When picking your mates, consider an IPA
The merger mania pervading the health care industry shows no signs of letting up. Just as hospitals are merging to create citywide health care systems and HMOs are joining forces to create mega-carriers, savvy physician practices are looking for ways to become part of larger organizations to create competitive advantages and greater economies of scale.
Nonetheless, many physicians still are loath to sacrifice their autonomy and control over their practices by selling them to hospitals or physician practice management companies, and instead prefer to participate in an independent practice association (IPA).
The overarching question for a physician to consider when evaluating different IPAs is: "How much market clout does the IPA have?" This and the adjoining column in this issue of Physician's Managed Care Report will consider these issues in an effort to give physicians a thoughtful approach to choosing an IPA that meets their needs.
An IPA's appropriateness for your practice can be dependent on many different factors. Ask yourself these questions:
· What is the IPA's mission?
· What kind of capital does the IPA have access to?
· What kind of infrastructure (staff and information management systems) does the IPA provide?
· Is it a multispecialty or single-specialty IPA?
· What is its geographic coverage?
There are several rules of thumb I consider absolutely essential for a physician pondering a contract with an IPA:
1. Avoid managed care-averse IPAs.
Managed care, in one form or another, is here to stay. Therefore, if the IPA that you as a physician are considering joining has formed to "fight" managed care, I would recommend staying clear of it. The physician who plans to practice for more than just a few more years needs to align with an IPA that can represent the physician in negotiating with managed care organizations, hospitals, and even other physician groups.
What does the mission statement say?
Ask the executive director or president of the IPA if the IPA has a published mission statement. If it does, get it and read it. If it does not, the physician should chat with his or her colleagues in the hospital hallways to discern what the IPA is all about. Seek an IPA whose mission statement embodies the unified representation of physicians to acquire and manage managed care contracts.
2. While single-specialty IPAs are good options, they don't hold all the answers and in some cases give rise to antitrust implications.
Single-specialty IPAs are most often developed to acquire and manage single-specialty carveouts from HMOs. These single-specialty IPAs acquire a capitated contract from an HMO and pay the individual physicians on a capitated or fee-for-service basis. Single-specialty IPAs can help a physician practicing solo or in a small practice to gain a larger market share in managed care patients, and often can get a higher reimbursement level than the physician could negotiate on his or her own.
Consider safe harbor parameters
Be wary of the antitrust implications, however. The Office of the Inspector General currently provides a safe harbor to IPAs that negotiate on an exclusive basis for their physicians if they represent less than 20% of the specialists in a single specialty in the geographic area and are seeking risk contracts.
While a single-specialty IPA can be successful in securing a specialty-specific carveout from an HMO, that contract may be overridden by a contract that the HMO executes with a large multispecialty IPA or group for full risk. In other words, if the HMO transfers risk to a large physician organization, that risk usually is either full professional risk or global risk.
Full professional risk means the group is responsible for all the professional services required by patients and receives a percentage of the premium from the HMO for that care. Global risk, on the other hand, requires an organization to take risk for all care that a patient may need, including hospital and ancillary services.
3. Determine if your market is dominated by multispecialty IPAs rather than single-specialty IPAs, and choose sides accordingly.
The goal of most multispecialty IPAs is to acquire and manage as much risk as possible. If they are successful, then it is the multispecialty IPA or group that decides what specialists to use and not the HMO. Therefore, look to see what kind of groups are successful in your market. Some markets have a predominance of single-specialty IPAs, and very few multispecialty IPAs in those markets are taking full risk. In these markets, your best bet probably would be to join a single-specialty IPA. In those markets where organizations are successful in acquiring full professional or global risk contracts, then they may be a safer bet for you.
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