August 1998 Bulletin

Orthopaedists build IPC to protect future

Getting ready for expected MCO consolidation in New Jersey

Paul Hirsch, MD, is not waiting around for the inevitable compression of the managed care market in New Jersey. Dr. Hirsch and his colleagues have built a network of 175 orthopaedic surgeons in 80 practices to position themselves for the expected consolidation of managed care companies that has happened in other states and the deselection of physicians and denial of access to patients that follows.

"We're at the stage (in New Jersey) where managed care is active and fees have been reduced, but not the patient load-not yet," Dr. Hirsch says. But he sees it coming in a year or two, at the most.

In 1995, Dr. Hirsch and a group of orthopaedic surgeons, who had active, successful practices, formed InterMedix Orthopaedic Resource Network. Unlike other networks, InterMedix was not designed to fight managed care or to force insurers to pay higher fees. "We believed that effort was doomed to failure," says Dr. Hirsch, InterMedix president and medical director. "If we were going to be successful, we needed to adopt a business-like attitude to deal with other businesses in a new economic environment."

The directors include practitioners and academics with a broad range of specialties who were located in different areas of the state. They provided the capital, retained actuarial experts to analyze data from the eight practices, used other experts to perform market studies and developed a business plan. The orthopaedists retained MIIX Health Care Group to provide a broad range of management services.

InterMedix was formed as an Independent Physician Corporation (IPC). The physicians maintain their individual offices, but they are legally considered one entity with a single tax identification number. The network can sign a contract on behalf of all the participating physicians. The insurer only issues one check, which the network disburses to the physicians. Patricia A. Costante, executive vice president and COO of InterMIIX, said the IPC structure allows the management company to aggregate the data for utilization review by practice, outcomes and patient satisfaction.

"It's another way to gain the strength to negotiate with managed care organizations and remain independent," Dr. Hirsch says. "Because of the economies of scale we can do things we never could do as single practices" The network checks all the reimbursement claims for accuracy and submits "clean claims" to insurers to obtain prompt payment.

The enterprise has only marginally increased the patient load for the participating practices. "We didn't expect that to happen now," he says. Costante notes that the practices were not lacking patients when InterMedix was formed.

"Our goals relate to a year from now," says Dr. Hirsch. "We are building the infrastructure of the network for the future when there will be fewer managed care organizations and we can show we provide high quality, cost effective care."

The InterMedix strategic plan includes development of additional networks of specialties, Costante says. The diversity will allow InterMedix to target the needs of the insurers. For instance, InterMedix will market orthopaedic surgeons, ophthalmologists and dermatologists to worker's comp carriers because these specialists treat much of the medical problems in worker's comp cases.

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