Take control of your future by joining forces

Multispecialty groups add bargaining power

The managed care battle lines are just beginning to be drawn in Cedar Rapids, IA, and Nevin Meredith doesn’t want to be forced to choose sides.

As executive director for a neuromuscular skeletal group in a town of approximately 150,000, Meredith and the physicians he works with want to play an active role in the changes brought on by managed care — and they don’t want to be handed dictates to follow.

The solution? Forming a multispecialty group practice with four other specialty groups in town, which will market to payers in Cedar Rapids and the surrounding metro area.

‘Practices without walls’ growing across U.S.

Multispecialty group practices, sometimes called "practices without walls," allow specialists to form their own network to market to payers. The concept is becoming more prevalent across the United States, especially in markets where physicians feel payers are receptive to signing a contract with one organization representing a number of specialty groups in town.

Physician groups see them as a way to cut administrative costs and to ensure a strong physician voice in decisions involved in operating in a managed care environment.

"We have a market where there are two PHOs trying to start, each affiliated with a hospital in town," Meredith explains. "Each wants you to join their network exclusively. We don’t think that’s the way to go. We think there is less likelihood that a larger organization gets coerced to pick one side over another." Their goal is to work with both PHOs and not be caught between the two.

So Physicians Clinic of Iowa, P.C., was born. The players: the group practice Meredith works for, which includes orthopedics, neurology, neurosurgery, rheumatology, and occupational medicine; a general surgery group; a group of surgical specialists who conduct general surgery and cardiothoracic surgery; a urology group practice; and an ear, nose, and throat practice.

How do you know if your practice is a good candidate for a multispecialty network? The main requirement is having other physician practices in the community that are willing to take the time and effort to set up a multispecialty organization, says Ramie Tritt, MD, FRCS, president of Georgia MultiSpecialty Group (GMG), which includes 15 separate specialty networks representing more than 630 physicians.

"In the Atlanta market, payers have realized that specialists can control utilization. [But] even if the payers initially may not be there [in terms of interest], physicians have to organize themselves in a network to go to payers and accept a risk contract," he says.

Putting a group in place

Expect to spend about a year setting a multispecialty practice group up in terms of the pure organizational aspects, and prepare to have at least two years of outcomes data to demonstrate to payers, Tritt and Meredith say. GMG and Physicians Clinic of Iowa recommend taking the following steps to organize such networks:

1. Identify other physician partners. "It takes physicians realizing managed care is a factor in the marketplace, and it really involves a lot of physician-to-physician dialogue," Tritt says. Identify which specialties you need to include. Recruit practices with a similar philosophy toward the practice of medicine, and with similar missions and goals. A multispecialty network does not necessarily have to include only one practice per specialty. In GMG’s case, Tritt estimates that there are as many as 10 practices in some specialties.

2. Select an outside expert to help you get started. "You need someone to help guide you through the process and who has access to good legal counsel," Meredith says. "You want to make sure you don’t violate antitrust or fraud laws."

Because each of the groups involved in Physicians Clinic is the only specialty practice of its kind in town, they were especially careful here. Physicians Clinic worked with an attorney specializing in health care, and with a health care management consultant experienced in putting multispecialty and single-specialty groups together.

3. Form an executive committee and subcommittees to give each practice a say in major decisions. In GMG’s case, Tritt runs the network on a daily basis, but has input on significant decisions from a 10-member executive committee and a 15-member board (one representative for each network included in GMG). The president and executive committee have annual terms. Subcommittees also are included in areas such as finance, marketing, and quality improvement.

Physicians Clinic of Iowa has elected officers and an appointed board. They felt it was important for physicians to feel they have a say in the process.

Because it is finalizing the group’s organization, it has held periodic "all-hands meetings" to keep everyone up to date, especially on major issues. About one dozen members from among the five practices in the network attend these meetings.

4. Determine how administration will be handled. GMG decided to hire a physician practice management company, Physician Health Corporation, to handle claims processing, credentialing functions, utilization management, and assistance with contract negotiations.

Large group seeks economies of scale

Physicians Clinic of Iowa officials have decided to pull from the existing administrative staff of the network members. "We can have a central administrative group, one central MIS area, one central billing area. We ought to be looking at some things to reduce overhead and improve economies of scale," Meredith says. "If you put a larger group together, you can afford to hire more professional help than you can afford in a smaller group."

5. Gather outcomes data to show to payers. GMG gathered utilization data by CPT code in each specialty in terms of frequency of the codes and money spent on each code, Tritt says. Physicians Clinic of Iowa has been accumulating data over the last two to five years, and plans to begin measuring patient satisfaction. One of the group’s major planned purchases is an information system to measure cost and quality of care.

6. Market the network to payers. Physicians Clinic of Iowa intends to market its group to payers throughout Iowa. The group plans to appoint a person in charge of marketing to payers.

7. Determine the risk-sharing arrangement and other contract provisions with each payer. GMG is in the process of finalizing a contract with an Atlanta managed care organization in which GMG will accept all physician risk. The MCO will pay a fixed per-member-per-month (PMPM) rate for primary care and specialty care.

GMG also will receive incentives for keeping hospital bed days per 1,000 below set targets, and achieving a targeted percentage of outpatient surgery cases. The incentives will be split between GMG and the MCO’s primary care network, and a predetermined percentage will be given to each participating specialty, Tritt says.

Can multispecialty networks work?

Experts are divided over whether multispecialty networks can make a difference. Mervin Shalowitz, MD, medical director of United HealthCare’s international division in Chicago, is not convinced the concept will work.

"I don’t think they’re the model we should be looking at," he says. Managed care organizations should rely on primary care physicians to direct patients to appropriate specialists, he says.

Shalowitz also says primary care physicians should not be mandated to refer patients to only one specialty group in town because that group happens to be in the network.

"This has to be done on a case-by-case basis," he says. "You can’t say that every single heart patient should go to a specific cardiologist." That decision depends on the patient’s condition and the type of care a particular specialist is best suited for, Shalowitz concludes.

But consultant Bill DeMarco, CMC, president of DeMarco & Associates, says payers like the concept of contracting with one entity instead of dozens. "Multispecialty groups are preferable to the employer. Single-specialty groups pit themselves against price, not quality. It’s better when you work together."

The answer, some say, may depend on the community.

"I asked the consultant if our timing was correct on this," says Wilson Strong, MD, chairman of Physicians Clinic of Iowa. "His comment was, ‘Are there managed care organizations out there looking for contracts? Do you have the information and clout to effectively negotiate those contracts? Are you caught between competing networks?’ The answers in our case were yes. We want to be the patient’s advocate."