Written by: John Lynn
I’ve regularly talked about the current healthcare environment of hospitals acquiring physician practices. This trend is occurring at a really rapid rate, but in an email exchange I had recently with Dave Chase from Avado I started asking myself if the benefits of a consolidated group of providers could be achieved by other means.
At the core of the current trend is a little reimbursement loophole that many hospitals have been exploiting. I wrote about this loophole in a post on Hospital EMR and EHR called Reasons Hospitals Acquire Medical Practices. Considering this reimbursement loophole, I think there is a little that can be done to discourage hospitals that want to try and increase revenue through this loophole.
At some point Medicare is going to catch up with this and close the loophole. Once that happens, it’s worth considering the other benefits of being part of a large organization as opposed to being a solo practice. Plus, can those benefits be achieved through other means than fully acquiring a practice? This is particularly important as doctors that are currently working for hospitals choose to go back out on their own and for those organizations who haven’t already gotten on the practice acquiring bandwagon.
I think the most pressing reason that practices are interested in relationships with hospitals is based on the changing reimbursement models. It will be impossible to access the ACO money that’s coming without tight ties to a large number of organizations. One way to achieve this is for a healthcare organization to acquire all of the various healthcare organizations that will make up an ACO. I think that’s part of what we’re seeing now and I’ve discussed before how this might be the way hospitals avoid the cycle of doctors leaving. Although, we’re already seeing signs of doctors leaving for new medical models.
This seems like a pretty expensive proposition for hospitals to acquire practices just for the doctors to go back to private practice. Which makes me wonder if the benefits of an acquired practice can be achieved through software and relationships? As we’ve discussed before, interfaces in healthcare are quite hard to do. So, once you’ve been able to create that interface with a clinic or hospital, then you have some pretty solid lock in with that organization.
Although, I’m pretty sure that Dave Chase (which inspired this idea) would take this idea one step further. Imagine that most of the patients used one portal to interact with your local healthcare community. Could that portal facilitate your ACO efforts? Once the majority of patients are in that portal, will anyone in the community want to be somewhere else? There’s real lock in that can occur once patients are engaged with healthcare institutions. This occurs with the patients and with the healthcare organizations that are engaging with those patients.
I think it will be interesting to see if software can facilitate some of the same benefits to hospitals that they get from acquiring physician practices.