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    April 7, 2014

    Disrupted Referral Patterns

    When we talk with independent physicians that are contemplating employment with a hospital system, there are usually a few different driving considerations. One of the top concerns for specialists is the loss of their referrals from primary care providers now employed by the system who will refer almost exclusively to specialists employed by that same system.

    In spite of (lame) protestations by the integrated systems to the contrary, this is a very real risk. As we previously explored in our review of the anti-trust case in Boise, Idaho (click here), this is a valid concern. Employed primary care physicians, it turns out, can read their paycheck and tend to move almost all of their referrals to fellow employed specialists.

    So by no means do I want to minimize this issue for practices that are facing it. But if this is the primary force against your practice that has you considering the employment alternative, I do want to ask you to pause and explore this more deeply before deciding.

    First, we’ve worked with specialists who have come to understand that, in fact, only a small number of their referrals come through PCPs. This varies greatly by market, but make sure you understand what is actually driving your new patients.

    But more important than your past referral patterns is where this is all headed, and this is one of the major reasons that I am bullish on the future of independent physicians in spite of the seemingly inevitable march to 100% employment.

    There are a few big themes that we chronicle regularly in this space: we need healthcare to cost less; patients, especially those in high deductible health plans, are paying more and more of the bill and are beginning to make decisions like real consumers; and, thus far integrated delivery systems cost more and not less.

    So mush those three thoughts together for just a minute.

    While some patients will end up in a plan that operates with some type of gatekeeper model, many are going the other way, essentially spending their own money and making their own decisions.

    If the total cost of care from that employed specialist costs more because the imaging or the procedure will occur in a hospital setting, many patients will say, ‘Thanks, but I’ll make my own decision about which specialist I see.’

    For some of you, this represents a golden opportunity.

    If referral disruption risk is your primary reason for considering hospital employment, just know that game is in flux.

    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    April 7, 2014

    I am Getting Worried

    Over the past few months, I have had countless conversations with our clients, our prospects, and people that I wish were our prospects but they just need to come around to embracing that idea. A new worry is forming in my mind, one that I believe will take multiple blog posts over time to flesh out. But enough has emerged from the fog that it is time for me to wade in.

    The problem is that raising this worry is going to get me in trouble, maybe even with some of my clients.

    However, my job here is to do my best to make sure you are thinking about what you need to think about in order to maintain your independence into the future. Sometimes, that means I have to point out some uncomfortable facts. This may be one.

    Here goes…

    Many independent practices that are working hard to stay independent and doing the work that we often celebrate in this space, are in reality 100% focused on maximizing their revenue in the existing fee-for-service model.

    That is it. That is their entire strategy.

    Let’s be clear (and let’s make sure I have an escape route if the mob turns on me): We are completely supportive of physician practices maximizing their value in the current model. We support gaining market leverage with payers and health systems. We support launching ancillary revenue streams that move aspects of patient care from someone else’s realm into the physician’s practice. We support making sure physicians get paid all of what they are supposed to get paid. Heck, this paragraph describes ALN’s core business model. We help our clients do this stuff every day.


    But, like it or not, the game is changing.

    While I am not ready to drink the Kool-Aid of the coastal wonks who are arranging the funeral service for fee-for-service reimbursement, how you get paid is changing. It is changing now and not just at some point in the distant future. We have clients in multiple specialties and in multiple markets that are seeing more and more of their reimbursement move to non-FFS models.

    Like I said, this is a complex issue that we’ll revisit a lot, but here is the headline:

    If your entire strategy for remaining independent is limited to maximizing your revenue and income in the current fee-for-service model (and don’t lie to yourself), you are still going to die. You might die later, but you’re future as an independent medical group is in jeopardy.

    Maximize away under the current rules. Absolutely. But you better invest a good chunk of that money into getting ready for the new world because it will eventually start to dry up.

    Are we still friends?

    More to come.

    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    April 7, 2014

    Confused Reality

    We are back to the future in so many ways with our v2.0 healthcare revolution. Keep an eye out for Doc Emmet Brown and his flying DeLorean.

    One sign is that integrated delivery systems are launching insurance products. It happened in the 90s and it is back again. As providers increasingly take risk, it is logical that they go all the way and become the payer. Many large integrated delivery systems have a lot of employees, which they put into their own health plan to jump start their enrollment.

    Conversely, health insurance companies are buying physician practices. United Healthcare, through their Optum subsidiary, has been a big buyer. The rules of the Affordable Care Act that mandate how much of the premium has to be spent on direct medical care mean the payers cannot make as much money by underwriting risk. So logically, they migrate across the line and become providers.

    For independent physician practices it means you can’t tell the players without a scorecard. The payer who is deciding when and what you get paid may also be a competitor. The health system who may be employing competing physicians and your referral sources may also be paying your claims.

