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Building—and rebuilding—a physician group for the future

From the March 1998 ACP Observer, copyright 1998 by the American College of Physicians.

By Deborah Gesensway

Four years ago, when managed care was just a whisper around Jacksonville, Fla., Todd L. Sack, FACP, and his five gastroenterology colleagues had a revelation: "We were hearing about what was occurring in California. We needed to reorganize for the new world of managed care."

But how? Since nobody could predict what kind of physician organization would thrive in the future, Dr. Sack and his fellow gastroenterologists decided to pursue two concepts at once.

The first was to bring enough of the 40 or so gastroenterologists in town into one group that could serve the entire region. The goal was to then market that group to local HMOs as willing and able to accept and manage single-specialty capitation for gastroenterology.

Dr. Sack explained why: "First, capitation is more cost effective than fee-for-service medicine, and we wanted to learn how to do it right early. Second, if capitation really takes over, there are too many gastroenterologists to care for the patients. We estimated that probably 10 gastroenterologists in town wouldn't be needed if the whole city was capitated."

The group, now called the Borland-Groover Clinic, will have 16 physicians by the summer and will be managing 240,000 patient lives.

Although Dr. Sack describes the new group in general as "a very lovely marriage," there have been stumbling blocks. At first, four of the gastroenterologists retired early or left the group in part because of what he called "the pressures of managed care." The reorganization, Dr. Sack said, forced the doctors to rethink how they manage their daily practices, how long appointments last, how many procedures they do, the flow of patients, the charting system and even the reimbursement method. Salaries no longer come from the group splitting all their profits equally, but instead from a productivity-based incentive payment system; about 25% of their income is paid by contact capitation. By doing this, he said, most of the doctors' incomes have remained stable (though some have dropped dramatically) and all the doctors find they are working harder.

Nonetheless, Dr. Sack doesn't think this single-specialty model is the one that will carry the group far into the future. Therefore, at the same time he has been involved with another project-building a 650-doctor independent practice association (IPA) and a giant management company that is a joint venture of the IPA and a four-hospital system in town. This physician-hospital organization (PHO), called Mission-Health, is now aggressively pursuing global capitation contracts. The president of Dr. Sack's GI group, Jack R. Groover, FACP, is also president and CEO of Mission-Health.

To date, Dr. Sack said, Mission Health has won 10 HMO contracts and its doctors and hospitals soon will care for 110,000 globally capitated patient lives, including some Medicare patients.

"Eventually, we hope to move all the single-specialty contracts into the PHO so that we can benefit from the hospital savings as well," Dr. Sack said. "Jacksonville will be a model for the rest of the country."

Why do all this at once? Dr. Sack acknowledged the intense effort it took for him and his partners to bring about practice mergers, design an IPA and help nurture a PHO over three years, all while seeing patients 8:30 a.m. to 5 p.m. everyday.

"There just wasn't time" to go slow, testing one model before trying another, Dr. Sack said. "It had to be done." Moreover, there's no time now to sit back and rest. Dr. Sack is the first to acknowledge that they haven't found all the answers yet. There's still more change to come.

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