Physicians Partnering With Hospitals on GI Centers: Q&A With Barry Tanner of Physicians Endoscopy

Barry Tanner is president and CEO of Physicians Endoscopy in Doylestown, Pa.

Q: To what extent are GI physicians working with hospitals on joint ventures for ambulatory centers?


Barry Tanner: There has been a lot of activity here, as there has been in several other specialties. Hospitals seem to be positioning themselves to function under an accountable care model or some kind of bundled-payment that would require greater collaboration among providers. Gastroenterologists who own ASCs that do not have a relationship with a hospital or some other large entity are increasingly concerned that if that entity took charge of some bundled-payment arrangement, the ASC would be left out in the cold. No one wants to be left out in the cold.


Q: Are concerns about being left out in the cold justified?

BT: I believe they are justified. No one knows exactly what the future holds, but I believe physician-owners need to work toward identifying the most likely options and then position their ASC so that it can connect with the greatest number of those options. Any sort of bundled payment scenario would require more collaboration, coordination and cooperation.


Q: How could aligning with a hospital help gastroenterologists?

BT: Internists and other primary care physicians, traditionally important referral sources for GI physicians, are increasingly employed by hospitals. This realignment could cause a basic change in GI referral patterns, making the GI center's relationship with the hospital all the more important. This does not mean giving up independence, though. Quite often, GI physicians retain their independence in these arrangements, even as they align their incentives with those of the hospital.


Q: How do these arrangements help the hospital?

BT: The hospital can recapture a portion of the facility fees that it lost to the physician-owned ASC. Moreover, hospitals are increasingly aware that GI physicians generate a great deal of in-bound healthcare services for the hospital. For example, colonoscopies unfortunately detect cancer, requiring surgery or other forms of treatment and follow-up care at the hospital. In addition, GI practices generate a lot of services for the hospital, such as CT scans and tests at the hospital lab.


Q: Are more GI physicians being employed by hospitals?

BT: Yes, but it's not a big trend. On a chart showing the amount of physician employment in each specialty, you'd go from ophthalmologists on the left, who are rarely employed, to cardiologists on the right, who are flocking to employment. Gastroenterologists are somewhere in the middle. Younger GIs, fresh out of fellowships, have been leaning toward hospital employment. These young GI physicians are thinking of quality-of-life issues. They seem to want more control over their professional lives. Some older gastroenterologists may also be exploring hospital employment, too. But anyone who considers hospital employment has to understand that it reduces their other options to zero.


Q: Are hospitals interested in GI-only centers?

BT: Hospitals are increasingly looking for GI-only centers. There has been a trend in recent years toward single-specialty centers because they are highly focused, efficient and cost-effective. However, hospitals with limited financial resources may opt for multi-specialty surgery centers. These centers tend to be more profitable for the hospital, and by catering to a broader group of specialists, they can spread the risks inherent in any one specialty. This may come down to the hospital asking, "Where am I going to get the biggest bang for the buck?"


Q: How would gastroenterologists fit into hospital-run multispecialty centers?

BT: GI physicians working in multispecialty ASCs can have some of highest volumes but they get relatively low reimbursement. They'll sometimes notice that they are responsible for most of the case volume and  feel their great volume is subsidizing the smaller volume of, say, orthopedics or spine. It's not uncommon for GI physicians to say –– to themselves at least –– that "we're doing 65 percent of the volume, so we should get 65 percent of the ASC ownership." Since orthopedic and spine cases typically get much higher reimbursements, that attitude may simply not be realistic.

Q: How are ASC arrangements between hospitals and GI physicians put together?

BT: Many of these arrangements are structured as three-way joint ventures, between the hospital, the physician-owners and an ASC management company like Physicians Endoscopy. We are participating in quite a few of these arrangements. Each partner has an ownership share in the facility, with the management company typically having the smallest share and no one having an absolute majority. In the arrangements we are involved in, the physicians often own something like 40 percent or more, while the hospital and Physicians Endoscopy cooperate to own something like 51 percent, but no one entity owns a majority.


As a participant in the 51 percent share, Physicians Endoscopy plays an important role for both the physicians and the hospital. For the physicians, we represent a strong, focused ASC advocate with an abiding interest is the continued success of the facility. The hospital, on the other hand, relies on us for GI-focused professional management and supervision of operations. Provided that Physicians Endoscopy votes independently, we can be an important fulcrum in the governance and control structure of the ASC.


Learn more about Physicians Endoscopy.


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