Under the new structure, the group will share administrative, technology and marketing costs, as well as reimbursement contracts with insurers and employee benefit plans. But the practices will continue to operate as individual business units managed by their physicians, who now share ownership in the umbrella corporation, too.
It is the culmination of talks that began two years ago, according to Louis Levitt, one of the physicians in the group, who will serve as the organization’s secretary and treasurer. At the time, large health-care systems in the area were racing to buy up hospitals and primary-care practices in the region, and he said many of the orthopedists he spoke to did not want to be acquired but were finding it harder to survive on their own.
“Over the course of a weekend, really, a group of us started talking, and within two weeks, we had more than a hundred doctors that wanted to be included,” said Levitt, a partner at Orthopaedic Medicine and Surgery in Washington.
“All of us wanted to maintain private practice as we knew it, because we wanted that personal interaction with our patients and to maintain our quality of care, but saw an opportunity to work together,” he said.
The move comes as independent physicians across the country migrate toward employment at hospitals or large health-care systems. Since 2000, the percentage of doctors who run their own practice has dropped from 57 percent to 39 percent, according to research by Accenture, while a study by the Medical Group Management Association shows that hospital employment jumped 75 percent over the same period.
It is a shift fueled in part by rising malpractice rates, declining reimbursement from insurers and a surge in the average debt for medical students, the latter of which has pushed many young physicians to seek stable, reliable salaries at hospitals.
The migration has been accelerated, some say, by new rules in the federal health-care law, including requirements that physicians implement new technology such as electronic medical record systems. In addition, the statute includes incentives for health-care providers that focus on improving the well-being of large populations of patients and evaluate the outcomes of treatments and procedures — both of which call for investments in advanced technology to track and analyze data over long periods of time.
Such investments are often too expensive for most individual practices to afford.
Denny Tritinger, executive director for the new orthopedic group, said physicians in the area had mulled the concept of a large consortium for years but that the implementation of the health-care law was “the critical factor that made doctors look at the way they were doing business and realize they had to find new ways to cut costs.”
It’s already working, too. Levitt noted that the board recently inked a medical malpractice contract for the entire group that saves the physicians an average of 30 percent, and the cost of medical supplies dropped about 20 percent. In addition, the groups have signed agreements with every major insurance company in the region.
“There was a time when I would pick up the phone and no one would call me back from Blue Cross Blue Shield,” Levitt said. “It’s funny, now that we have 130 doctors together, when I call them up, I’m talking to vice presidents.”
Still, merging different practices with different programs and procedures isn’t without its challenges. Among the 25 practices, the physicians currently use 18 different electronic medical record programs. During the next two years, the corporation’s board, which includes one representative from each of the practices, plans to choose a single program and integrate every doctor’s charts into that system.
In addition, in order to operate as a joint health-care provider, the group had to implement a single computer program that serves as a clearinghouse for every billing statement sent out to insurers. While it has completed that step, Levitt said the group would eventually like to further streamline its procedures by requiring every practice within the organization to use a single billing company.
“If we consolidate our billing, I bet we can save another 20 or 30 percent,” he said.
The advantages of banding together are not solely financial, the group said.
Doctors in the new company are already putting their heads together to determine the best treatments and procedures for some of the most common injuries and ailments, such as tennis elbow or back pain — an effort aimed at establishing consistent, effective approaches that can be adopted by physicians across the organization.
In addition, by making doctors with different backgrounds and expertise available to the entire group, Levitt said the team is better prepared to help patients. For example, Levitt explained, one of the group’s physicians may face an unusual case, and he or she can send out a message to the group asking if other doctors have experience with it.
“We have already seen it, where immediately, five or six of them will log on say they have done this before and offer to consult,” he said. “It’s extraordinary to see that type of cooperation among physicians who were once fairly competitive with one another.”
Capital Business is The Post’s weekly publication focusing on the region’s business community.