Reform School

Smart physician survival strategies within the Affordable Care Act By Charles Bond, JD

Hundreds of pages of regulations are spewing out of Washington, DC, now that the Patient Protection and Affordable Care Act is the law of the land. These regulations will affect the daily practice of medicine for years to come. Consultants are making a fortune trying to read the tea leaves. Some, even high-level politicians, are predicting a “train wreck” in the implementation of the ACA.

So, what are doctors to do?

The first piece of advice when crafting strategy in love, war or business is: Get to a safe place. With all the upheaval in health care, it is very difficult to know where that safe place is for physicians. Use the four ways listed below as a guide to the safest place possible.

Way 1: Create Unity

The safest, strongest place for physicians is actively working together. No matter how the health care delivery system is reconfigured, the path between the patient and treatment is through the physician, and the path between the patient and reimbursement also passes through the physician. Physicians, therefore, have tremendous strategic power. Having worked with physicians for nearly 40 years, I have consistently seen that when doctors work together, good things happen for doctors, and even better things happen for patients.

There is not only safety in numbers, but also strength in numbers. The more doctors join together, the greater their bargaining power.

Way 2: Form Patient Alliances

Whether forming an ACO or negotiating a payer contract, the first question is: “How many lives do you have?” In other words, how many patients are loyal to you? Physicians have not tapped into their greatest ally and their greatest economic weapon—their patients’ support. There is a deep and abiding reserve of good will that physicians can rely on. So, if physicians want to increase their bargaining power, they should not only band together, but also literally create a loyalty program for their patients. Recent government rulings are opening up great new possibilities for aligning incentives with patients while improving care.

Way 3: Align with Other Providers

Once physicians have created their own joint venture and have developed a loyalty program for their patients, they can begin negotiating their relationship with other providers, like their local hospital. Forming the patient-physician alliance before entering into a business relationship with the hospital ensures equal bargaining power, instead of the top-down model hospitals are pursuing so aggressively. Physicians need not sign up for a subservient future.

While there are appropriate employment arrangements, the mass migration of physicians into hospital employment is generally not working much better than it did back in the 1990s. Virtually all such arrangements are unprofitable for the hospital, with many doctors rankling under the degree of control exercised by the administration. Perhaps the most troubling trend is the use of peer review mechanisms to fire physicians. This can result in reports to the medical licensing board and National Practitioner Data Bank, possibly making the physician untouchable in terms of future employment.

It is a far better idea for physicians to join together to work with hospitals collaboratively. If physicians approach the hospital collectively, the hospital is less likely to use its power to retaliate against any single individual. Structurally, joint ventures, co-management agreements, practice leasing and centers of excellence preserve greater autonomy for physicians, and an exit strategy if things don’t work out.

There really is safety in numbers.

Way 4: Create Gainsharing Arrangements

Once health care providers are aligned, real reform can begin with everyone participating in the redesign of the most expensive care, using centralized case management and collaborative patient-flows. Because 5% of patients use 95% of our health care dollars, we should logically address those 5% first.

They are the patients with relatively well-recognized diagnoses or conditions that are bankrupting the system. Every doctor knows intuitively which diagnoses and conditions could be treated more efficiently and cost-effectively—if only providers were incentivized to cooperate in providing less wasteful care.

Now, however, there is a way to provide those incentives through gainsharing contracts. Under gainsharing arrangements, a group of providers forms a contractual joint venture for the purpose of collaborating on providing more cost-efficient and higher-quality care for a pre-designated population. The joint venture then contracts with the payer to care for that population, and if the joint venture saves money, it gets to share in the cost savings.

The Affordable Care Act offers limited gainsharing. The investment required to achieve the gainshare and the reward for doing so make ACOs a rather unattractive venture. So, doctors don’t need to rush into ACOs to negotiate gainsharing contracts. All they have to do is to design a continuum of care with the providers rendering that care and negotiate a gainsharing contract. Indications are that the Centers for Medicare and Medicaid Services (CMS) will support gainsharing outside the ACO structure as a part of its efforts to encourage innovation.

A Patient-Centric Strategy

These are turbulent and uncertain times for physicians. The ACA has tried to set in motion big changes. Many of the underlying motives and intentions of the ACA may resonate with physicians, but the business reality is that physicians should not be planning their entire professional structures around the ACA.

To the contrary, physicians should rely on common sense. Doctors have more power—whether under the ACA or not—if they work together. They have even more power when they organize and synergize with their patients. Fortunately, as a result of new rulings these loyalties can be solidified. Then, whether they call it an ACO or not, physicians and patients can unite with other providers to design continuums of care that can really save money.

This patient-centric strategy is key. Imagine an ACO that is accountable to patients. Imagine a system of care that is interactive with patients and involves them in the continuum of care. After all, the greatest predictor of both outcomes and costs is the patient.

The ACA has opened the door to innovation. But physicians need not rush into the legislatively prescribed reforms. They should, however, embrace the opportunity to forge alliances that can help to re-design health care. Patients are looking to physicians for just that leadership. By following the ideas in this article, physicians can and will succeed.

Charles Bond, JD, is a principal of Physicians’ Advocates, a law firm in Berkeley, CA. He writes on health law, medical economics, practice management, physician employment, hospital-physician agreements, and health policy. He can be reached at cb@physiciansadvocates.com. The Chicago Medical Society and the American Bar Association have established a formal relationship to address medical-legal issues affecting CMS members and their practices. This legal section is sponsored by the Health Law Section of the ABA.