Increase revenue through ambulatory care facility

Income can offset reduced Medicare dollars

There are two ways of dealing with budget cuts from outside sources: You can look for ways to keep your own costs down, and you can look for ways to bring more dollars in the door.

Practices facing cuts in their Medicare income can combat this situation by truly integrating and restructuring. While a physician network may look like or call itself an integrated delivery system (IDS), there’s more to running an IDS than throwing the acronym around, argues Philadelphia health care consultant Thomas W. Reinke.

"The term integrated’ is probably premature," says Reinke. "Generally, most mergers of physician practices into a larger group, or acquisitions by hospitals, have only taken half a step toward real integration."

According to Reinke, the most commonly found physician integration blueprint is the "as is, where is" model, where doctors remain in their offices and continue to function largely as they did in the past.

"There is no true integration here, as this type of organization operates more like a confederacy than a single unified entity," he maintains. In turn, it is very difficult to make the financial, administrative, and clinical aspects of the as-is-where-is model work together. That’s because the very idea of an integrated group is often in direct conflict with the reality of operating multiple small sites that separate doctors and require duplicated facilities, personnel, and overhead expenses, Reinke points out.

For these practices to succeed, they must find that medical niche where they have the most competitive advantage and where demand is projected to grow, he argues. "In health care, that means outpatient services," says Reinke. "This has been a successful area of expansion for providers in the past and still presents an opportunity."

Also, many studies are predicting an increased demand for specialist services. "The real opportunity for a health care organization to obtain a competitive advantage is to provide more specialist services in an ambulatory setting," says Reinke.

Some of the advantages of consolidating various physician practice groups into an ambulatory care center include: increased utilization of clinical space, elimination of duplicative personnel, reduced bureaucracy, and lower overhead and information technology costs along with a wider range of enhanced services.

"Instead of just acquiring physicians, ambulatory care centers offer the potential for true integration of health care services," maintains Reinke.

For example, once primary care physicians are capitated, they often see their responsibilities expanded to include treating simple low back pain. But in an ambulatory care center setting, a specific back pain treatment center can be created and staffed by both primary care physicians who screen and treat simple low back pain and orthopedists or neurosurgeons who are called in for difficult cases.

"Furthermore, by marketing the center to occupational health case management companies, you create an additional source of revenue," notes Reinke.

The key to making these ambulatory centers work is the proper integration of specialists into the operation. "True integration among providers must include specialists, since this allows you to better differentiate your products and services," says Reinke.

Contrary to recent common wisdom, Reinke says physician groups should not increase capital spending on expanding primary care services. Rather, "specialty services and unique programs are one key to differentiation and growth," argues Reinke. "Specialty services and unique programs require specialist physicians. Any provider organization intending to grow and become an integrated delivery system must plan to include more specialists."