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    Urologists make the shift to hospital, group practice

    Cost, administrative pressures send more into hospital employment, large groups

    National Report—As waves of change in medicine erode urologists’ ability to go into and stay in traditional solo and private practices, many new urologists are opting for hospital employment. This is as established practitioners wonder whether solo—even small-group practice—survival is possible.

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    David Green, MD, adjunct associate professor of urology at Geisel School of Medicine at Dartmouth, Hanover, NH, said he saw the writing on the wall in 2005, when he and his partners sold their four-urologist group practice to Concord Hospital, Concord, NH.

    “I think like any small business, it was increasingly challenging to keep up with the health insurance and retirement funding for our employees. We were faced with a $150,000 to $200,000 investment in information technology, and we felt that we probably needed to develop ancillary services, such as CT scanning and in-house labs, to be able to survive. Frankly, there wasn’t the passion amongst my partners to take on that additional risk and responsibility,” Dr. Green said.

    Dr. Green, who serves on the AUA Board of Directors, said he believes solo providers are a vanishing breed. The majority of urologists, he says, are in group urologic practices. “Around 60% of residents finishing their training this year are going to enter into employed positions,” Dr. Green pointed out.

    According to a 2012 American College of Surgeons’ report, “Urology workforce trends,” solo practices have been in decline for some time (Bull Am Coll Surg 2012; 97:46-9). While the percentage of urologists in group practice increased from 42% in 2001 to 60% in 2009, the percentage in solo practice sharply declined from 26% in ’01 to 20% in ’09. Urology Times’ State of the Specialty survey has shown similar trends since its inception in 2006, when 37% of urologists were solo practitioners, compared with 29% in 2012.

    The percentage of urologists in private practice also dropped during the same period (from 80% to 56%), while those employed by hospitals rose from 6% to 9%. Another 29% of respondents in 2012 said they have considered joining the ranks of the hospital employed.

    Todd A. Rodriguez, JD, partner and co-chair of the health law group Fox Rothschild LLC, Exton, PA, said urology solo and private practices are particularly vulnerable to change, given the specialty’s dependence on insurance-covered services, which include office visits and ancillary services.

    “The problem is that in order to have those ancillary services and make them profitable, there has to be a certain amount of volume that goes through the practice. Solo practitioners in urology generally can’t support radiation therapy service, for example, without being part of larger group practices,” Rodriguez said.

     

    The appeal of large groups

    There are good reasons to be in a larger, integrated group practice, Rodriguez said.

    “Certainly, there are opportunities to improve the delivery and quality of care because you have a larger patient population,” he said, “and you can share information among doctors in the group practice. You can analyze patient statistics and see what kinds of treatment modalities work better than others. And you can do all that in an integrated basis. That’s one of the big pushes for health care reform: to integrate the delivery system.”

    From cost and administrative standpoints, being in a larger practice allows urologists to share financial risks and practice burdens, and offers economies of scale.

    “So, if you have to buy a $500,000 electronic medical record system and you spread that over 20 doctors, it’s certainly a lot more tolerable than bearing that cost yourself or sharing it with two or three doctors,” Rodriguez said. “You can generally hire more expensive advisers. Smaller practices can’t afford a compliance officer, for example.”

    Better reimbursement actually ranked third among reasons urologists gave for considering hospital employment in the 2012 State of the Specialty survey. The prospects of less administrative hassle and more free time were the first and second most popular reasons.

    Whether it’s better to go with a single-specialty or multispecialty group is a matter of preference.

    “The common thinking with multispecialty is that you have a built-in referral base,” Rodriguez said. “On the other hand, all the other primary care doctors in the community may not want to refer to you because they are afraid of losing their patients to your partners who are in primary care.”

    According to Rodriguez, multispecialty practices often struggle with income division issues because some specialties are more labor intensive and may not generate as much revenue as other specialties.

    “I have seen situations where there can be some contention over how different specialties in a group practice should share in practice profits,” Rodriguez said.

     

    Employed perks, pearls, and warnings

    There’s no question that choosing employment over private practice is a growing trend in medicine.

    According to the American Hospital Association, hospitals now support one in nine jobs in the United States. The number of physicians and dentists employed full time by community hospitals rose from 62,000 in 1998 to 91,000 in 2010, the association reported in 2012.

