Pursue Mergers, Affiliations With Both Eyes Open

Oncology Business News®, February 2016, Volume 5, Issue 2

Finding the right partner can lead to a much higher level of practice for physicians, as well as broader responsibilities that add fulfillment to one’s career.

Cary Presant, MD

When considering a merger with a larger institution or group of practices, the pitfalls are many for oncology practices. However, finding the right partner can lead to a much higher level of practice for physicians, as well as broader responsibilities that add fulfillment to one’s career, physicians and consultants told Oncology Business Management.

Those who have been through affiliations and mergers, or counseled them, said the best advice is to do your homework and thoroughly scope out the institution you are thinking of joining in order to make sure that the fit will be right for you and your staff. All of the details need to be worked out in advance so that nothing is hidden that might constitute a deal-breaker.

“In general, it is easier culturally when practices join practices, because they’re at least joining together with physicians who understand what life is like and what one’s priorities might be,” said Teri Guidi, president of Oncology Management Consulting Group. “Joining a hospital can be very different. Hospitals have all of their rules and regulations, and they have their personnel policies, so physicians joining hospitals do face a much greater chance of having those cultural lifestyle differences. We’ve seen practices that were acquired by hospitals who agreed to hire a practice’s entire staff and then the physicians learn that they don’t have the right or power to just fire a nurse. They have to go through all of the HR policies and procedures,” she said.

In its report last year on the state of cancer care in America, ASCO indicated that among nearly 1000 US practices surveyed in 2014, one-quarter of communitybased practices said they would likely pursue hospital affiliation over the following 12 months. There are many reasons why practices working independently would seek the embrace of a larger institution, said Cary Presant, MD, past president of the Association of Community Cancer Centers and a practicing hematologist and medical oncologist with City of Hope Medical Group in the greater Los Angeles region. The costs of maintaining a practice with adequate support have risen, compliance requirements are stiffer, there is greater demand for managed care and cost savings, and many oncologists are getting older and finding it harder to interest younger physicians in buying them out, Presant added. “They don’t want to pay a large amount of dollars for a practice that is more challenging today than it was 20 years ago, and so these older physicians are guiding practices very often to being taken over by hospitals.”

With hospitals anxious to extend their territories, having realized the advantage of satellite offices over centralized facilities, the mutual attraction is strong. Despite this, the cultural and administrative fit can feel like an itchy sweater, Presant said. In his position at City of Hope, Presant has seen many independent practices added to the system as the network of owned and affiliated practices has grown. The goal has been to leverage size in order to practice the most advanced oncology and to achieve City of Hope’s mission to extend better care into urban southern California.

Salary May Be Low, But There Are Other Compensations

Larger institutions tend to have better developed clinical-trials programs that can actually be important revenue generators when they are well managed; for the physicians who join from outlying practices, participation in such activities can supply the feeling that “you’re really keeping up with where oncology is moving in these very tumultuous and exciting years,” Presant said. The alternative may be to continue to practice good, “standard” care in many of the oncologic disciplines in an independent community practice; however, the trade-off is that your program may not have the support necessary to offer the really advanced techniques and opportunities for specialization that, in addition to career advancement, can lead to higher volumes of patients and better overall outcomes, Presant said.Those are some of the benefits that serve to lure physicians who want to improve their oncologic game. On the pay side, as well, it can get complicated, particularly when you throw in all of the compensations that do not strictly amount to salary. These include payments for the acquisition of the independent practice, pay for special duties that are assumed when a physician joins a hospital, and bonuses for meeting targets for attracting and seeing patients. “In some physician practices, their pay goes down, but they’ve been compensated by having an acquisition fee, and in some cases, their pay has gone up because they have received income for running parts of the program. Generally speaking, the benefits from institutional affiliation usually are pretty good with retirement,” Presant said.

Another big advantage of joining a hospital system is that suddenly you do not have to worry about whether the institution is going to survive; it’s almost a given that the institution is going to outlast you. One problem that does arise, however, is when you discover that being a cog in an immense system means that you are replaceable, physicians interviewed for this article said. Such a liability, combined with the other compromises that have to be made when you join a much larger system, can chafe at the egos and personal ambitions of independent-minded physicians.

“You’re going from really having total control over your own practice to being one of a group that is an employee of a larger practice. And so you lose a lot of control over what you do day-to-day. You gain a lot in terms of the kind of camaraderie and the kind of confidence you have in the system that you’re within and the type of compliance with national guidelines, type of compliance with the actual requirements of practice. Those things are taken out of your hands, and the institution takes care of all those details,” Presant said. “This has been very, very good for some people who have been overwhelmed by the amount of businessrelated activities and administrative activities they have to do in their practice. It’s been very bad for others who have liked being in control and suddenly they’re not in control anymore,” he added.

