In the years following the adoption of the Affordable Care Act, physician and hospital leaders have been scrambling to cut costs, emphasize value-based care, and remain independent.
This dramatic upheaval of the healthcare industry in 2008 forced providers to switch business models and adapt to a far more dynamic market than they had previously known. It was during this period of transition that single- and multi-specialty management companies like Sheridan and TeamHealth emerged as key players in the industry, providing health systems the resources, economies of scale, and subspecialty access they needed. Thus began a trend of aggressive consolidation throughout the industry, as more and more independent physician practices were unable to keep up with rising demands, costs, and decreasing reimbursements.
In fact, just this past year, medical management consultancy ProCare Systems released a report titled “Threats to Independence and Implications for the Future” which found that 71 percent of surveyed physicians reported that changes in healthcare regulatory, compliance and government policy landscape significantly affect their future as an independent physician.
While M&A activity largely began in specialties other than radiology, such as anesthesia and emergency medicine, radiology has gradually become a target for national management companies as an additional service line to offer.
In the last year alone, two large, radiology-specific national management companies were acquired by multi-specialty giants, leaving independent practices to wonder, “Will I be next?” Sheridan’s acquisition of Radisphere in January 2015, combined with Mednax’s acquisition of vRad in May, changed the tone of the conversation to one of urgency for independent radiology groups across the country.
But this contradicts physicians’ preference to remain autonomous, especially when it comes to clinical operations. According to a 2013 RAND study for the American Medical Association, physicians reported greater rates of satisfaction when they maintained control over clinical operations and the selection of colleagues and coworkers. The study, titled “Factors Affecting Physician Professional Satisfaction and Their Implications for Patient Care, Health Systems, and Health Policy,” also reflected the growing pressure on physician leaders in this era of change. Nearly half of the surveyed doctors reported their jobs felt “extremely stressful,” and more than a quarter reported experiencing chronic symptoms of burnout or feeling “completely burned out.”
Ultimately, in the dynamic and rapidly changing post-ACA world, independent physician leaders have three options:
1. Collaborate with others and remain independent;
2. Sell or merge their practice to a management company or larger practice; or
3. Sell their practice to a hospital.
ProCare Systems’ 2015 report found that, though 73 percent of surveyed physicians would like to remain independent in the coming years, 44 percent said they were likely to sell their practice in the next decade due to escalating costs and shrinking reimbursements assuming no other alternatives.
And yet, half of the survey respondents reported an interest in joining an independent practice association to provide the scale and negotiating power necessary to thrive in the post-ACA landscape.
This is the first option from the above list, which allows groups the ability to collaborate and avoid the loss of independence experienced by so many other groups and specialties in the industry.
An example of this alternative is aRegional Radiology Group Network (RRGN) model, which brings together independent radiology groups not in a merger, but in a joint venture through which practices maintain autonomy but achieve the resources and scale they need to survive. Groups also experience significant cost-savings on items such as medical malpractice insurance, as well as an advanced data and analytics package that helps improve operational efficiency and clinical results.
The success of this model can be seen through Empire Health Support Services, an RRGN located in New York’s Hudson Valley. This network is the result of a partnership between Radiologic Associates, P.C. andRamapo Radiology Associates in 2014, and has already succeeded in cutting costs and strengthening the operational capacity for the two groups.
“Given the many changes in radiology, it has already been beneficial to work with other like-minded groups rather than compete with them,” said Radiologic Associates’ president Joseph Racanelli, M.D.
Radiologic Associates CEO Andrew Mazzella echoed the advantages of this collaborative model to not only the groups themselves, but also the local health systems they serve.
“The benefits to the hospital systems served are an increase in subspecialty access, a better skill set for overnight coverage, and an ability to access a broad and deep informatics pool to drive both efficiency and quality across the spectrum of care,” Mazzella said.
While the past five or so years have been a chaotic and rapidly evolving time for the healthcare industry, it is difficult to imagine the chaos stopping or even slowing down anytime soon. And though radiology operated in a steady milieu for decades, it is undeniable that big changes will continue to come to the specialty.
To find out more about this collaborative model and how your practice can remain independent, please contact Integrated Radiology Partners at ContactIRP@IntegratedRP.com.