Small, independent practices are capable of delivering quality, cost-effective care — but they need new kinds of tools and expertise to adapt and compete.
When Dr. Jim Walton joined a small internal medicine practice in suburban Dallas in the early 1990s, he learned what many medical graduates learn. Running a practice can be difficult.
First came the headwinds of providing employee benefits. Even more difficult was negotiating managed care contracts and finding the capital for technology.
By the time the practice had grown to 20 doctors in three locations, Walton and his colleagues struggled to balance the demands of family, patient care and multiplying administrative duties.
“We were significantly challenged by the complexity and number of business issues that we were not prepared to negotiate or address,” Walton says.
The doctors found a remedy in the flurry of hospital and medical group consolidations sweeping North Texas. In 1995, they accepted a buyout offer from Dallas-based Baylor Health Care System (now Baylor Scott & White Health).
Powerful market forces have continued to lure physicians away from independent practice to hospitals and health systems. Medicare and health insurers increasingly favor payment models that reward quality and efficiency of care.
For doctors, these models require expensive technology and expertise to collect, crunch and share patient data.
Growing numbers of doctors are becoming employees of hospitals or large practices. Those large practices, in many cases, are owned by hospitals or health systems. In 2016, the total number of U.S. doctors in private practice dropped below 50 percent for the first time, according to the American Medical Association.
But it’s a little too early to write the eulogy for small practices.
“Independent physicians historically have lower costs and equal quality to employed physicians, so there’s not necessarily additional value added by attaching yourself to a health system employed group,” Walton says.
In 2013, Walton left Baylor to become president and CEO of Genesis Physicians Group, a North Texas independent physician association.
Genesis provides an array of business services — such as credentialing and insurance contracting — for more than 1,500 solo and small-practice physicians. Its members represent more than 70 specialties across 800 practice sites in North Texas.
Independent physicians historically have lower costs and equal quality to employed physicians.
Walton helped Genesis form an accountable care organization, or ACO, so its members could participate in this emerging way of delivering and paying for care.
An ACO is a group of providers who agree to coordinate care for a population of patients. The participating providers are rewarded for delivering quality care at lower costs. In 2018, the Genesis ACO has eight contracts with payers, including Blue Cross and Blue Shield of Texas.
Genesis launched its ACO with the help of TMA PracticeEdge, a first-of-its-kind organization that helps Texas independent practices join forces to form physician-led ACOs. TMA PracticeEdge helps practices set up and manage networks needed to coordinate care. It also provides access to tools for collecting, sharing and analyzing data.
TMA PracticeEdge was formed by the Texas Medical Association with Blue Cross and Blue Shield of Texas.
“We support independent physicians because it’s important that our members have the ability to choose the most accessible care at the most appropriate price for their needs and budget,” says Shara McClure, the Texas Blues Plan’s divisional senior vice president of health care delivery.
“Our goal is to help independent physicians remain competitive, even in markets dominated by large hospital and health systems,” McClure says.
Studies have found that prices and spending for physician services often rise after practices are bought by hospitals and health systems.
Blue Cross and Blue Shield of Texas and researchers at Rice University reached a similar conclusion from an analysis of the insurer’s 2016 medical claims. Spending on patients in hospital-owned practices was more than 6 percent higher than spending on patients in physician-owned practices.
These lower costs don’t reflect lower quality. Patients seen by primary care physicians in small practices have lower rates of preventable hospital admissions than patients seen by doctors in larger practices, according to a study sponsored by the Commonwealth Fund.
Since its launch, TMA PracticeEdge has helped doctors form 12 ACOs that serve more than 110,000 patients across 35 Texas counties. The success has other health insurers expressing interest in partnering with the Blue Cross and Blue Shield Plan or starting similar programs, McClure says.
A new national coalition called the Partnership to Empower Physician-Led Care will likewise support independent practices that want to adopt new payment models.
Coalitions like these may prove critical to independent practices that are committed to thriving in a changing health care landscape.
Walton says independent practices face three primary challenges: They need to improve at sharing electronic health records to coordinate care; they need to integrate mobile apps into their patient management; and they need to understand how they rank in patient outcomes compared to their peers.
“The most successful independent physicians of the future will recognize that the consumer wants to access them differently than they are today,” Walton says. “They want to schedule appointments by text or email and integrate their mobile phone devices to have video chats.”
On the bright side for small practices, he says, patients prefer to have these interactions with a provider they know. “The key is, they want to do this with their primary care doctor.”