A new practice routine
For cardiologist Matt Phillips and his practice partners, what they could accomplish on their own wasn’t enough. Six years ago, Phillips became president of Austin (Texas) Heart, which has 47 cardiologists and 25 physician extenders. They practice in 14 hospitals that are part of eight systems across a 16,000-squaremile chunk of central Texas.
“We met and wanted to be standard-setters in quality,” Phillips says. “It’s not so easy to achieve that vision.” The physicians started building the administrative and clinical infra- structure to make their vision a reality. They started a research department, hired a fulltime quality-assurance nurse and learned some business practices from Dallas-based Southwest Airlines.
Austin Heart’s physicians engage in an intensive peer review of each others’ work, Phillips says. Austin Heart has an electronic health record, but now the physicians want an even better system, he says. Its physicians spend 6% of their time maintaining and improving this infrastructure—time not spent seeing patients, Phillips says.
Two years ago, Phillips says, the physicians decided that, “If we were really going to set the standard, we were going to need more resources than we had.” So Austin Heart started a two-year process that ended with the sale of the practice to St. David’s HealthCare in Austin, effective Dec. 31, 2009. St. David’s is a six-hospital joint venture that brings together for-profit HCA with two not-for-profit partners—St. David’s Foundation and Georgetown (Texas) Healthcare System.
Austin Heart is but one example of the trend of physicians throwing in their lot with hospitals. A survey last fall by the American College of Cardiology, as well as surveys by the Medical Group Management Association, indicates the strength of this trend.
Among cardiologists in private practice, 38.1% said they will respond to a recent CMS fee-schedule ruling by pursuing integration with a hospital system. Only 33% expect to remain in private practice without a merger into some other organization, whether a hospital or other physician practice, according to the survey of 801 cardiologists conducted between Oct. 31 and Nov. 17, 2009.
Meanwhile, among respondents to the MGMA’s annual Physician Compensation and Production Survey, hospital-owned group practices have grown from 25.6% in 2005 to 49.5% in 2008. In that latter year, hospitalowned practices exceeded physicianowned group practices for the first time, according to the MGMA.
The prospect of bundled payments and penalties for readmission of patients provides a carrot-andstick set to bring hospitals and physicians together, says Dave Johnson, a senior managing director for Ziegler, a consultancy. “If suddenly outcomes matter and consistency matters, then care coordination becomes a bigger part of the picture, and neither hospitals nor physicians can do that alone,” Johnson says.
While healthcare reform has stalled in Washington, physicians see the regulatory pressure that could come to bear on physician-owned facilities, Johnson says. They already have faced lower reimbursements for their outpatient surgery centers compared with hospital-based surgery centers.
John Deane, CEO of Southwind, a Nashvillebased physician practice management consultancy that is now a division of the Advisory Board Co., says the well-reported changes in the expectations that today’s medical school gradu-
Johnson: Policy proposals bring docs, hospitals together.