Hospital Buyouts of Physician Practices

January 30th, 2015 - Dorothy Steed

           

The last several years have seen a rapid increase of hospital acquisitions of physician practices.  Rather lucrative offers have been made to physicians as hospitals compete for market share and patient loyalty.  Included in such offers are regular work schedules, salary plus incentives and absorption of malpractice premiums.  For the physicians who have become weary of business administration responsibilities and those who desire more personal and family time, the offers can be very tempting.  However, they do have diminished independence. 

Audits and investigations are on the rise. These may be initiated in a variety of ways and for a number of reasons, but some of the more common initiators are payers, state health boards, by whistleblowers, and by patients.  Each case has its own components, but the underlying reason is generally money.  Through sophisticated software, payers are able to profile the billing patterns of providers, and generally flag providers that exhibit unusual and suspicious billing that stands out against the patterns that are exhibited by their peers.  When the software has detected the outlier patterns, the billing is tracked over a period of time to confirm that a pattern truly exists, rather than an isolated case.  State health boards will initiate, often as a result of patient complaint.  Whistleblowers are generally current or former employees who have knowledge of unethical charging and billing.  Patients may contact payers when they believe they have been charged for services not rendered, or involving what they deem to be excessive and/or extreme charges.  When the independent practice comes under scrutiny and must pay back significant sums of money, and in some cases, additional monetary penalties, it may lead to financial jeopardy of the practice and significant change, including possible sell to a hospital system; a very strong reason for hiring quality staff and ongoing education.  This is an area that is frequently lacking in small practices. 

As physicians become hospital employees, they may serve in a number of capacities.  Common situations include staffing hospital clinics, serving as hospitalists, or simply maintaining the status quo with ownership and oversight by the hospital rather than a privately owned practice.  Regardless of the structure, the ownership by a hospital creates shared liability, and the hospital must address this exposure.  As for the billing/coding staff, one must be mindful that hospital functions are significantly different, requiring different proficiencies.  Without training in these areas, one cannot assume guarantee of being offered a position. 

 

A proactive system will establish internal and ongoing review of clinical documentation accuracy and billing practices by their employed physicians, for example, a comprehensive review of all new physicians, plus quarterly review of a certain number of records per physician, with education provided.  Any areas that are considered to place the hospital at risk for investigation may be addressed individually, as deemed necessary. 

Recent healthcare delivery structures, such as Accountable Care Organizations and Patient Centered Medical Homes have created a need for integration and alignment of the private physician and the large healthcare system.  Of particular interest is the acquisition of primary care physicians, although certain specialties may also be attractive candidates, such as oncology & cardiology.    

Frequently, there are differing philosophies and both parties must strive to reach cohesiveness to delivery optimal patient outcomes.  Healthcare consumers today are better informed, demand greater transparency and are quick to seek other providers if their experience is less than ideal.   A successful partnership offers the patient greater satisfaction and improved outcomes; a win-win for all parties. 

Dorothy D. Steed, CCS, CDIP, CPC-H, CPCO, CPUM, CPUR, CPHM, CPMA, ACS-OP,

CCS-P, RCC, RMC, CEMC, CPC-I, CFPC, PCS, FCS, CPAR

 

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