Rise of Hospital-Owned Practices
Another major disruptor has been the increase in hospitals buying private practices. According to a recent AMA white paper, 32.8% of practices are partially or wholly owned by hospitals, up from 29.0% reported in 2012 (AMA. July 2015).
Explore This IssueFebruary 2016
The early rounds of consolidation were largely hospitals and healthcare systems buying community-based primary care practices. More recently, hospitals have been looking at acquiring specialty practices, and otolaryngology practices, which have a high number of ambulatory surgery patients, are a good fit.
“What happens is that the hospital essentially becomes a large multispecialty practice that keeps referral within the system,” said David N. Gans, MSHA, senior fellow for industry affairs at the Medical Group Management Association (MGMA) in Englewood, Colo. “To the extent that all players adopt the same electronic medical record (EMR), billing, and communication systems, it can have an impact on those doctors who are not a part of the organization.”
When the hospital becomes a competitor, an independent practice’s defenses depend a lot on the specifics of its community and the number of patients involved. How many independent PCPs are left in the community? How can the non-hospital-owned practice cultivate relationships with those PCPs, instead of relying on the relationships established with PCPs at the hospital-acquired practice? These are major questions private practice physicians must answer for themselves.
Many independent primary care practices may be hesitant to send their patients to a hospital-affiliated otolaryngology group, for fear they won’t come back. Turning to the non-hospital-affiliated specialist would alleviate this concern. “In some communities this poses a major threat to the viability of a practice,” said Gans. “If patient referrals are not available to an otolaryngology practice, they will have a big problem.”
Advent of Narrow Networks
The cultivation of narrow networks by insurance companies is another concern otolaryngology practices face. In this situation, the insurer contracts with only a few physicians at all levels to see its patients. If one of your PCPs is not included, or if you aren’t in a network with your sources, you will most likely lose their referrals.
“We have already had a couple of doctors stop sending us their patients because they are a part of a narrow network and we aren’t a low-cost provider,” said DeMaio-DeAngelis. “They wanted to make sure they got their incentive at the end of the year, and I’m not changing that. Other than showing you provide the best care, I am not sure how, or if, you can change the financial incentives in narrow networks.”