A report on successful physician-run organizations conveys some fresh insights from the front lines.
Case Study Analysis of Physician Organizations was released last month by the American Medical Association, the Indiana State Medical Association and the Michigan State Medical Society.
It profiles nine diverse physician-driven organizations, including groups without walls, independent practice associations and fully integrated group practices.
Some observations from the 81-page report:
There is a potential for duplication and conflict with hospital medical staffs as physician organizations assume responsibilities such as credentialing and quality assurance.
POs are placing more emphasis on quality assurance, including compliance with the guidelines developed by the National Committee for Quality Assurance, as a result of employers pressuring HMOs to demonstrate quality.
Primary-care POs are altering well-established relationships between specialists and primary-care doctors through selective contracting with, and in some cases employment of, specialists.
Some POs are considering requiring board certification or board eligibility of their members under increasing pressure from health plans, which "view board certification as a proxy for quality."
Despite initial opposition to capitation, many PO doctors, including specialists, with experience in capitation say doctors and patients are better off under capitation than under fee-for-service.
A primary strategy to align incentives is to pay both primary-care physicians and specialists a capitated rate.
Most POs are integrating various organizational models. For instance, clinics are establishing offices in outlying areas to provide personalized, convenient care, while networks are recognizing the need to consolidate functions to reduce overhead and develop a "group sense."
HMOs have begun to put POs at financial risk for pharmacy costs that exceed a certain amount. To comply, Lakeside Medical Group, a Glendale, Calif.-based IPA, is encouraging the use of generic drugs and a formulary.
Most POs prefer to take responsibility for quality assurance and utilization management because it enables them to obtain much-needed data. Assuming financial risk eliminates the hassles of
Physicians typically don't want to spend money on administrative talent, but some POs found creative ways to compensate senior management, including equity in the PO.
Specialty IPAs can succeed if they seek out managed-care contracting opportunities through aggressive and innovative pricing strategies.
In addition to working with business coalitions and other employer groups, some POs are forging closer strategic alliances with third-party payers, which may be accomplished through "virtual integration" without a formal merger or exchange of assets.
Profiled in the study are Baltimore Medical Group, Owings Mills, Md.; Burns Clinic, Petoskey, Mich.; Cascade Medical Group, Portland, Ore.; Dean Clinic, Madison, Wis.; East Metropolitan Health Organization, St. Paul, Minn.; Health Source Medical Group, Los Angeles; Lakeside Medical Group; Maryland Cardiovascular Network, Owings Mills; and New Mexico Medical Group, Albuquerque.