• Physician Practice Options in the New Health Reform Paradigm
  • December 10, 2010 | Authors: Kathryn M. Darling; Stuart Miller
  • Law Firms: Strasburger & Price, LLP - Austin Office ; Strasburger & Price, LLP - Houston Office
  • Physicians have many options when it comes to the way they practice medicine.  The dialog about practice arrangements has come to the forefront since March 23, 2010, when the Patient Protection and Accountable Care Act (PPACA) was signed into law.  PPACA changes many of the ways health care is provided and paid for.  The examples of changes for physicians in PPACA are legion, but they include: (a) changed payment methodologies from RVUs for services provided to value-based purchasing, which will vary depending on whether best practices were followed, whether patients are satisfied with their care, and whether specified outcomes are achieved; (b) distribution of shared savings from the Medicare program, which will require that physicians either form an accountable care organization (ACO) or affiliate with an ACO in order to participate in the savings of fee-for-service dollars paid by Medicare; and (c) wider abilities to participate in clinically integrated delivery systems (IDS), which are intended to foster improved quality of care, reduce the costs of the care provided, and financially incentivize the participants to maintain high quality at lower costs.   Many physicians across the nation, and certainly those in Texas, are exploring and weighing their options in this process to determine what option will best fit their practice.

    In a great many cases, the most financially and clinically beneficial answer for physicians may be to organize into clinically integrated groups that will then be eligible to qualify as a Medicare-certified ACO.  The advantage of this option is that the physicians who provide the care are the people who are also in control of creating the clinical environment, determining the best ways to create savings without denying or diluting care, and determining the methods by which reimbursement and shared-cost savings are distributed.  This model could be implemented in any number of ways and can include primary care physicians, specialists, mid-level providers, ancillary services, and any combination of the above, plus any combination of other providers.  For example, with a medical home constituency, there may be community service providers who are part of the delivery model.

    Physicians will have many options in the coming months and years.  There is, however, a move afoot within the hospital community nationally to buy-up physician practices with the result that the physician is an employee of either the hospital, in states that do not have a corporate practice of medicine prohibition, or the employee of a hospital affiliate, in states such as Texas that do have the corporate practice prohibition.  Many physicians are wary of this type of arrangement for a number of reasons: (a) loss of control of the business portion of their practice; (b) a perception that their treatment options may be limited to those offered by the hospital; (c) the effect of non-compete provisions; (d) the limitation on reimbursement to a salary with perhaps the opportunity for bonuses instead of the distributions otherwise available to an owner of a practice.  For some physicians, though, employee status with no responsibility for the business side of practice is attractive.  For those physicians, affiliation with a hospital or hospital affiliate is a viable choice.  This was the impetus for the discussion published in last week’s HIO.

    The other unknown in Texas is the future of the corporate practice of medicine prohibition.  Rumors have been rampant on both sides of this issue for at least 20 years, and in the last two legislative sessions, bills were introduced to modify or abolish the corporate practice prohibition with little success.  The issue will likely be raised again during the 2011 legislative session.  This is a hotly contested issue with strong advocates on both sides.  As the outcome is far from sure, either way, a physician assessing his or her options should be comfortable that he or she has made the best decision for his or her practice, regardless of the fate of the prohibition.

    Each individual physician (and his or her practice) is unique.  Therefore, no one answer will be correct for all physicians. As a firm, we have been encouraging physicians to do their due diligence and carefully consider their options based on their unique practice needs.