Hospitals May Tap More Than Just Your Doctoring Skills

Jeffery Ward, MD, a hematology oncologist and a member of ASCO’s Government Relations Committee, said that on the upside, there are opportunities to participate in hospital initiatives if you are willing to leave certain aspects of your former practice responsibilities behind. For him, this has translated into an opportunity to bring a Quality Oncology Practice Initiative to the Swedish Cancer Institute, which was something the hospital wanted him to do based on his accomplishments as an independent practitioner.“My impression is that they have recognized that we bring certain skills that we gained in private practice, and as much as the bigger Swedish (Swedish Medical Center) will allow them to do, the Swedish Cancer Institute is utilizing those skills and recognizing them, and that feels good,” Ward said. “One of the things that Swedish has done that we could never have done on our own is develop a personalized medicine research program, and they have signed an agreement with Systems for Improved Access to Pharmaceuticals and Services and are going to begin collecting big data and doing some things that really are exciting.” This is something Ward said he enjoys doing more than, say, the administrative task of interviewing nursing candidates. “I can now let somebody else run a business and I can build a cancer program.”

Physicians find that resources can be more plentiful at larger institutions, such as the availability of palliative care physicians and social workers, specialists whom their own smaller practices couldn’t afford to hire. But even with a bigger tool set and more elbow room to practice advanced oncology, a lot has to be said for the importance of hammering out the details and finding a partnership deal whose attractiveness is more than an illusion. In the end, it may turn out that remaining an independent is the best decision after all, those interviewed said.

“I think for every success story, there’s probably going to be a horror story, and some of that will relate to physicians who chose the wrong partners. Some of it will relate to people who were never suited to be in a hospital-based practice in the first place, and some of it will be because things changed once they got there,” Ward said, acknowledging that his group lucked out in being able to partner so successfully with Swedish.

With Growth Comes Policy and Procedure

Many things at a larger operation are liable to be different, and “people have to be prepared when they are considering doing this type of a transition for the very dramatic changes in culture and how it will affect them in their professional lives, and how it will affect them in their personal lives as well,” Presant said. Even burnout, a rising factor in job dissatisfaction among independent oncologists, can be a problem at hospital institutions, he said. There is no shortage of meetings at larger health care facilities, those interviewed pointed out. In addition, physicians may have to learn entirely different record keeping systems, despite the advantages of whatever they have become used to at their community practices. “Hospitals have a very large and complicated portfolio of IT systems, and they’re not generally very accepting of just bringing another system in,” Guidi said.Even when physicians decide they want to join a network of independent practices, they may find that it becomes necessary over time for that larger group to begin implementing policies and procedures that are similar to those in force at hospital systems, which means that a certain measure of independence begins to erode, Guidi said. She cited the example of Regional Cancer Care Associates (RCCA), which has roughly 30 practices and has begun to extend its reach from New Jersey into other states on the East Coast. “Physicians, when they first started, joined for economies of scale and some negotiating power with payers, but the practices were pretty much allowed to remain independent and operate on their own. So, a doctor who was used to saying, ‘I want the walls to be painted in purple today’ could do that. That is changing in RCCA a bit and in some of the larger groups.” They’re looking to make things consistent across all of their platforms so that revenues are maximized and expenses brought under control, Guidi said. “They’re also looking at compliance-type issues. If there’s an audit at one of their sites and there’s an issue, the larger group may be held accountable.” It’s also important for them to be able to demonstrate to the payers they’re negotiating with, using group strength, that they have their costs under control from practice to practice, Guidi said.

For those who discover that their merger agreement or partnership arrangement has wound up at the closed portion of a dead-end street, the consequence may be that the town is no longer big enough for the former independent and the larger system, said George Conomikes, head of practice consultants Conomikes & Associates, in San Diego, California. “Doctors caught in hospitals are stuck. Their only option is to leave town because they signed a no-compete agreement. They have to move 50 miles and start from scratch, and it’s very tough to do that.” They may also need a consensus from the other physicians who joined the hospital with them, and some of those doctors may be highly content and unwilling to start over. “Those other guys may not be as unhappy. They might say, ‘Oh, God, what a relief. All I have to do is come to work, see patients, and go home, and not worry about the overhead and all this other stuff.”