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Dialing Up Physician Networks

Joe Cantlupe, for HealthLeaders Media, November 2, 2012

Success key No. 1: Geographic strategies

Over the past decade, Metro Health Hospital has invested heavily in developing its network of primary care sites, integrating physicians and implementing IT, says Mike Faas, president and CEO of the 208-staffed-bed facility in Wyoming, Mich. It has worked to find the right balance of primary care and specialists, with recruitment of geographically distributed practices being key for physician coordination, he says.

Metro Health has a 50% share in a physician hospital organization that represents both employed and independent physicians. Like many hospitals, Metro Health is considering an ACO plan, but developing its physician networks is paramount. "No matter what happens with an ACO, physician groups will be responsible for a population of patients, either by default or having patients assigned to them," Faas says. "More people will have coverage of care, and hospitals will be responsible for managing that care. If you don't get your arms around managing that care, it's not sustainable financially."

Gradually, the hospital has been adding to its physician network with an eye on spreading its demographic base, Faas says.

Metro has been developing its physician network, now known as Metro Health Medical Group, since the 1990s, Faas says. "We got into that curve and were able to build a solid foundation, with a conscious effort to grow primary care access and keep that focus. It has helped recruiting and garnering referrals, building our relationships with primary care docs, other providers, physician assistants, and nurse clinicians. We started and never stopped."

Metro owns and operates 12 ambulatory care facilities, neighborhood outpatient centers with dozens of primary care providers distributed across its service area. Physicians employed by Metro Health Medical Group staff
10 sites.

According to a 2011 American Hospital Association–sponsored report that examined hospitals suitable for ACOs, for the fiscal year ending in 2010, Metro Health's revenues were $286 million and operating income was $7.3 million, with a 3% operating margin. The Metro Health revenues were reduced by investments in Metro Health Medical Group, the physician group, as well as a startup ambulatory center. Metro Health invests roughly $30,000 per year per physician in the Metro Health Medical Group physician group, the AHA report states. Overall, "Metro Health leaders believed the employed physician group has been a very positive investment that positions the organization for a future of accountable care," it adds.

To maintain its ROI and clinical scale, Metro has consistently pursued alliances with other hospitals and medical practices to manage larger, more geographically dispersed populations. 

"There's no doubt that working with a tightly aligned physician group is essential and not a roadblock. Networks will only be more important with the rolling out of healthcare reform," Faas says.

As part of its alliance to bolster its physician networks, Metro Health has joined with Trinity Health and the 880-licensed-bed University of Michigan Health System, based in Ann Arbor, to form the Pennant Health Alliance to improve primary care acquisition strategies as well as revenue cycle management programs. Trinity Health, based in Novi, Mich., operates 49 acute care hospitals in 10 states. Under the organization plan, Pennant is expected to coordinate and provide "high-quality" physician groups for the member hospitals. It also is expected to be a support network for quality and cost improvements overall, according to Faas, who also serves as CEO of the Pennant Health Alliance. An integrated IT strategy is built into the plan to spread and reduce costs. The arrangement calls for Trinity Health's supply chain and support network to provide for a more favorable cost structure for independent medical practices.

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