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Saturday, February 06, 1999

Physicians Urged to "Take Back Medicine"

In most battle plans, you want to have a two-step approach of divide and conquer. "But in the case of the war against physicians, you can skip step one since they are already divided," quipped Lanny L. Johnson, MD, of Okemos, Mich.

Speaking with almost evangelical zeal, Dr. Johnson urged physicians to overcome their tendency to remain fragmented. In an Instructional Course entitled "Taking Medicine Back: Organizational Initiatives," held Thursday afternoon, Dr. Johnson proposed the remedy for what ails physicians beleaguered by battles with managed care and third party payers.

The first step for regaining control of the practice of medicine, said Dr. Johnson, is for physicians to "come together." Only by acting in concert can they hope to maintain independence and avoid being relegated to labor with managed care sitting in the drivers' seat.

Left unchallenged, Dr. Johnson maintained, the present market place dynamics will result in increasing responsibility and decreasing income and authority for orthopaedic surgeons.

The early and mid 1990s saw the proliferation of privately owned and publicly traded physician practice management companies (PPMCs). But the often-required 40-year commitments and high management fees, coupled with the recent demise of several high profile multispeciality PPMCs point out danger signs for doctors. Other solutions may serve their needs better, Dr. Johnson said.

To illustrate some of the options open to physicians, Dr. Johnson invited several colleagues as panelists for the course, each representing a different avenue of how to form a physician group.

John K. aaosway, MD, of Phoenix, Ariz., president of Orthopedic Surgeons Network of Arizona, Inc. (OSNA) described the organization as an "independent practice corporation," or IPC. Using a single tax ID number, the IPC acts as an umbrella organization for its members. Founded in 1994 with 18 initial providers, OSNA now boasts 65 providers and is 100 percent physician-owned, with rates of reimbursement at "126 percent of Medicare," according to Dr. aaosway.

The organization uses a third party administrator (TPA) as receptors of data for their group, but the physicians analyze their own data. Dr. aaosway credits his group's success to business acumen and to scrupulous attention to utilization data. Because of their QA infrastructure, for instance, OSNA obtained a 7 percent reduction in malpractice insurance premiums. In answer to a question from the audience as to any downsides of this arrangement, Dr. aaosway conceded that the road to an IPC entails hard work. He is compensated as president, but the members of the boards serve three-year terms without pay.

Naresh Nagpal, MD, Boca Raton, Fla., shared some lessons learned from his affiliation with a now-bankrupt PPMC. He summarized the elements of a successful physician company: commitment to investment in their information systems technology; an emphasis on marketing; bringing ancillary revenue in-house; and an infrastructure for governance.

Gerald L. Wilks, MD, president and chairman of the Board, Physicians Care of California, Irvine, Calif., touted his and his colleagues' solution to the squeeze of managed care: become a physician-owned insurer. "Right now, there's a 500-pound canary sitting between you and your patient. That's the payer," he said. Physicians must become proactive and eliminate the middle man. Physicians Care, dubbed a "high class PPO" by Dr. Wilks, has no gatekeepers (a "phony wedge" invented by insurers); is physician-owned and controlled; operates on the principle of one-man, one-vote; and, as a multispeciality group, has no specialty versus primary care issues (another "phony wedge"). The balance of Dr. Wilks' talk was devoted to the nuts and bolts of setting up their company, such as initially renting their insurance license and bringing all claims processing in-house.

Dr. Johnson concluded the program with a series of messages for his audience:

  1. Remember that "ammunition is data, and most doctors don't have any." The equity and value in your company are in information systems.
  2. If you don't educate yourself about business management, you will not be practicing medicine as you like to.
  3. There are no overnight successes; doctors must reinvest in their companies and their alliances in order to have the staying power necessary to survive in this marketplace.

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Last modified 06/February/1999