Skip to content Skip to navigation

Diving Into the Deep End of the Pool: A Look at Physician Groups and Risk

September 14, 2016
by Mark Hagland
| Reprints
As physician group leaders move into risk-based contracting, the ability to capably leverage data and IS will be crucial to success

Just as with everything else in U.S. healthcare, the path forward towards mastering risk-based contracts is one filled with challenge and complexity for the leaders of physician groups. But industry pioneers aren’t letting themselves be daunted by the challenges involved; they’re plunging ahead to create the future for themselves, their patients, and their communities.

That is certainly true for the 650 providers (500 of them physicians) at the Summit Medical Group, based in the northeast New Jersey community of Berkeley Heights, and with 36 care locations across northeastern New Jersey. Summit Medical Group’s leaders have spent years putting into place the strategic, operational, clinical, and IT foundations to take on risk on a major scale, and they’re ready for the future. They’ve also grown tremendously through expansion. “In 1989, when I came, we had 45 doctors,” notes Jeffrey LeBenger, M.D., the group’s chairman and CEO. LeBenger, a head and neck surgeon, who assumed the group’s top executive role in 2000, has aggressively moved to grow the group numerically (there were about 70 doctors in the group when he assumed its chairmanship), and to expand its presence across its service area.

How were the Summit Medical Group physicians able to find their way forward into successful risk-based contracting in a rapidly changing environment? “What happened is that we knew for us to grow, we had to be in the network of the largest insurer in the state, Horizon Blue Cross Blue Shield New Jersey,” LeBenger says. “So I started to manage with my CFO the negotiations” with Horizon BCBS, and “we were able to construct the first shared-savings product, with upside and downside risk,” with that health insurer. “That was about four years ago. And then once I knew that we had gotten Horizon, with 3.8 million beneficiaries in the state, we were able to grow our model,” as well as grow the medical group’s physician staff. There was no small investment involved, he underscores: “We spent millions developing our care management program, with hospitalists and with extensivists. And now we have four high-acuity urgent care centers. That’s the model. With chest pain, belly pain, our patients go there. And our admission rate is only 2-3 percent from our urgent care centers, whereas at the average hospital, they’re admitting over 20 percent of those patients.”

There are layers of details, but among the keys for Summit Medical Group’s success so far, LeBenger notes, are compensating the group’s hospitalists based on quality metrics rather than “per-click” patient rounding, leading to a 30-day readmission rate for Medicare below 8 percent (when New Jersey’s statewide rate is 18 percent), and the close care management of all patients through their transitions of care, through the group’s care management department, with all patients leaving the hospital seen by a nurse practitioner within the next day after discharge. “So with that, we’ve found that our PMPM [per member per month] cost” for patients in its risk-based plans “is $60, whereas the benchmark in New Jersey is over $110.”

Meanwhile, IT infrastructure has been absolutely essential to Summit Medical Group’s success in risk-based contracts, LeBenger says, but he emphasizes that “Infrastructure does not drive medical care. You have to have the physician buy-in and the program that manages patient care, and your infrastructure has to support the care, but not drive it.” And, finally, he says this about why physician group leaders can in some cases achieve what hospital and health system leaders struggle to achieve: “Often, when hospitals manage medical groups, the problem is that they use the wrong paradigm. Our paradigm is to take everything to the ambulatory sector, and do what’s right for the patient on the ambulatory side.”

Shifting paradigms create a complex landscape

At a time of shifting paradigms across the U.S. healthcare system, the leaders of physician groups are finding themselves working to build foundations for the future in a dramatically changing policy and operating environment. With the internal healthcare system reforms emerging out of the Affordable Care Act (ACA) ramping up now every year (around such areas as avoidable readmissions, value-based purchasing, and healthcare-acquired conditions), and with newer mandates emerging (including those around mandated bundled payments to providers in many healthcare markets for total joint replacement and now cardiac care), as well as an entirely new set of requirements emerging out of the MACRA (Medicare Access and CHIP Reauthorization Act of 2015), including the new MIPS (Merit-based Incentive Payment System), the leaders of pioneering medical groups are breaking new ground, even as others are struggling just to keep up with developments in the news.

In fact, the medical group world’s pioneers have been busy moving forward into uncharted territory, says Don Crane, president and CEO of CAPG—“the voice of accountable physician groups”—a national association of medical groups involved in accountable care organization (ACO) development and other risk-based contracts. “Among the key learnings,” Crane says, “is that taking on higher levels of risk and moving to professional and not just institutional risk, is being seen as a good thing,” among the leaders of the most innovative medical groups in the U.S. “Doing so improves the quality of care, results in higher quality scores, and higher bonuses. And so moving up in risk is something that has grown in the CAPG membership.