Driving Value Through Clinical Integration

How Independent Physician Groups and Independent Practice Associations (IPAs) can remain independent and protable in a changing healthcare reimbursement environment

The challenge to remain independent under the ACA

Although the passage of the Affordable Care Act (ACA) in 2010 has resulted in more insured Americans–about 10 million to date–it has also created new challenges for independent physician groups and IPAs. Under the current Fee-for-Service (FFS) model, payors created volume-based provider economics, where providers were paid each time they delivered a service. The new approach  is “accountable care,” a model that places the focus on value over volume. Payment is tied to patient outcomes and appropriate use of healthcare resources. Value-based (VB) payment can take many forms: pay-for-performance (P4P), for example, or bundled payments.


Projected Mix of Payment Models within Organization
Among payors who are other than 100% FFS only

Doctors in small and large groups or traditional IPAs are not only subject to declining reimbursements and a reduction in FFS patients, they face increasing financial and time burdens, as they struggle to adopt new tools of medical practice, such as electronic health records (EHR). Because of the need for infrastructure investment, physicians may feel pressured to accept hospital employment as networks become more narrow. And with the increasing need for documentation for virtually every aspect of care, many doctors are frustrated and overwhelmed.

As Dr. Fred Pelzman stated in a Medpage Today  blog post about the new healthcare environment, “Those of us who have been doing this for a long time worry… that this is going to become just another version of some monitor looking over our shoulders at what we are spending while we care for patients, and telling us what we can and cannot do to take care of them.

“While we recognize that ultimately there is a business side to healthcare…many of us fear that linking our practice of medicine to the sometimes unavoidable and messy nature of healthcare delivery, with the ultimate goal of saving money, creates a paradigm in which the practitioner may be pressured to avoid providing care they think is necessary and appropriate.”1

But whether physicians are ready or not, the ACA is driving change across the entire healthcare landscape. At the heart of healthcare improvement is the so-called “Triple Aim”2 : improved experience of care for the patient, improved overall health for the community and lower overall costs, with a network of collaborating physicians at the core of care delivery. Although providers bear a greater portion of clinical risk under the new model, they are better positioned than payors to make proactive clinical decisions and appropriate tradeoffs. For the first time, providers have the opportunity to benefit from more cost-effective health outcomes, and many physician groups and IPAs have already been dipping their toes in the Accountable Care waters.

In July 2012, a significant number of Medicare Accountable Care Organizations (ACOs) were new entities formed of independent physicians (with or without hospitals) coming together through some type of virtual aggregation.3 Today in 2014, according to the New England Journal of Medicine, there are 361 ACOs contracting with Medicare and hundreds of ACO-like contracts in the private sector.4


The move to value is changing the treatment paradigm

Under a value-based contract, providers agree to provide healthcare to specific patient populations at a fixed reimbursement rate, reflecting historical costs and adjusted for population-specific risk. If a medical group is able to deliver that care for less than the target reimbursement, they share in the savings, either as part of a risk-sharing program or pay-for-performance.

Providers have always viewed high quality care as an imperative, but traditional fee-for-service contracts were never designed to support proactive care and disease management. Today, physicians need to think differently about their medical practice, learning how to help their patients manage their chronic illnesses to avoid acute episodes, for example, or identifying which patients in their practice are clinically at-risk for high resource utilization. It is estimated that approximately 5% of patients in a healthcare plan utilize greater than 50% of healthcare resources.5 By focusing on the value of the health care given and the well-being of the patient instead of the volume of services provided, value-based contracts can improve quality, reduce overall costs, and improve providers’ financial performance—but only if they are able to work together and coordinate care.

Recent data show that this approach appears to be working. A report from the Congressional Budget Office (CBO) in late August showed that 10-year Medicare cost projections have declined every year for the last six years in a row, with a difference of about $95 billion between the most recent projection of Medicare’s 2019 budget and the one four years ago. Part of this reduction is attributed to a change in behavior by health care providers. According to a New York Times article, “Medicare beneficiaries are using fewer high-cost health care services than in the past — taking fewer brand-name drugs, for example, or spending less time in the hospital….” These changes have dominated the downward estimate revisions since 2010.6



An analysis of the results of the effect of global budgets (that is value-based rather than traditional fee-for-service) in Massachusetts compared with traditional plans seems to bear this out.7 Compared with similar populations in other states, claims spending under global budgets was slower over the four -year period between 2009 and 2012, mostly driven by cost savings in the outpatient setting, and explained by both lower fee schedules and reduced utilization. In addition, improvement in process and outcome quality was better than those seen in the control group (non-accountable care) and also compared with the Healthcare Effectiveness Data and Information Set (HEDIS).


Outcome Quality in the 2009 AQC Cohort versus the Healthcare Effectiveness Data and Information Set (HEDIS), 2007–2012.*

* Outcome quality consisted of the following five measures: control of the glycated hemoglobin level (9%), control of the low-density lipoprotein (LDL) cholesterol level (<100 mg per deciliter [2.6 mmol per liter]), and blood-pressure control (<140/80 mm Hg) in patients with diabetes; the same level of control of LDL cholesterol in patients with coronary artery disease; and a blood-pressure control level of 140/90 mm Hg in patients with hypertension


Although this news is a reassuring “proof of concept” it is not a “slam-dunk” for value-based arrangements. Sadly, many physician groups and IPAs are under-equipped to manage proactive care and total cost performance, and lack the strategic partnerships with ambulatory, acute, and post-acute care providers.

