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Redefining Primary Care

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Northwestern's practice gains where others fear to tread.

Owned primary care practices have long been a financial backwater as far as hospitals were concerned—but one they couldn't do without. Writing off losses was seen as a necessary evil as primary care practices drove referrals to much more profitable inpatient episodes of care.

As far as losses are concerned, it's still that way. Despite that, primary care has more recently become a land-grab as smart hospitals look to own physician practices—although it's not entirely for the reasons of the past. In the most innovative of models, primary care practices have become not only the drivers of inpatient referrals, but they are also being transformed into the touch point for how patients view the hospital and their doctor: as the medical home so many pundits are preaching.

But how does the practice achieve that lofty goal?

"The medical home is not only where we want patients to come for immediate and urgent care, but also for wellness and chronic care," says Drew Palumbo, the vice president of Northwestern Memorial Physicians Group, a 95-physician primary care practice that's owned by Northwestern Memorial Hospital in Chicago.

But calling NMPG a primary care practice leaves so much out. Palumbo and the physicians have positioned the practice to compete effectively against many of the new perceived threats to primary care: consumerism, alternative medicine, convenient care clinics, and the cost of an electronic medical record system, among others. Palumbo says his group is "agnostic" toward these threats, instead seeing them as ways the primary care practice can further develop a symbiotic relationship with its patients such that they won't consider getting care anywhere else but at NMPG or at its parent.

"We see everything as a trend and try to position ourselves to capitalize on those trends," Palumbo says. "If we position ourselves right, these things aren't a threat for us."

One of the keys for NMPG is a productivity-based compensation model in which physicians and physician extenders at the practice know that the more they work and the more ways they can interact with patients, the more money they can make, says Daniel Derman, MD, the practice's president. Derman adds that the practice is in a unique position as the medical home for about 125,000 people.

"That's a good medium-size city," he says. "We ask ourselves what medical services those people need, and we try to capture as much of the outpatient medical services as we can that are required by that population. For us they're a captive population that we can market to."

For instance, the practice competes with convenient care clinics by offering virtual visits, a move that serves the double need for the practice of making money to reduce the subsidy the parent organization has to pay to keep it afloat while also keeping patients from going elsewhere for their healthcare.

"When we saw how convenient it was for patients to go to Walgreens for urgent care, we took a look and said, ‘You know what, if a patient is already in our practice, if we can find a way to be even more convenient, patients won't want to go to Walgreens,'" Palumbo says.

Some payers reimburse the practice for the cost of that virtual visit, but if they don't, the practice charges $35, "which is competitive and more convenient for the patient," Palumbo says. "It's not much more than the cost of an office copay."

Of course, on a line-item basis, the group still loses money, says Derman, because it's prevented from entering some high-margin businesses that would compete with services the hospital offers, such as radiology or sub-specialty medicine.

"We do a pretty good job of identifying products and services that complement our core goal, which is primary care," Palumbo says. "We try to focus on services that help augment the bottom line."

For example, in the past two or three years, the practice has integrated occupational medicine and travel medicine services—high-margin businesses. It's also introduced an alternative medicine clinic and a "high-end executive health center to compete heads-up with similar Mayo Clinic and Cleveland Clinic programs. That's been phenomenally successful," says Palumbo. "That's all to say that our subsidy is fairly minimal. If you took out cross-allocations, there's little or no subsidy."

Thinking ahead for new revenue opportunities, Derman sees a world where one physician might head a pyramid of caregivers with two to three nurse practitioners and three medical assistants and some clerical workers assigned to his group of patients.

"We'll implement that in 18-24 months," he says. "This is a highest and best use for everyone. If you need a doctor, you'll get a doctor, but for a lot of routine care, a NP will be used in partnership with the doctor. We'll be solving a lot of different challenges, like patient convenience, reimbursement, and professional satisfaction."

Philip Betbeze

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