Health Care

Are independent docs an endangered species?

October 8, 2012
| By Pete Daly |
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No one disputes the fact that physicians today are increasingly opting for salaried employment within a hospital system. What is debatable is whether that is a good thing for the health care consumer — or for the doctors still in private practice.

It definitely is not an encouraging trend to ProCare Systems Inc., a Grand Rapids business formed in 1994 to provide a wide variety of business services to physicians in private practice.

“Spectrum Medical Group every week is adding more specialists to their group,” said Cyndy Walsh, CEO of ProCare. She also mentioned Advantage Health/Saint Mary’s Medical Group, an organization of more than 115 physicians that is part of Saint Mary’s Health Care.
“That trend is going on, on a national level, and it’s certainly pretty aggressive in West Michigan, largely being driven right now by the fact that the Spectrum Medical Group is really beginning to bring in a lot of specialists. That has created some concern on the part of physicians who really want to maintain their independence,” she said.

Dr. Fred Davis, an owner of ProCare Systems, said one of the big concerns is in regard to referrals.

“In the private sector, we are seeing medical practices being absorbed into hospital organizations. You wonder how you are going to be able to work effectively in a private practice environment,” said Davis. “How do private practitioners establish a level playing field, to be able to continue to practice and compete effectively with a larger organization?”

“As a private practitioner myself, I’ve lived through the world where most of the referrals you made were because of a personal association you made with other doctors in the community. You knew them and they knew you, and they would send you patients,” he said.

“Now, referrals are coming through more organized systems of care, where a lot of the referrals are being controlled by these organized systems, whether they are being maintained internally with self-referrals into their own system, or whether there are more restrictions on external referrals.”
“Doctors are concerned,” added Davis. “Where are we going to get our patients from?”

A doctor who is an employee “may be told where he has to refer patients, preferentially,” he added.

Davis said he believes a private practice “can compete efficiently on price and cost, compared to big organizations.” He cited articles recently in The Wall Street Journal and Los Angeles Times “about the cost of care … actually increasing when physicians’ practices are rolled into hospital-based practices.”

He stressed, however, “That’s nationally. I’m not saying for sure this market,” but he repeated that according to the news media, when a doctor is part of “a big hospital system, prices for tests, for procedures and evaluations and things actually go up. And so that is another reason why a private practice that’s run efficiently can actually effectively compete on cost.”

Dr. Ken Fawcett, chief medical officer for Spectrum Health Medical Group, said that organization is approaching a total of 500 physicians and close to 700 care providers in all.

He said one reason doctors prefer to work for a hospital rather than have a private practice is “a desire to be part of an organization that has greater stability, and one that allows for people to have more integrated care, as opposed to being a stand-alone office.”

He added that new requirements involved with third-party insurance companies and federal compliance programs have “made being an independent practice much more complicated.”

As to Davis’ comments about referrals, Fawcett said there is an “intrinsic strength” in referring patients into a physician group “that shares the same electronic medical records, instead of relying on an exchange of paper records which are oftentimes delayed for weeks and result in delayed care.”

Fawcett said “the choice of referrals remains at the discretion of our individual providers, who are not contractually bound to refer internally. They can refer to private physicians.”

He added that there are many specialties in West Michigan that are only provided by independent physicians, “and we would not hesitate to refer patients to their care. Monitoring the referrals is important, not so as to have conversations about changing these referral patterns but instead to identify opportunities” in which SHMG may want to add physicians with that specialty to its own group.

Both Davis and Fawcett mentioned the expense involved in installing and maintaining electronic medical records as a daunting factor for small private practices.

“Being part of organizations that are larger and creating greater economies of scale, I think, are huge driving forces,” said Fawcett.

It should be noted that IT expertise for maintaining electronic records is one of the services provided by ProCare to independent practices.

The Business Journal asked Fawcett about the allegation that costs for procedures in hospitals are higher than those performed at private practices. He responded that it was such “a broad question” that he would not be in a position to render an opinion.

“I will tell you that the driving force for our Spectrum Health Medical Group is not an economic one, but rather it is to try to change our care model.”

He cited the Commonwealth Fund, a private foundation that states that it is “working toward a high performance health system” and releases free, regular reports on health care topics. The organization has reported that patient surveys indicate they are critical of health care organizations because care is too difficult to access, too fragmented and not done in a coordinated manner.

Fawcett said that by having a larger array of services and covering a broader geography, SHMG can offer its patients “care that is very time compressed, highly coordinated, and done so in such a way as to promote greater access.” With that come factors such as extended hours and leveraging electronic health records, he added.

Lody Zwarensteyn, director of the Alliance for Health, said doctors’ work does tend to become more expensive when they are within a medical care system, as opposed to working in their own private practice. He attributes that to what he calls “corporate pricing,” in which a large organization requires a unit charge for each individual service it provides, whereas a doctor in private practice may typically charge one set fee for a given procedure.

Another factor that can add to cost is what Zwarensteyn calls “conflict of duty.” For example, a hospital may urge its staff to use its own under-utilized lab. “Who is the doctor’s duty to? The patient or the employer?” said Zwarensteyn.

He said there are hospitals “that are used to spending in ways that private folks are not. And that also has an impact on costs.” As an example, Zwarensteyn said he recently met a doctor who lives in a Southern state but works for Spectrum Health — on weekends, and Spectrum picks up his commuting airfare.

He said hospitals definitely are recruiting doctors to become employees, but added there also is a trend among young doctors to seek employment with a hospital rather than joining a private practice, and that decision has to do with “lifestyle considerations.” If a doctor works for a hospital, he said, “When you go home, you’re home,” but a doctor in private practice is usually expected to take calls at home and may have to interrupt family life to deal with a patient.

“Most private care doctors work long days and weekends, year round,” said Zwarensteyn, adding that “fatigue becomes the consideration.”

ProCare Services was formed by Davis and Dr. Mark Gostine and has about a dozen client practices, according to Walsh. One of those practices is Michigan Pain Consultants, where Davis and Gostine work, and others include pain specialist practices in other regions of Michigan.

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