    Our title as the world’s wackiest industry seems secure.

    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    April 7, 2014

    Upon Further Review

    Clearly, one of the joys I have in posting these daily musings is hearing back from folks who are reading along. I am honored that you give me two minutes of your day to read my ramblings. When you take two more to say something back, I am honored beyond words.

    I have two fairly regular responders, both of whom are physicians who are, shall we say, a bit more seasoned than you might guess the age of the average blog reader to be. Hearing from these two always makes my day.

    Granted, Dr. Abe is a fellow St. Louis Cardinal fan and his replies are as likely to be about the wisdom of the double switch the Cards did in the bottom of the 7th inning the night before as whatever I said in the blog. That is just fine, because discussing the Red Birds is generally more interesting that what I said.

    The other, Dr. Don, recently asked for my fax number, something that hasn’t happened for some time. That led to a great exchange about the still wonderful experience of holding a book and turning the physical pages as you read.

    Following a post last week about The One-Time Implementation Myth, he quizzically asked if I had a conflict of interest with that point of view since our company provides EMR implementation services.

    He is right and I appreciate his highlighting that fact. It is in ALN’s best interest for our clients to plan on spending money into eternity to expand and optimize their EMR. Our employees have children to feed, you know?

    On the other hand, we believe that we have clients and not customers. This is not just semantics, but a meaningful difference in values. Thus I am comfortable advocating that position to you, even with the conflict of interest.

    Companies that have ‘customers’ conduct a transaction and move on. ‘You give me $8, I give you a burger and fries, and we’ll call it good. Next.’

    Too often, especially in the mad rush that was the early days of the HITECH EMR subsidies, software vendors sold physicians an EMR and a terribly insufficient level of implementation services. The result was software that ‘worked,’ but a practice that didn’t.

    That is the real conflict of interest.

    When you have ‘clients,’ by contrast, you are committed to making sure that what you sell and deliver works for the client and not just you. You are on the hook for making sure they get what they need, not just what they might say they want, especially if they don’t fully understand what they are buying. And most practices, the first time they buy an EMR, don’t fully understand what this monster requires.

    We owe to you to tell you what it will really take to make this EMR thing do what you need it to do. And our experience of 25+ years says you have to think about implementation differently.

    So, after checking instant replay, the umps say it was in fact a conflict, but leave it to you to decide if it was fair or foul. Abe, here’s a tip of the cap to the truth that baseball can teach us everything about medicine that we need to know.

    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    March 31, 2014

    Your Integration is My Conflict of Interest

    You know the mantra of the integrated delivery system and their employment of physicians…

    ‘This way we can integrate care, improve outcomes, lower costs, and maybe save the baby seals.’
    Except that costs go up, not down.


    But today’s rant has a different angle on this issue.

    We know a group on independent physicians in a market with a big, monopolistic health system that are turning the stated benefits of the big integrated delivery system on its ear and using it as a marketing campaign.

    Here is the gist of their pitch:

    We are not employed by the folks who own those big, expensive hospitals that, you know, need to stay filled all the time. So when you come see us, you never have to wonder if our decisions about your care are driven by anything other than what is best for you as our patient. Because, you know, we don’t have to care about filling up big, expensive hospitals.

    Don’t give up. You’ve got assets. Use them.

    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    March 31, 2014

    Medicaid Level Set

    Many private practices take no new Medicaid patients. As such, Medicaid can be out of sight and out of mind. Here are a few facts to update your walking around knowledge of that other CMS program.

    Prior to the expansion of Medicaid rolls through the Affordable Care Act, Medicaid covered about 16% of the population. That includes 31 million children, 9 million disabled adults under age 65, and 4.6 million low-income seniors. That is more than Medicare, which rings in at about 14%.

    As part of the ACA, 25 states and the District of Columbia expanded Medicaid eligibility up to 138% of the federal poverty level. During the ACA sign-ups we added a ton of new Medicaid patients.

    (There is a temptation here to launch into a side rant about the ACA being a very expensive Medicaid enrollment marketing campaign. You can be grateful that my self-imposed semi-strict word count prevents that. Maybe the rant will grow into a full-fledged thought and it get its own post someday.)

    What do we know?

    We know that most physicians limit their Medicaid coverage because of the extremely low reimbursement rates.

    We know that we are on our way toward one in five people in the US being covered by Medicaid.

    We know that the Medicaid population does not distribute evenly. Some segments and some markets have a lot of Medicaid patients; others have virtually none.

    We know that Medicaid patients are often sicker, require more care, have higher no-show rates, and just bring more complexity.

    So what do you need to do?

    I can’t tell you because everyone is different, but you have to have a strategy for dealing with Medicaid. Make sure you come to those decisions with good information in hand.

    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.