    “A decade or more ago, the business model [for hospitals buying practices] was to fill patient beds. But now the business model is to generate downstream ancillary revenues to the hospital,” said Tom Stringer, MD, assistant professor of urology at the University of Florida, Gainesville.

    Employment has its perks and problems. One example: Becoming employed doesn’t mean you’ll have a turnkey operation, experts say. But employment does take some of the burdens of running a practice off physicians’ backs.

    “As a consequence of joining the hospital, we had the capital then to acquire a lithotripter,” Dr. Green said. “CT scanning was of course in place. It gave us the cash flow to go from four urologists at that time and we’ll soon be up to nine, with four advanced providers (three nurse practitioners and one physician assistant). So, we’ve been able to more than double the capacity of the practice.”

    Dr. Green said the employed model for his group practice has offered not only funding to achieve strategic gains, but also job security and access to technology and practice innovations. The electronic medical record system now in place in the practice is integrated to Dr. Green’s primary care base, and the group has access to analytics that allow the group’s urologists to better monitor and report on quality.

    “For us, there has been very little downside. When we were a private group, we were very aligned with the mission and vision of Concord Hospital. We approached the hospital; the hospital didn’t approach us,” Dr. Green said.

    Urologist Arthur Tarantino, MD, was part of a 45-provider multispecialty group, which sold to Hartford HealthCare, a health system in Hartford, CT. As big as his group was, it wasn’t big enough to comfortably navigate Connecticut’s highly contracted payer environment.

    Like Dr. Green, Dr. Tarantino said the move from private to employed physician has been largely positive. He admits to struggling with management layers and less control over day-to-day operations, but Dr. Tarantino said he’s happy with the compensation.

    “Our income has improved,” he said.

    With the changing health care environment, however, come shifts in pay and benefits, he said.

    “The health care system is in the process of creating a foundation because, in our state, that’s the vehicle by which a health system can employ physicians across hospitals. We’re going from a for-profit to a not-for-profit entity. With the for-profit model, you have more flexibility for high wage earners for a variety of pension vehicles, whereas in a not-for-profit system, there are restrictions on that. These are bumps in the road,” Dr. Tarantino said.

     

    Security in question

    Working for a hospital can stabilize your income at a reasonable level for a period of time, according to Rodriguez.

    “Because you’re not an owner—you’re an employee—your salary can be guaranteed for a period of time. If the business does poorly, it doesn’t matter; you get your agreed-upon compensation,” Rodriguez said.

    On the other hand, physicians end up with limited-term (perhaps 2 to 5 years) employment arrangements, which have to be renegotiated at the term’s end.

    Alice G. Gosfield, Esq, of Alice G. Gosfield and Associates, Philadelphia, said many health care experts warn that hospitals are promising physicians more money than they’ll be able to pay them. Why? Among the reasons, she said: Hospitals are looking at across-the-board cuts, no payment for preventable 30-day readmission, no payment for hospital-acquired conditions, and value-based payment modifiers (meaning lower-performing hospitals get less than higher-performing hospitals). In addition, in a quality-driven environment where community-based care better manages chronic diseases, hospitals might lose some of those admissions, according to Gosfield.

    Hospitals, she said, “are standing on a burning platform.”

    Dr. Green said financial security is a big question mark whether urologists are in private practices or are employed.

    “It would be incredibly naive to think that in the future, we are not going to see incomes come down no matter what one’s employment status. There is no money in the federal government, and the public is not going to want to change its consumption, so the only way you’re going to reign in costs is through reduction of payment to providers. So, the question again comes down to the only way you’re going to survive—whether you’re in a large group or are employed by a hospital—is going to be by increasing your efficiency and reducing your costs,” Dr. Green said.

    The key, in Dr. Green’s opinion, will be how urologists manage costs.

    “If you can spread that cost over many providers, you can do more collectively. If you’re a solo doc, you’re going to be in deep trouble. There is just no way that you can keep up with the increased regulation and the demands on information technology. You don’t have the negotiating power,” Dr. Green said.

     

    Learn to work well with others

    The word for success in today’s health care climate: collaboration. Without it, experts say, urologists might as well throw in the specialty’s towel.

