Delivering Physician Services: the Good, the Bad and the Ugly!

1. Delivering Physician Services: the Good, the Bad and the Ugly! Source: https://www.hermesdb.net October 2007 to September 2008 data, updated 01/08/2009 ALL OB Services excluded

2. Trend in Hospital Physician Employment • 2009 first year in which more graduating physicians entered practice as an employed vs. independent. • Studies show large decrease in independent and two-physician practices from 1996 to 2007. • Nearly 70% of rural hospitals surveyed were currently recruiting physicians for employment. Nearly 40% suggested that the only way to bring a physician to the local market was to employ.

3. Our experience from the 90’s • Hospital employment drivers in the 90’s: • Rural rationale- Initial push to utlize cost-based reimbursed rural health clinics transferring risk of physician employment to federal government. • Urban rationale- Attempt by hospital systems to control and expand their market share. Vertical and horizontal integration in response to “managed care” threat. • Typical losses in excess of $100k per year per physician due to large salaries and bonuses not supported by productivity.

4. Why this time is different • Physician Drivers • Reimbursement- Decreasing for commercial payers; stagnant with governmental with prospects for large decreases. • Curbing ancillary revenue/expansion of Stark Law limitations. • Rising practice expenses- Practice costs up 4-5% per year while reimbursement increasing only .5% per year. • Higher expectations for EMR without financial or personnel resources to implement.

5. Why this time is different (con’t) • Hospital Drivers • Keep up with demand. No shortage of patients, just shortage of reimbursement. • Desire to have physicians with invested interest in financial performance of hospital. • Need for more specialists in local markets. • Desire to improve ability to control quality/cost control. • Average loss per physician has dropped from approximately $100k per year to roughly $30k per year.

6. Best Practices: Insurance and Risk Management HTH Survey Results: Hospitals employing physicians • How many are employing physicians? • 88% currently employ physicians. Of those hospitals… 88% employ 1-5 physicians, 12% employ 11 or more • 78% plan to hire new physicians in the next 18 months 57% in primary care, 42% both primary care & specialists Information provided by Potter Holden & Company

7. The Decision Source: https://www.hermesdb.net October 2007 to September 2008 data, updated 01/08/2009 ALL OB Services excluded

8. Bad Practices: • Hiring as knee jerk reaction or to bail out. • Hiring when not justified by outmigration. • Hiring when only bad payer mix subject to shift. • Hiring based on gut feelings (without proforma). • Hiring with financial guarantee without mechanism to promote proper set up and maximization of volume and reimbursement. • Hiring under hospital TIN. • Hiring physician with “issues.”

9. Best Practices:Do Your Homework! • Review market share analyses: • HERMES data • Outmigration by payer by specialty • Lost cases with financial impact • Develop proforma • Use market share • Identify specialized equipment, office space, staffing needs • Project both hospital and physician impact • Review licensure and determine any “issues.” • Behavioral issues (drugs, alcohol, etc) • Malpractice history

10. Best Practices:Legal Set-Up • Determine correct legal structure • Separate physician group TIN (make TIN decision and stick with it – avoid changes!) • All physicians under one (non-hospital) TIN • Determine operational and financial structure: Practice or RHC?

11. Benefits of a Practice • Easy to establish. • Concept easily understood by public and patients. • Does require enrollment and contracting with health plans. • No requirement to staff with NP, PA.

12. Benefits of an RHC • Possible Increased Reimbursement • Medicare visits are reimbursed based on allowable costs • Medicaid visits are reimbursed under the cost-based method • Insulations against Medicare and Medicaid rate cuts. Since reimbursed based upon costs the RHC is unaffected by the proposed Medicare or Medicaid rate cuts. • Potential Cost Savings on Utilization • RHCs may see improved patient flow through the utilization of NPs, PAs and CNMs, as well as more efficient clinic operations. The clinic must be staffed at least 50% of the time with a midlevel practitioner.

13. Be Clear… • It is a very lengthy process – up to 12 months or more! • An action plan is necessary for successful establishment or conversion. • Any changes to application will either delay the approval process or cause the application process to be restarted (i.e change of address, name change, etc) • RHC designation does not improve Commercial reimbursement. • CMO contracting must be included in the process to ensure appropriate amendments are obtained. • Billing processes must coordinate with conversion activities. • It will be a frustrating process! (but often worthwhile in $$s)

14. The Preparation

15. Bad Practices: • Insufficient lead time for enrollment and office set up. • Failure to assist in practice set up. • Provider enrollment • Office start-up • Billing • Training • Establishing too much like hospital operationally. • Attempting to incorporate into hospital business office. • Adjusting corporate structure in middle of process (changing TINs, adding addresses).

16. Best Practices:Provider Enrollment • Start early (very early)! • Determine participation strategy. • Identify staff member responsible. • Set up physician credentialing file. • Establish appropriate NPI numbers. • Establish CAQH. • Enroll electronically in Medicare and Medicaid. • Enroll in EDI/EFT. • Keep copies of everything (applications and approval letters, etc) • Follow up, follow up, follow up

17. Best Practices:Contracting • Apply contracting strategy to your physician entities. • Contract as HEALTH SYSTEM! • Obtain PHO or Group contracts whenever possible. • Negotiate language and reimbursement. • Watch for operational implications. • Only Hospital CEO or CFO signs group contracts. • Train physician and office staff NOT to sign anything; send to you.

18. Provider Credentialing: A Technology Solution Providing IT Solutions for the Healthcare Community Steve Cherry CPHIMS President (615) 424 2489 scherry@ionitgroup.com www.ionitgroup.com

19. Provider Credentialing Technology Ion IT Group’s PrivilegePortal application is designed to help providers of all sizes meet their Credentialing requirements. PrivilegePortal is a comprehensive Provider Credentialing solution that provides immediate access to credentialing data from a single, user friendly source. PrivilegePortal is a single solution for credentialing of physicians, allied health and other staff/providers.

20. Provider Credentialing Technology • Advantages of utilizing technology for credentialing process: • Filing cabinet becomes electronic • Automatic backup of data • Expiration reminders • File can be shared by multiple users at once • Reduce lost documentation • Automatic completion of verification letters, forms • Consistent data for all providers • Ease of reporting

21. Provider Credentialing Technology • PrivilegePortal allows on line entry of necessary data: • Demographics • Insurance • Offices • License • Expiration Dates • CME Tracking • National DB Links • Document Scanning/Storage • Application/Reappointment Information • Education • References

22. Provider Credentialing Technology • PrivilegePortal features include: • On line application process • Expiration worklist • Automated reappointment alerts • Verification letters populated with entered data • Import and storage of scanned/email/fax documents • Email reminders of expiring data • Auto population of CMS-855 • Provider and Procedure view only search

23. Provider Credentialing Technology • PrivilegePortal is easy to maintain: • Client defined master files • Starter set of master files included • Add to master files ‘on the fly’ • Dropdown boxes utilized • Screen edits for required information • Web based application hosted by Ion IT Group • All updates loaded by Ion IT Group staff • Software, hosting, support and upgrades for one fee • Integration with Microsoft Office applications

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30. Mike Scribner Strategic Healthcare Partners Helen Williams, CPC Precision Practice Management Steve Cherry Ion IT Group