Indie Docs Versus the Networks

Indie Docs Versus the Networks

The pros and cons of hospital groups and independent physicians comes down to groups of independent patients

By Tom Mullaney

Roughly 30 years ago, choosing a doctor was fairly simple. It was either the family doctor, one recommended by a friend or the physician closest to home. Today, it seems that patients now confront a different choice: whether to pick an independent physician or one affiliated with a hospital network.

“Patients choose doctors, not health networks,” says Howard Drenth, MD, president and CEO of Presence Medical Group, claiming that the choice really hasn’t changed.

Patients who prefer a physician in private practice may find the choice increasingly harder to make. Since the passage of the Affordable Care Act (ACA) in 2010, hospitals have aggressively acquired certain physician practices to boost their primary care capabilities, control referrals, expand market share and succeed in keeping the quality of patient care in-house.

The American Medical Association’s 2012 Physician Practice Benchmark Survey documented a higher hospital employment over the past five years. Only 18 percent of physicians were in solo practice in 2012, down 6 percentage points from 2007. In 2012, 29 percent of physicians worked either directly for a hospital (5.6 percent) or for a practice that was at least partially owned by a hospital (23.4 percent).

American Hospital Association data shows that the number of physicians employed by community hospitals has increased by 32 percent between 2000 and 2010, from 160,000 to 212,000.

A key factor favoring hospital affiliation, according to Michael Taylor, MD, chief medical officer at Truven Health Analytics, is that “medical care is moving away from a sick-care patient model to providing care for the entire community.”

Mitchell Bernsen, MD, managing partner of Illinois Gastroenterology Group, agrees that hospitals are “gobbling up internists” and that independent physicians’ patient pools may be “drying up.” His group’s offices are surrounded by eight networks in the immediate vicinity.

Presence now has 250 practitioners in its network, a 150 percent jump since 2010. With 180 doctors in 33 offices, Northwestern Memorial Physicians Group, a subsidiary of Northwestern Medical Group, has seen a 40 percent increase in the last 18 months, according to Daniel Derman, MD, president of Northwestern Memorial Group. Northwestern Medical Group has 1,200 physicians. Derman expects a doubling of ambulatory care sites by 2015.

“… All care is documented and tracked in one place and is more cost-efficient for the patient.”

Bernsen says doctors are moving over to the hospital side due to stagnant reimbursement rates, a better work/personal-life balance and higher pay incentives. Many independents also express uncertainty about how the ACA will pan out and are hedging their bets, he says.

While physicians and hospitals are engaged in a tit-for-tat duel, patients are left to navigate a changing and confusing medical-delivery landscape. Their choice has ramifications with out-of-pocket costs and specialty practice options.

Michele M. Kadlec, CEO of Health Plus Physicians Organization (HPPO), an independent organization of 300 doctors in the Northwest suburbs, says that the trend toward hospital consolidation will punish consumers. “Competition will be dramatically reduced, and expenditures will increase as hospitals leverage higher medical payments.”

Employed physicians, she contends, receive much higher fee schedules from insurers than do independents because of the hospital systems’ higher leveraging power. An office visit that has cost you $100 might be $160 the next time if your doctor has joined a large hospital system. Such fee-schedule variations are driving patient out-of-pocket costs higher.

This trend becomes increasingly important as a growing population moves into higher-deductible insurance programs and patients will be responsible to pay the higher costs.

“Depending on your insurance plan and its deductible, an MRI at the physician’s office might cost $500, but at the hospital, it’s $3,000,” says Kadlec. “A colonoscopy screening, including all attending physicians’ fees, might be under $1,000 in the office while the hospital will bill the same service up to five times higher and take longer door to door.”

Hospital network officials declined to cite specific cost comparisons. They acknowledge that hospitals have higher overhead costs. However, Presence’s Drenth says, “For professional services, we bill at physician rates comparable to [those of] independent physicians.”

Besides cost benefits to patients, the independent physicians whom Chicago Health spoke with say that they are better able to prescribe the most suitable treatment fit for the patient in terms of a specific regimen or choice of hospital. Unlike hospital doctors, they are not bound to refer to specialists within a network or a medical facility that employs them.

But then, Truven’s Taylor advises patients choosing a smaller independent practice to find out who will care for them in an emergency, what coverage exists on weekends or holidays and what hospital arrangements are in place.

Keith Veselik, MD, is medical director of the 90 physicians in the Loyola Primary Care Network. He stresses the advantage of a single electronic medical record (EMR). “A patient’s medical record, both in- and outpatient, goes with them. All care is documented and tracked in one place and is more cost-efficient for the patient.”

“We work hard on our patient coordination,” says Drenth. “Our patient-centered EMRs can all be retrieved faster and are portable, should a patient move.” He points to a strict monitoring of employees’ compliance and quality oversight. No quality-performance metrics currently exist for independent doctors.

And while the transferring of personal records from office to office can be done, it takes more of an effort on the patient’s part. Being tied into a hospital system increases what Northwestern’s Derman calls the “brain power” that the newest technology affords doctors and patients. New medical information can be shared among all members with the press of a button.

What the future holds for each physician practice is uncertain, but one thing is clear: Patients will need to be informed and play a more active role in managing the medical care that is best for them.

Published in Chicago Health Winter/Spring 2014