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Physician Practices: Changing Dynamics
In our introductory article introducing our healthcare practice, we provided a general assessment of the American Healthcare system and the state of flux that currently overshadows the industry and its practitioners.
There are significant changes that are profoundly affecting individual practitioners and small physician groups that require self-assessment and adjustment to survive in the changing environment.
Because of a more recent development, a totally different method of provider reimbursement, from fee for service or volume payments, to outcome based reimbursements or Value Based Care (VBC) is being encouraged by both Centers for Medicare and Medicaid (CMS) and by private insurers. Essentially, fees for services under VBC are paid based
on case outcome and the payment must be shared by all providers in the continuum. VBC reimbursement was originally introduced by the CMS, however now private insurers are moving in the direction of value based reimbursement and they are providing incentives to healthcare providers to participate. What is essential to succeed in the VBC method of reimbursement lie in integration of providers and the ability to aggregate data.
Even prior to the movement to VBC, the PPACA is requiring all practitioners to utilize Electronic Medical Records, (EMR) which is costly in both software acquisition as well as implementation. While a burden to small practitioners and groups, EMR will ultimately allow groups to operate, integrate and bill more efficiently.
As new requirements continue to be heaped on single physician practices and small groups, they have been dwindling as more groups consolidate to gain scale and integration. Also, there is a significant trend toward physician groups selling their practices to hospitals, as hospitals are a significant cog in the VBC wheel.
Because of PPACA, more insurers are requiring providers to be part of networks and are grouping providers into tiers where reimbursement is based upon a provider’s relationship with the insurance provider and other providers within the network and tiers. It is becoming less likely that practitioners can assume that the patient’s insurance company will cover the services provided, as more insurance companies are restricting out of network reimbursements. As an example, there are no insurance providers offered by the PPACA in the New Jersey marketplace that reimburses out of network services.
Viability in the changing healthcare delivery model for practice groups will require a significant change in how a practice operates, will require investments in information technology, possibly require upgraded staffing as well as the development of relationships with other providers in the continuum.
Sole practitioners and practice groups need to assess their situations and determine if they are positioned to continue independently or should they align with a network of providers or sell to a larger group or hospital.
CFO Consulting Partners’ healthcare practice is here to help you. We can assist you to access your current situation and help you create and implement a plan forward. We can also assist you should you decide to align with a network or sell or consolidate with another group or hospital.