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Primary care networks: choose your physicians wisely.

As hospitals and health care systems maneuver for a position in the integrated health care delivery system, no initiative is more important than developing an effective and competitive primary care network. While price remains the key issue managed care organizations consider when selecting providers, a large, geographically distributed, and cost-effective primary care network has moved to the forefront as an essential element of the selection process.

Yet this critical initiative is fraught with potential pitfalls. In their haste to develop primary care networks, hospitals and health care systems may fail to thoroughly evaluate network participants and in turn create large, inclusive, and inefficient primary care networks that don't come close to breaking even, much less repay practice acquisition costs. In an effort to become more efficient, practitioners often find themselves in the unenviable position of "de-selecting" peers retrospectively.

Network developers would do well to consider the difficulties physician/hospital organizations (PHOs) are now facing. The most frequently cited reason for a failed or stalled PHO is the tendency to keep it open to all potential participants. Most open PHOs now wish, in retrospect, that they had addressed the tough decision of which physicians are in or out early in the formation process. These organizations are now dealing with the political landmine of trying to convert the open PHO to a closed or selective model.

The lesson to be learned is that primary care networks should proactively establish criteria so that each potential participant is evaluated prior to joining. These criteria should include physician requirements, as well as issues, such as the geographic areas targeted by the network. Specifically, criteria for evaluating primary care practices should include:

* Specialty: Preference should be given to physicians who practice exclusively in family/general practice, general internal medicine, obstetrics/gynecology, or general pediatrics--not subspecialists, who spend minimal time serving as primary care providers. This guideline is consistent with market trends; many managed care organizations are now requiring that primary care physicians declare one specialty category rather than two (e.g., internal medicine and gastroenterology).

* Board certification: Physicians who are board certified or eligible in primary care specialties should be given preference over those lacking these credentials. This criterion is consistent with the trend of PHOs, physician groups, and managed care organizations requiring board certification as a prerequisite for participation.

* Geographic location: The practice or service being considered should have significant presence in the network's geographic target area (i.e., a cluster of two to three zip codes). Targeted geographic areas are underserved by primary care practitioners as measured by physician to population ratios and validated by other measures such as time necessary to get an appointment, open/closed practices, etc.

* Practice type: Preference should be given to physicians who favor group practice, since they are able to take advantage of economies of scale. Physicians should also be willing to incorporate nurse practitioners and physician assistants to improve efficiency.

These modifications to physician practice may be difficult for the solo practice physician to implement. Many primary care networks enable solo practitioners to collocate and share support staff as a compromise short of group practice formation and its implications, such as pooled income and merger of assets.

* Staff status: Physicians should be, or must become, active members of the hospital and PHO staffs with which the primary care network is most closely affiliated. If they are not active members, the sponsoring organization (usually a hospital or PHO) will most likely gain no benefit from having the physician participate (the benefit being increased quality and more primary care access points for the community served).

Often, however, this requirement is of no value to a host or sponsoring hospital. Many primary care networks incorrectly assume that building a network is necessary to gain incremental referrals to medical staff subspecialists and admissions to the hospital. The rationale is that incremental referrals help recoup the investment costs associated with practice acquisition, which can reach $100,000 to $200,000 or more per practice.

While staff status should be considered a minimal requirement for network participation, the more important criterion is practice style and the potential to modify it. When practice acquisition is the favored strategy for primary care network development, the practitioners who are able to effect incremental practice earnings are the primary candidates for acquasition. Examples of approaches for achieving incremental earnings are increased productivity (unrealistic for the private practice physician whose income is directly tied to work load), reduced overhead costs (realistic through practice collocation or consolidation), or improved group purchasing and collections performance.

* Quality/economic indicators: Physicians should agree to participate in the development of quality and economic performance measurement, which may include reviews of ancillary use per encounter, technology/imaging application, and ALOS/nonacute days. These performance measures are the first step in altering utilization so that the network can provide the appropriate type and level of primary care services in the most suitable setting.

* Agreeable to primary care network contract provisions: Contracts signed through the network may require the physician to:

* Make referrals exclusively to selected specialists and ancillary providers who have been historically chosen on the basis of cost/price performance. Increasingly, selection will be made on the basis of the value of the care provided. * Refer patients to a particular facility if it provides the appropriate level of care. * Accept that chronic economic outliers may be terminated from a particular contract, or even from the network. * Sign a formal provider participation agreement.

An emerging criterion is selecting primary care practitioners on the basis of U.S. medical school education. Internationally trained physicians would not be eligible for participation. One of the major integrated delivery systems developing in the Philadelphia metropolitan area has adopted this policy.

These criteria provide the basic framework of topics that should be considered when selecting primary care network participants. While they may need to be tailored to unique circumstances, careful and consistent application of these criteria enable networks to establish a strong and successful base of physicians, while avoiding politically sensitive personnel issues once physicians are network participants.

Craig E. Holm, CHE, CHC, is Vice President of Chi Systems, Inc. in Philadelphia, Pennsylvania. Mr. Holm has directed many consulting engagements involving primary care network development and physician-hospital integration. He can be reached at (215) 922-1222.
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Author:Holm, Craig
Publication:Physician Executive
Date:May 1, 1996
Previous Article:Making integrated health care work.
Next Article:Focus on the fundamentals.

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