IPA model evolving to meet marketplace demands

‘Super IPA’ concept picking up steam

Just when you thought you had all the managed care buzzwords down pat, the definitions are changing yet again. The independent practice association (IPA) concept that has allowed the best of both worlds in managed care — the volume discounts and contracting advantages that come with being part of a larger organization, without the disadvantages of having to physically combine practice offices or cut into a practice leader’s autonomy — is being reinvented. Taking its place are bigger and better IPAs that are growing one of two ways:

• merging competing entities in one or several markets;

• combining the IPA and multispecialty group concepts to form a new construct, the dual-model network (see story on p. 111 for a look at one practice that is taking this approach).

The super-IPA concept is a growing trend because the power inherent in large numbers gives physician groups more bargaining clout with managed care organizations, says Naomi Fuchs, executive vice president of national development for the Oakland, CA-based National IPA Coalition. Meanwhile, IPAs are becoming increasingly popular with health plans as open-access, broad-panel plans are more indicative of the plan design employers want (see chart on p. 110). Other physicians agree that it makes sense for formerly competing groups to combine their bargaining clout.

"If physicians don’t learn how to come together with other physician organizations in their city, they will fall into the trap that hospitals and payers set to pit them against each other," says Elizabeth Gallup, MD, JD, MBA, executive director of Community Health Partners, LLC, a Kansas City, KS, physician organization that contracts directly with payers. "When two [competing] groups choose to stay apart and not contract together, they miss the opportunity of being a powerful force in their city."

One organization attempting to do just that is New York City-based Physician Partners Co. (PPC), the IPA arm of the New York Presbyterian Hospital Network. The organization is in the process of undertaking a full assets merger with nearby Presbyterian Hospital. The combined network will include between 20 and 25 hospitals throughout the 19-county New York metro area, which hospital leadership describes as a managed care market that is somewhere between stage 2 and stage 3. The group hopes to begin signing contracts within the next few months that will have effective enrollment dates in early 1998, says Robert Ascheim, MD, president and CEO of PPC.

The physician portion of the network will principally include physician organizations affiliated with the participating hospitals. In key geographic areas where there are no affiliated network hospitals, IPAs will be invited to join the physician network, Ascheim says. PPC has signed a letter of intent with North American Management Company (the IPA arm of PhyCor, a Nashville, TN-based physician practice management company) to form a partnership that will develop this new venture.

One unusual feature of the PPC network is that each affiliated IPA will pick its own specialty referral network, rather than relying on health plans to do so for them — a model that some experts say is a coming trend.

"We want to create an independent local physician entity that functions unto itself, including the establishment of local risk groups," Ascheim says.

The structure will work as follows:

• At each local site there will be a local IPA that may be divided into smaller functional units of organized physicians. These risk-bearing units will be a congregation of primary care physicians who will then select an appropriate panel of specialists to complete their organization.

• Each IPA will be locally governed by physician leaders in the community. PPC will be represented on each local board to facilitate communication and coordination throughout the federation.

• At each site there will be a local site management company. It will facilitate medical management by the local IPA and provide other financial and management services to help the practices succeed in their managed care contracting.

• A central facility will support each local site management company to create a cost-effective, coordinated integrated delivery system.

Although the concept is unique for the New York market, Ascheim says he is confident that managed care organizations in the market will respond. The keys to making it work, he says, are having a well-organized group of physicians who are committed to the concept; a sufficient geographic presence to command leverage; and common goals and a common understanding that sacrifices have to be shared among all participants.

"Physicians have been making sacrifices [in their rate structure] for a while, but hospitals [in his market] haven’t," Ascheim explains. "The CEOs of our hospitals understand that, but they still will have to practice what they preach."