IPA affiliation may be the answer to your problems
By Reed Tinsley, CPA
No matter what the maturity level of managed care is in your market, its impact is unquestionable. Many practices are faced with the one-two punch of increased administrative expenses to handle the increased paperwork that managed care contracts bring, coupled with reimbursement cuts from managed care organizations (MCOs).
The smart providers are looking for ways to gain leverage over managed care while at the same time attempting to ease the impact managed care has had on their practices. This is especially true for smaller medical practices.
The vehicle to drive through managed care
The immediate answer may lie in the development of what is known as an independent practice association (IPA). Many providers around the country have found the IPA format is a vehicle that can successfully negotiate managed care contracts and even increase a practice's net income. (For another option, see story on management services organizations, p. 79.)
The following is a brief explanation of how any physician practice can benefit from developing, or participating in, an independent practice association.
1. Managed care contracting.
An IPA, if structured properly, can negotiate favorable rates and contract terms with PPOs, HMOs, and other third party payers. In other words, it can put you in a "position" to negotiate rather than in a position of accepting what a managed care plan wants to pay you. The IPA can also identify potential contracting opportunities, generally with HMOs. It is a vehicle to market yourself as a group to managed care. On a "per-doctor" basis, these types of activities are extremely cost-effective rather than doing the same thing by yourself.
2. Utilization management and quality assurance.
The real winners in the managed care game are those that have the data to prove they are the most cost effective physicians in the service area. These are the doctors that will eventually get the best pay for the services they render. As such, an IPA can develop and implement quality assurance, utilization management, and outcomes study programs for its doctors.
3. Overhead reduction.
Doctors within an IPA have group purchasing power and should use this leverage to reduce the operating costs of each participating provider. (For another way of gaining purchasing leverage, see story on group purchasing organizations, below.)
Forming an IPA is relatively simple. Properly implementing its goals and objectives is not. Doctors must realize the industry landscape is changing rapidly. They must develop a strategy, both short and long term, to confront these changes and address their many issues. In other words, the proactive practices are most likely going to be the winners. Developing, creating, or affiliating with, an independent practice association just might be a good first step for your own practice.
(Editor's Note: Reed Tinsley is a CPA with the Horne CPA Group in Houston. Tinsley is an endorsed consultant of the Texas Medical Association, American Medical Association's Doctor Advisory Network, Illinois Medical Society, the Society of Plastic Surgeons, and the American Academy of Ophthalmology., and is a member of the Practice Marketing and Management editorial advisory board.
He is the author of two books, Medical Practice Management Handbook for CPA and Medical Practice Management: A Strategic Operations and Contracting Guide For Physicians and Managers, both published by Harcourt Brace.)
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