    While he no longer owns his practice, Dr. Green said he has maintained autonomy and decision-making power thanks to Concord’s 250-strong provider medical group. Concord Hospital Medical Group includes not only urologists but also general surgeons, plastic surgeons, cardiothoracic surgeons, neurologists, pulmonary intensivists, primary care and internal medicine physicians, and advanced practice providers.

    “All these groups are owned by the hospital, and it so happens that as chief medical officer, I’m accountable for all those groups. As a consequence—as a urologist—I have considerable influence over the big group,” Dr. Green said.

    In fact, being employed doesn’t mean you shouldn’t try to control your fate, Dr. Green said.

    “I think in an employed environment, you will get out of it exactly what you put into it. It doesn’t change the need to be very engaged. It’s just a different form of engagement,” Dr. Green said.

     

    Solo for the brave

    Solo and private practices have undeniable appeal: namely, autonomy.

    Richard Pelman, MD, clinical professor of urology at the University of Washington and president-elect of the American Association of Clinical Urologists, left a urology group practice a year ago to open the solo Northwest Center for Urology and Male Health practice in Bellevue, WA.

    “I have a two-employee office,” Dr. Pelman said. “I don’t think there is any right or wrong [practice environment] if it works for you. The question is of the viability of a solo practitioner in the future and whether this model works. If you rate it by patient experience, solo practice works very well. The practice is thriving.”

    But Dr. Pelman admitted there are hurdles—some he has managed, so far, to run around.

    He’s on a paper chart system because the electronic medical record that he hoped would seamlessly transfer from the group to his solo practice is not portable. Other challenges are that reimbursement models don’t take the true administrative and practice costs into consideration. Even vendors, from medical supply and equipment companies to commercial landlords, base prices on traditional retail rather than medical reimbursement levels.

    Still, Dr. Pelman said there’s hope for private practitioners if they band together and make technology work for them. The AUA and AACU are among organizations working on practice development and practice management software that will help private practices collect much-needed data, he said.

    “For the vast majority of private practice, there hasn’t been a lot of good data capture,” Dr. Pelman said. “Having appropriate data will lay the groundwork for urologists to practice in any setting if they can show value and outcomes, beyond what we currently find in the EMR.”

    Steven Schlossberg, MD, a urologist who has largely transitioned out of a large group practice and into his role as chief medical information officer at Yale University, New Haven, CT, says solo practice is possible, but it’s a niche concept.

    “What I’ve been saying for years to physicians is you either need to get bigger or you need to get smaller. I think if you want to run a boutique practice in a city that can afford it—that will pay for it—I think that’s a viable strategy. I think if you are the only urologist in a town, chances are you could survive but I think it would be pretty hard,” Dr. Schlossberg said.

    Gosfield said before putting out a shingle, urologists need to evaluate what’s going on in their markets and referral bases.

    “If you’re in a rural area where you don’t have a whole lot of competition and the local hospital isn’t going to be able to recruit somebody to come into the community to compete with you, [solo is possible],” she said. “Urologists are highly dependent on insurance payments and will have to be able to organize their practices for efficiency and value, as well as a good patient experience, to continue to garner referrals from others. As referral sources join larger entities, this becomes more difficult, but not impossible. Urologists also ought to consider how they can clinically integrate with like-minded folks in independent practice to learn from each other and improve value and patient experience. If they are truly clinically integrated, then they can bargain together for rates they couldn’t get alone.”

     

    Consolidation: Just look at banking

    The future of medicine might mimic the consolidation of the banking industry, according to Dr. Green.

    “It is a transformational time in urology, as it is for every specialty. In the next 5 to 10 years, the urologic world will look very different than it has historically. The only way you’re going to get the efficiency and cost reduction out of your operation is going to be through size—by merging and consolidating, and eliminating the duplication of backroom functions,” Dr. Green said.

    Rodriguez said while the push for integration may seem all consuming now, it might not take hold. Rather than try to predict the future, urologists should aim to thrive in whatever climate there might be.

    “For any medical practice to survive, no matter what specialty, they have to become more sophisticated,” Rodriguez said. “They have to learn how to run a business and focus on running a business and running a business profitably, and being able to evolve as the marketplace changes.”UT

     

     

    Lisette Hilton
    Lisette Hilton is president of Words Come Alive, based in Boca Raton, Florida.

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