
In this issue, we delve into the alphabet soup of health care organization models that many of our adult colleagues have led—CIN, ACO, PHO, and IPA—dissecting their structures, benefits, and the barriers to their success, all while emphasizing the pivotal role of physician behavior in determining their outcome.
Here’s an overview that includes the financial impact, detailing both the financial upside potential and the downside risks associated with clinically integrated networks (CINs), physician-hospital organizations (PHOs), independent practice associations (IPAs), and accountable care organizations (ACOs):
Financial implications: a comparative analysis
Understanding the financial landscape is critical when considering clinically integrated networks (CINs), physician-hospital organizations (PHOs), independent practice associations (IPAs), and accountable care organizations (ACOs):
Clinically integrated networks (CINs):
- Structure: A network of providers sharing data to improve care and reduce costs.
- Risks: High startup and operational costs, potential financial losses.
- Benefits: Potential for improved care coordination and reimbursement rates.
- Financial upside: Shared savings and performance bonuses.
- Downside risk: Financial losses from unmet cost reductions.
Physician-hospital organizations (PHOs):
- Structure: Collaborations between hospitals and physicians.
- Risks: Risk of hospital interests overshadowing physicians, high integration costs.
- Benefits: Increased negotiating power, integration of services for billing.
- Financial upside: Enhanced reimbursement through service integration.
- Downside risk: Financial losses from inefficient integration.
Independent practice associations (IPAs):
- Structure: Independent physicians grouping for collective payer negotiations.
- Risks: Decreased individual bargaining power, antitrust law challenges.
- Benefits: Enhanced contracting power, preservation of autonomy.
- Financial upside: Improved contract rates from collective bargaining.
- Downside risk: Reduced income due to administrative costs.
Accountable care organizations (ACOs):
- Structure: Providers jointly accountable for quality and cost of care for a population.
- Risks: Financial risk from shared savings/losses, potential penalties.
- Benefits: Shared savings, improved patient outcomes.
- Financial upside: Retention of savings, bonuses for quality care.
- Downside risk: Penalties for not meeting benchmarks.
Physician behaviors and organizational success
For any of these models to succeed, physician engagement is crucial. Here’s how physician behaviors can influence outcomes:
Behaviors for success:
- Commitment to shared protocols and data sharing.
- Active participation in quality improvement initiatives.
- Adaptability to changing health care landscapes.
Behaviors leading to failure:
- Resistance to data sharing and clinical integration.
- Lack of commitment to collective decision-making.
- Prioritizing individual practice goals over group objectives.
Health care models making a difference
Examples of success in a variety of physician-led health care models that rival traditional acquisition routes by private equity or hospitals:
1. Clinically integrated networks (CINs). Advocate Physician Partners (APP) in Illinois exemplifies the success of CINs with its renowned clinical integration, improving care quality and managing costs effectively.
2. Physician-hospital organizations (PHOs). Billings Clinic in Montana demonstrates a PHO’s ability to offer comprehensive care and financial stability by integrating services across various domains.
3. Independent practice associations (IPAs). Jefferson Physician Group in Texas is a testament to IPAs’ power in fostering physician autonomy and enhancing patient-centered care through collective bargaining and care coordination.
4. Accountable care organizations (ACOs). Atrius Health in Massachusetts, as an ACO, has realized the benefits of coordinated care, achieving financial savings and boosting patient outcomes under value-based care frameworks.
The physician’s role in shaping health care
Physicians hold the keys to health care’s future. Yet, it requires a concerted effort to align, share insights, and forge a path that deviates from established practices. The division in the ranks, much like an orchestra out of sync, can only lead to dissonance.
The crossroads of physician practice futures
Physicians today face a crossroads: Here are the most common paths.
Selling to larger entities. Private equity and hospitals offer financial relief, regulatory support, and promise better work-life balance.
Closing practices or early retirement due to unsustainable operating costs, retirement without succession plans, and overwhelming market pressures.
Maintaining the status quo to uphold autonomy, patient relationships, and explore innovative care models like direct primary care.
Forming or joining organized groups like IPAs, CINs, or ACOs to harness the power of collective resources, all while maintaining at least an illusion of independence.
Conclusion: Embracing change for future success
The decision for pediatricians whether to sell, close, or persist independently will be influenced by their unique circumstances. Yet, it’s evident that those who are willing to embrace change, consider new models of care, and even consider joining may well find better ways in this evolving landscape. Is more unity on the table? Is it an option? Or are we missing other paths that could redefine progress? Could we ponder innovative strategies for practices to unite, spearhead transformation, and enhance health care delivery. Can we think creatively to not only enhance outcomes but also drive down costs?
Mick Connors is a pediatric emergency physician.