Physicians beware: revisiting the physician practice acquisition frenzy.

This commentary compares the current physician practice acquisition frenzy to that of the mid-1990s and reflects on lessons learned. The bottom line: Physicians must understand that there were no "white knights" in the 1990s, and there really aren't any today. This article delineates five main factors that both physicians and hospital executives should thoroughly explore and agree on before an alignment or acquisition. Agreement on these issues is the glue that holds the deal together after the merger. These factors eliminate both buyer and seller remorse and delve into the true cultural alignment that must take place as the healthcare industry addresses the challenges of the future.

Are your physician-integration strategies sustainable?

Before embarking on a physician-integration strategy, hospitals and health systems should perform a detailed analysis of the following four critical areas to ensure that the strategy is competitive and sustainable: Strategic objectives; Financial resources; Requisite experience and functional capabilities; Organizational structure, culture, and commitment.

Integrated delivery systems.

It's been assumed, and now MGMA member stats bear it out--more and more practices are hospital-owned.

Trends in hospital/physician relationships.

Findings from two surveys of all physicians in Pima County, Arizona, in 1985 and 1990 to determine the trajectory of hospital/physician relationships suggest that conflicts have increased in almost all areas. Physicians report the greatest number of and increase in conflicts in traditional problem areas such as the quality of nursing and response to equipment requests. They report a smaller increase in conflicts relating to the new competitive marketplace, including hospital efforts to influence medical practice. Both types of problems are most prevalent among younger physicians. The new marketplace thus appears to exacerbate traditional hospital/physician conflicts more than it generates new areas of contention.

Reevaluation of capitation contracting in New York and California.

We obtained detailed quantitative and interview data from Aetna U.S. Healthcare and six physician organizations to examine changes between 1998 and 2000 in the scope of capitation contracting and delegation of responsibility for claims payment and medical management in New York and California. The physician organizations in New York included Benchmark (Continuum), Montefiore IPA, and Lenox Hill Healthcare Network. In California they included Brown and Toland Medical Group, Monarch Healthcare, and Santa Clara County IPA. In both California, where global and shared risk capitation have been common, and New York, where they have not, we find movement to reduce the scope of prepayment and a rethinking of the delegated contractual relationship by physician organizations and health plans. This represents a departure from the 1990s, when many industry participants and analysts expected capitated and delegated relationships to spread across the nation.

Something old, something new: recent developments in hospital-physician relationships.

OBJECTIVE: To describe recent developments in hospital-physician relationships in 12 metropolitan areas. METHODS: We analyze qualitative data from a third round of biannual site visit interviews conducted in 12 randomly selected metropolitan areas from 1996 to 2001. The study interviewed 895 respondents during the third round of site visits, conducted in 2000 and 2001. PRINCIPAL FINDINGS: As HMO enrollment and capitation contracting has failed to grow in local markets, hospital executives have returned to a strategic focus on improving relationships with specialists in pursuit of fee-for-service revenue. Yet, 65 percent of hospitals interviewed in 2000 and 2001 continued to own primary care physician practices, with ownership more prevalent in highly concentrated hospital markets. A majority (55 percent) of hospitals have decreased the size of these practices in the past two years. CONCLUSIONS: Interest in forming integrated delivery systems has waned. The potential for quality improvement through these organizations systems--by emphasizing primary care and coordinating hospital and physician services--has not been realized. The new emphasis on hospital-specialist partnerships may improve the financial status of hospitals and participating specialists in local markets, and may improve quality of care in selected service areas, but it may also increase health care costs incurred by employers and consumers.

Organizing and managing care in a changing health system.

OBJECTIVE: To examine ways in which the management and organization of medical care is changing in response to the shifting incentives created by managed care. DATA SOURCES: Site visits conducted in 12 randomly selected communities in 1996/ 1997. STUDY DESIGN: Approximately 35-60 interviews were conducted per site with key informants in healthcare and community organizations; about half were with providers. DATA COLLECTION: A standardized interview protocol was implemented across all sites, enabling cross-site comparisons. Multiple respondents were interviewed on each issue. PRINCIPAL FINDINGS: A great deal of experimentation and apparent duplication exist in efforts to develop programs to influence physician practice patterns. Responsibility for managing care is being contested by health plans, medical groups and hospitals, as each seeks to accrue the savings that can result from the more efficient delivery of care. To manage the financial and clinical risk, providers are aggressively consolidating and reorganizing. Most significant was the rapid formation of intermediary organizations, such as independent practice arrangements (IPAs), physician-hospital organizations (PHOs), or management services organizations (MSOs), for contracting with managed care organizations. CONCLUSIONS: Managed care appears to have only a modest effect on how healthcare organizations deliver medical care, despite the profound effect that managed care has on how providers are organized. Rather than improving the efficiency of healthcare organizations, provider efforts to build large systems and become indispensable to health plans are exacerbating problems of excess capacity. It is not clear if new organizational arrangements will help providers manage the changing incentives they face, or if their intent is to blunt the effects of the incentives by forming larger organizations to improve their bargaining power and resist change.

Management services organization for group practices.

This article analyzes why management service organizations (MSOs) have become the major interface between group practices and managed care organizations as well as their advantages and disadvantages. It provides this information in the context of The University of Texas Southwestern Medical Center's development and operation of an MSO in the Dallas/Fort Worth market.

Ambulatory care growth: implications for academic organizations.

This article discusses the implications of the dramatic growth of outpatient activity in academic health care organizations, and, more broadly, in all forms of joint physician-hospital outpatient care. The authors describe several economic, operational, and regulatory factors that influence the success of ambulatory care expansion in the academic environment. A case study of the Metropolitan New York Medicaid managed care environment illustrates the impact of these factors and highlights the specific challenges confronting teaching hospitals and physicians. The attributes of ambulatory care providers that have successfully addressed these challenges are also discussed. Finally, the benefits of the model ambulatory practice structure, employed at a number of teaching institutions across the country, are explored.

Emerging trends affecting ambulatory care: findings from an environmental assessment.

Deloitte & Touche LLP, in conjunction with VHA, Inc., conducts an annual environmental assessment of trends affecting the health care industry. The annual study assesses the impact of these trends on both providers and purchasers. This article focuses on specific trends from our current study that suggest the need for significant change in the way ambulatory care is delivered. The article examines 10 key trends in overview, takes a closer look at four critical areas with special impact on ambulatory care, and concludes with a discussion of how the industry is responding.

Strategic health system development and managed care delivery.

For the past quarter century major hospitals and physician groups have actively developed competitive health systems. Their compelling motivation has been fueled by the onslaught of managed care. Successful initiatives have been driven by mutual strategic system planning, effective management, and enhanced quality of care.