Moreover some groups lack the strong development strategy needed to achieve the information competencies required for effective population management, and to learn how to benefit clinically and financially by managing clinical risk. To do this, providers need extensive patient information. Without it, the group will find it almost impossible to understand patient stratification––what segments live inside the total population–– or how to manage them.

And without an information dashboard, integration tools, and actionable insights proactively delivered at the point of care, a multidisciplinary care team will have little chance of shifting the cost/quality/value equation.

Today’s healthcare environment impacts Physician Groups and IPA members in several ways:

  • Declining reimbursements
  • Increasing financial and time burdens
  • Pressure to accept hospital employment
  • Lack of funding for infrastructure investment
  • Threat of exclusion from emerging narrow networks
  • Inability to capitalize on value-based reimbursement opportunities

The opportunity for Independent Providers — Clinical Integration

Traditional medicine has been practiced in silos, with the well-being and bottom line of each participant the main goal. Now physicians must align on value and cost savings across the continuum of care, and agree on standards of care and performance metrics. Communication and information sharing is key to care management, and the ability to analyze population health data to define patients at clinical risk for high cost care can be the difference between success and failure. The ability to manage patients with chronic disease will become a crucial competency, and physicians and hospitals must align to reduce readmission rates after acute exacerbations, one of the quality and cost-saving benchmarks. But how can providers achieve that?

Regulatory authorities have defined the conditions, collectively referred to as Clinical Integration, under which providers can collaborate to improve quality and efficiency, while remaining independent entities. In return for investment in performance infrastructure and initiatives, it allows direct negotiation with insurers for better payment rates,or incentives based on quality and cost improvements.

In a Clinical Integration arrangement, participating physicians lead and operate an organization under a structure with stated participation and performance criteria. Although hospitals and other providers may be included, Clinical Integration is physician-centric. Certain management companies can help practices aggregate independent physician providers into a team that will work together via integration in order to get the benefits accrued through efficiency and risk-sharing/cost-savings.

Clinical Integration also requires the use of the right information integration platform — a software component that integrates all data — electronic health record (EHR), laboratory values, and insurance claims, etc. — into a usable form, no matter what the base program. That way, the appropriate data can be used to generate “report cards” and metric reports to allow practitioners to better manage care and reap the rewards of cost-sharing arrangements. As physician members may have already made significant investment in EHR software, an EHR “agnostic” platform may be able to help reduce infrastructure costs.


With the right implementation, Clinical Integration comprises the organizational attributes necessary to catalyze the transformation of healthcare delivery, including governance structure, leadership, and comprehensive physician-hospital alignment, while allowing independent providers to continue to benefit from existing FFS opportunities.

Why Clinical integration makes sense

  • Strengthens relationships among all providers (physicians, hospitals, etc.)
  • Makes providers more attractive network participants to payors
  • Focuses efforts on keeping people well rather than treating acute events
  • Lowers cost of care
  • Creates momentum for additional quality initiatives to improve the health of the patient population, while improving the financial health of the practice

The opportunity for Independent Providers — Clinical Integration

Although shifting to a value-based payment environment may be daunting for providers accustomed to working in traditional silos, the benefits of either creating or joining a Clinical Integration arrangement can mean survival to physicians who want to maintain their independence. More than survival, the value to a Clinically Integrated physician group or IPA can be a return to the values that drove physicians to become doctors in the first place—the practice of quality patient care and being a successful and financially solvent part of a healthy community.

Continuum  Health  is a physician enablement company based in Marlton, NJ providing a platform  for practice management, population health management, and network development services. Continuum offers proven, strategic business and clinical solution empowering medical providers within  physician  groups,  private  practices,  health  systems,  hospitals,  and  self-funded settings  to enhance patient access and experience, improve quality and lower the overall cost of care.

1Pelzman FN. “The Promise and Perils of ACOs” blog Building the Patient-Centered Medical Home MedPage today October 14, 2014

2The Institute for Healthcare Improvement describes the”Triple Aim” as an approach to optimizing health system performance through the pursuit of three dimensions – improving the patient experience of care (including quality and satisfaction); improving the health of populations; and reducing the per capita cost of health care.

3Oliver Wyman, 2012 The ACO Surprise, p2

4Casalino LP, Accountable Care Organizations — The Risk of Failure and the Risks of Success. 2014, N Eng J Med. 371;18:1750-1751.

5NIHCM Foundation, The Concentration of Health Care Spending, NIHCM Foundation Data Brief, July 2012.

6NY Times August 27, 2014. Medicare: Not such a Budget-Buster Anymore.

7Song Z, Rose S, Safran DG, et al. Changes in health care spending and quality 4 years into global payment. N Engl J Med 2014; 371:1704-1714