During this session, Partner Jerry Sokol moderated a panel in which top CEOs shared their insights on capitalizing on opportunities and overcoming obstacles in the current environment. They discussed the transition to value-based care, the No Surprises Act (NSA), physician alignment and the future of the physician practice management (PPM) deal landscape, among other topics.
Session panelists included:
Bob LaGalia, President & CEO, Unified Women’s Healthcare
James Swift, MD, CEO, Pediatrix Medical Group, Inc.
At this time, industry players are focused on building capabilities to ensure they are ready for the transition to value-based care. Changes to payment programs may take a long time, but using this time to prepare and focus on adding value can help with long-term success.
One of the biggest challenges platforms face when adopting value-based care models is physician engagement. Strategies for enhancing engagement include aligning economic incentives (while protecting physicians from risk) and investing in the right technology infrastructure and tools to support value-based care delivery.
Data aggregation and actuarial analysis are critical to success in a value-based environment. Providers and platforms need to understand the historical costs, treatment patterns, and other characteristics of their patient population and carefully assess the financial implications of a value-based care arrangement before making the jump.
Payors are not always ready for value-based care, even when platforms and providers initiate outreach. Payor readiness may depend on the provider’s specialty area. For example, payors may have a more difficult time creating programs for specialties that cover lifelong chronic diseases. This presents an opportunity for providers to work with payors to design new value-based programs that facilitate the right incentives.
Challenges for Hospital-Based PPMs.
The implementation of the NSA—particularly the independent dispute resolution (IDR) process—has been an enormous challenge. PPMs are beginning to see plans and issuers move away from the IDR process and toward negotiated resolutions and in-network agreements. In the meantime, the IDR process and other provisions of the NSA continue to cause significant industry disruption.
Proper physician alignment is paramount to the success of any PPM company. Successful PPM companies (1) build credibility and trust with providers; (2) develop the proper incentives for physicians to capture growth through productivity, including a good compensation program and equity ownership in the parent company so that successes and challenges are shared; and (3) prioritize transparency, including shared data and physician involvement in governance and the decision-making process.
When incentives align, physicians can contribute in significant ways to the success of their enterprises, including by recruiting physicians, identifying acquisition targets and working collaboratively to solve problems as they arise. Executive teams and investors can be significant resources for allowing physicians to succeed in this ever-changing environment that is increasingly difficult for independent practices to navigate. However, for the industry to succeed in navigating changes and challenges, physicians need to be at the center of decision-making and innovation.
Transactional Activity: Build vs. Buy.
While transactional activity will continue in 2022 and beyond, PPMs are taking a more disciplined approach to ensure that acquisition targets will fill gaps or otherwise add value and be the right cultural fit to join their enterprises.
PPMs who have achieved scale are also shifting their primary focus to organic growth by expanding through de novo practices, provider hiring and smaller tuck-in acquisitions.
Long-Term Future of the PPM Industry.
PPM is here to stay. As the industry continues to evolve and market pressures change, there is a significant advantage to having the scale provided by PPMs, which allows providers to improve care, manage the cost of regulatory burdens, and drive efficiencies.
PPM leaders anticipate that an additional wave of consolidation is coming. Large platforms will need to lead the way through investment in technology and appropriate skill set balances to help the industry adapt to the changing dynamics, including the scarcity of physicians.
Succeeding in the future will require an increased focus on physicians and other clinicians. Certain PPMs are moving in on advanced practice providers and working to have sufficient physicians in the pipeline.