By Christopher Guadagnino, Ph.D..

Published July 1999

• React to this article in the Discussion Forum.

PND: How many physicians are in your IPA?

HM: I don’t know yet. It’s just been formed. We presently are creating our panel of physicians at all eight Tenet hospitals. We’ve just finalized the one at Hahnemann, which has maybe 70 physicians. The issue is not specific numbers of physicians, but to get proper coverage for the patient needs at each facility.

PND: The IPA will have single signature authority for health plan contracts?

HM: Correct.

PND: What is the primary goal of its alliance with Tenet?

HM: The Delaware Valley Physician Alliance is a hospital-physician organization that exists essentially for contracting purposes between the Tenet hospitals and the Delaware Valley IPA. The IPA creates the panel of physicians that cares for the patients. There’s a board of directors for the alliance that has equal representation between the IPA and Tenet—I believe there’s four members from Tenet and four members from the IPA. In order to contract with a specific provider we have to have equal input into the contract.

PND: What’s the relationship of the IPA to Tenet in this alliance?

HM: The IPA is technically independent as an entity. We will be signing a management agreement with Tenet to help manage the administration of the IPA in terms of length of stay issues, credentialing of physicians, approval of hospital care, monitoring inpatient days and amount of utilization. Those are all activities that Tenet will provide for us as a management vehicle. Tenet brings its computer system to do utilization review. There’s a medical director and a team of support people that work for Tenet who will essentially help monitor those activities and help to deal with the collections from the IPA. Tenet and the board of directors of the IPA meet on a regular basis to discuss those issues. The information Tenet provides the IPA allows the IPA to make proper decisions regarding patient care, proper physician notification, dealing with outliers in terms of utilization efforts, making sure we have the proper mix of coverage for the mix of patients that are capitated or subscribed to the IPA.

PND: It will be the IPA’s ultimate decision whether or not to de-credential a member?

HM: That’s correct.

PND: What sort of accountability to Tenet does the IPA have?

HM: None, other than having a management services agreement. We’ll pay Tenet for the services, but the IPA is an independent entity which will run and is managed independently. The board of directors of the IPA comes from two members from each of the eight hospitals—one primary care physician and one subspecialty physician. The management of the IPA is specifically an independent issue.

PND: Who handles billing?

HM: I believe that’s going to run through Tenet. Most of the vehicles are going to be run through a classic managed care contract, so primary care physicians will be paid on a capitated basis and no billing is involved. In terms of the sub-specialists, some physicians have their own practices and some are full-time faculty at the medical school. These physicians are currently running billing services or have some form of apparatus for billing the managed care companies directly. The information from those specific members of the IPA will be shared with the IPA.

PND: What kinds of contracting options can the alliance provide to health plans?

HM: We can provide full service care to a very large group of people because of the scope of hospitals and physicians involved. We have eight different hospitals which include tertiary care hospitals and hospitals out in the community, as well as a full service pediatric hospital. In the future it has been thought of to include non-Tenet hospitals in other places not covered by their current configuration, for instance, New Jersey, to broaden the breadth of coverage. Because of the breadth of the physician coverage involved it’s hoped that we can strike a contract with reasonable rates to large employers to be able to cover their patients at a reasonable cost and give them an option to see this group of physicians as their preferred provider at somewhat of a discounted rate.

PND: So essentially this is a PPO for health plans?

HM: Correct.

PND: What about direct contracting with employers?

HM: That may happen. We’re presently looking into those options. Part of what Tenet provides us in terms of their management services is marketing.

PND: What about risk contracting?

HM: That’s down the pike and has yet to be determined. Our initial efforts will be non-risk because we need to get our feet on the ground and get the IPA started in a reasonable sort of way. Risk contracting is convoluted and difficult and has had variable results in many marketplaces. Doing risk contracting across eight hospitals when there are house staff involved in at least three of the hospitals is difficult because it’s hard to control the parameters.

PND: Health plans in the region have been reluctant to sign contracts with IPAs. What are you going to do differently?

HM: We have a very large group of physicians that will be involved up front. We have proper credentialing of everybody involved so that all of the insurance plans will know exactly who they’re dealing with and what variety of coverages they have. We have the ability of Tenet, which has had experience in other marketplaces in dealing with insurers and has been involved with IPAs within their own facilities in the past. I think that’s the advantage that we have as opposed to being an independent group of physicians on their own trying to market their services. I think our tracking facilities are going to be better. I think that our coverage is going to be broader. I think that Tenet is willing to give good rates to the insurers and that’s also enticing.

PND: Do you feel that your affiliation with a national hospital chain, combined with the presence of national insurance companies in the region, allows you to cut a deal that other local entities cannot cut?

HM: I’m not sure. I think that will have to played out.

PND: Do you believe this alliance will enable you to attract physicians who have left the Allegheny system?

HM: That’s what we’re hoping. People left because of an unstable situation created by the bankruptcy. I think that people leave when they’re uncomfortable and fearful. Putting together a situation that has some long term viability will allow somebody to feel that they have a long term commitment and ability to see patients and make a living. I think once they see that things are growing and productive, that the hospitals are functional and providing good care, that Tenet is a reasonable partner to take care of these patients, I think that people will come back.

PND: PHOs have been criticized by some physicians as being heavily stacked in favor of hospitals. Do you think the PHO model sacrifices some physician autonomy?

HM: The IPA part of this is independently run. The PHO part has equal representation between Tenet and IPA. So, I don’t believe we’re sacrificing anything. I think we have common goals and I think that maybe that’s the difference between this alliance and others in the past. Tenet has a desire to fill their hospitals. We have a desire to fill our practices. I think they are mutual needs. I think they’re going to be met mutually with equal representation.

PND: Why are the physicians who have joined this alliance with Tenet better off than those who are practicing independently?

HM: The advantage is that Tenet will grant good rates to the members of the IPA, which will hopefully enhance some capitation rates to physicians. Secondly, the size of Tenet has allowed us to discount some services to physicians, including medical and surgical supplies to offices as well as, eventually, malpractice insurance. So, there’s certainly some very simple but straightforward advantages both in terms of enhanced fees and decreased costs that will be passed along to members of the IPA.

PND: Is an alliance like this Tenet’s preferred relationship with physicians and is Tenet going to try to encourage physicians whose practices it owns to become part of this IPA?

HM: If Tenet’s physicians are best served by being part of the IPA because they’re in the proper place and they’re doing primary care in the proper setting, then I think that they believe they should be part of the IPA.

PND: A number of hospitals have lost a lot of money purchasing physician practices. Do you think that your type of relationship will evolve as the preferred one in the area?

HM: I think it’s preferred because people lose their incentive to work when their practices are bought. Some places had very harsh oversight and physicians felt they no longer had any independence in terms of how to run their practices, and I think they failed for that reason. This specific entity is based on physicians’ productivity, maintaining some independence, running their practices as they see fit to best serve the needs of their patients. The physicians see more patients, therefore they do better in terms of their practice income. Tenet does better because, if the physicians are more productive, they get more people into their hospitals. Patients are served better because the physicians that have more interest are incentivized to actually work harder. For all those reasons I think this type of relationship is unique and will work better. I don’t know what Tenet is going to do with their owned practices. Some of the IPA’s practices will be owned by Tenet. Some practices will be totally independent. It’s whatever best serves the needs of the patients in the IPA.