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Go slowly, don’t make rash decisions, and your practice can survive
When MedPartners decided in November 1998 to get out of the practice management business, it was just the latest in a long line of disappointments in the practice management industry. MedPartners’ decision, the bankruptcy of Coastal Physician Services in Durham, NC, and the financial collapse of San Diego-based FPA have left hundreds of practices in the lurch.
"My first reaction was, So what else is new?’" says Stephen Hochschuler, MD, president of the Texas Back Institute in Plano, a 27-physician MedPartners practice. "I really think they lost their focus, that they had too many balls in the air at one time. Focusing on disease management and the pharmaceutical side makes sense. It’s a lot easier than running a bunch of practices."
If Hochschuler sounds blasé about the situation, it’s because he isn’t letting fear guide his decision making. "This just won’t impact us at all," he says. "They haven’t hurt our skills or our attitude one bit. We have a big name in the spinal business. We are well-positioned. And if they never delivered on things I was counting on, I also never considered them the Messiah. I never took my hands off the reins."
Indeed, when a decision to centralize billing left his 15-year billing veteran without a job, he simply kept her on as a consultant. Now she’s doing the billing again. That’s what may separate the Texas Back Institute from other MedPartners clients. The practice never abdicated responsibility to others, and Hochschuler has always been as interested in running a tight business as a quality practice.
Steve Messinger, a director with ZA Consulting of Washington, DC, says one mistake many practices made with MedPartners was losing sight of their raison d’être. "These deals were never about being able to practice high-quality medicine better," he says. "They were never about the objectives of the group or of the physicians. It was all about income and upside. The fit of the parties or whether they could live with shared governance wasn’t considered. They figured it was MedPartners’ problem to meet payroll, to do the billing, and to pick up the gum wrappers in the waiting room."
Now that MedPartners is leaving the scene, many are stuck, not knowing where [those practices’] business stands, still needing the same capitalization to fund organic growth that isn’t based on mergers. "To a degree," says Messinger, "their problems are of their own making. And to a degree, they were hoodwinked. They thought only of their pocket book, not the long-term interests of the practice."
So what are your options? According to Jeffry Peters, president of Health Directions, a Harvey, IL-based consulting firm, you may want to affiliate with a hospital or try another practice management company. Management service organizations, mergers, or loose affiliation with other practices also are options, But whatever organizational model you consider must meet the needs of your physicians, preserve quality of care, and generate revenues and value for the practice. "The success of any model depends on making sure that physicians are satisfied with their professional lives and working environment."
Hochschuler isn’t sure what the future will bring. Other practice management companies are courting the practice, but it may opt to "do our own deal with Wall Street." There is a need for economies of scale and high-ticket items like computer systems in health care, he adds. That means there will be a need for capital. Practices need to remember, he says, that nothing can happen overnight. "You can’t do things by revolution, but by evolution. People try to copy us, but it’s taken 25 years to get where we are. Don’t do things so fast they drown you. Before you make a decision to go with another organization, make sure your incentives are aligned, that you both win, and that you have a common vision. Know what you are willing to give up for capital."
• Jeffry Peters, President, Health Directions, Harvey, IL. Telephone: (708) 915-2706.
• Stephen Hochschuler, MD, President, Texas Back Institute, Plano, TX. Telephone: (800) 247 2225.
• Steve Messinger, Director, ZA Consulting, Washington, DC. Telephone: (202) 393-3044.