The Future Growth of ASCs – The Model of Tomorrow: Physician Employment
In part two of our series on the Future Growth of ASCs, we delve the increasingly popular physician employment model and how it compares to the standard ASC model of ownership.
Alejandro Fernandez, CEO of Gastro Health, PL, and Dr. Michael Rimlawi, Director at The Minimally Invasive Spine Institute, explain what exactly the physician recruitment model is and the benefits it can lend to an ASC and the community wherein it operates.
The Physician Recruitment Model
When it comes to the standard ASC model, there is one major difference that comes into play when comparing to the physician employment model, according to Fernandez.
“The ASC cannot own the practice, that’s really what it boils down to,” he explains. “An ASC is a facility, so it cannot own a physician. On the other hand, the practice and the physicians in the practice can acquire a physician and still have ownership stakes. It’s a completely different model.”
For practices that have multiple services under one roof, as in the case of Gastro Health, community demand can become high. Bringing in more physicians using the physician recruitment model can provide benefits not realized under previous models.
“You get better physician retention that way,” notes Rimlawi. “Physicians can really do what they please, and as an owner of an ASC you really don’t know what they are doing. When they are employed by you as well, you know everything they are doing.”
The legal structure of this model remains the same as the standard model. The questions that arise as a result of this involve figuring out what to do with the physician owners of an ASC that aren’t partners in the physician practice. You have to find ways to share in the efficiencies of owning an ASC when you’re not an owner in the physician practice itself.
Regardless, by implementing the physician employment model you avoid one of the more prominent problems associated with the standard ASC model, that of loyalty from physicians.
“There always seems to just be short term success with the standard model and there always seems to be failure after awhile,” Rimlawi said. “The reason is that there always seems to be a few bad apples, some physicians that have multiple investments in different surgery centers or have different deals with hospitals so they stop bringing their surgeries to the centers. Thus, the whole thing self-implodes.”
Who and Why?
One of the main goals that everyone is reaching for is efficiency. This comes as a result of continually decreasing reimbursement rates and increasing patient cost responsibility. That being said, physicians are looking more to becoming part of group practices via the physician employment model.
“The main reason physicians are attracted to this is that the market is fragmented,” Fernandez said. “There are a lot of solo doctors that have to figure out how to generate revenue, do all the quality measures, participate in government programs, etc. But when they go ahead and participate in a group practice like ours, we have higher reimbursement, we have all the tools, they are able to offer the patient a streamline practice in regards to quality care all under one roof.”
According to Rimlawi, there are some specialties that could work better within this model and result in a higher return.
“It can work in almost any specialty, but if you’re looking at ASC profitability, you’d want to look at what specialties will be most profitable,” he said. “For example, if you get a dermatologist, that’s not going to help you. You want to look at spine, orthopedics, pain management, bariatric. After that, I’d look at ENT, urology, general surgery, etc.”
Those physicians who are highly respected in the community who have ownership in an ASC are a good fit. The purpose of acquiring physicians, according to Fernandez, shouldn’t just be for growth. There are many other factors that should be taken into consideration when implementing this model, such as board certification, personality, referrals from physicians, etc.
“We are looking for successful and high quality physicians that are looking to simplify their lives, generate more revenue and have a better lifestyle,” he said. “We don’t want to recruit everyone; we want the best and market segmentation. There will always be payers that want to reimburse based on the lowest rates. We want the best physicians in order to provide value and generate the highest rates from payers and keep operational cost low.”
In order to best make this model work from a logistic perspective, Rimlawi recommends first forming a Professional Association (PA) to hire physicians under.
“It’s a separate entity from the ASC,” he explains. “You can get a recruiter to help you or look at residency programs and hire directly from there. If you are able to find a physician that is in the area that already has patients, that’s better yet. If they don’t want the management and you can offer them a salary with a bonus structure, then you can bring them in house.”
Seeking out a partner entity to purchase practices and ASCs is also an approach being taken by owners. For example, Gastro Health engages in such deals regularly.
“I don’t see ASCs buying practices,” said Fernandez. “It’s the other way around. I feel that group practices especially ours will look to buy physician practices and the ASC as a bundle. If I’m looking to acquire a practice, I’m looking for the practice and their ASC, and the anesthesia, and the pathology and all those things are all together but they’re separate orientations. In the future due to bundling of services, it will make sense that the ownership of an ASC and of the physician practice is combined.”
The physicians who opt into this arrangement, notes Fernandez, also aren’t necessarily those whose business is booming under their current situation.
“It’s more the physician in that dire need,” he said. “If their practice is successful and they are making lots of money, they wouldn’t be coming to us. Physician practices nationwide are being acquired on a regular basis.”
The last and final benefit, as should be in all things medical related, goes to the patient. Any model that can contribute to the best possible care for the patient who is becoming increasingly burdened with cost responsibility is worth consideration.
“Primarily, because we live in the outpatient world and we are not quite at the hospital rate, for patients the greater customer service is important,” Fernandez said. “Quality care from physicians and ASCs that are totally certified and participate in quality benchmarks, and finally lower costs for the patients, for the payer, are benefits. It’s just a better overall experience for the patient.”
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