Doctors enthused about Providence partnership

March 1, 2012

Syndicate aims to standardize clinical protocols, improve quality, lower costs

In October, when a new partnership was first announced between doctors in the Los Angeles region and Providence Health & Services, Southern California, board members of the joint venture — an effort to contain costs and measure quality — had a relatively modest membership goal.

After all, it is an unusual business proposition, said Kerry Carmody, regional chief operating officer for Providence. And to participate, each physician was required to invest cash at a time when plenty of uncertainty still surrounds future health care business models.

"We thought if we could get 250 physicians — across the region and from multiple specialties — to engage in this alliance we would really have a nucleus to form around," Carmody said.

By the end of the sign-up period on Dec. 31, 669 physicians had joined Providence Partners for Health, more than doubling expectations and providing a confident launch for the new joint venture focused on responding to changes in the health care marketplace.

Standardizing treatment protocols
Ownership in Providence Partners for Health is split 50-50 between Providence and participating physicians, who paid $1,000 each to purchase membership shares and join the alliance. Providence matched the entry fees and also committed to paying up to 85 percent of the cost of connecting the members to an electronic medical records network. With technology costs included, the total up-front expense to Providence could be as high as $5 million.

For their part, the physicians agree to share data on a variety of quality measures, accept feedback from their physician colleagues and collaborate in clinical projects designed to identify procedures that will provide high-quality health care at lower costs. The ultimate goal is to develop standardized guidelines for treatment, which all members of the partnership pledge to follow.

"This has been an effort that has been motivated by a desire to be part of the solution," said Dr. John Armato, an internal medicine specialist from Redondo Beach, Calif., who was elected chair of the partnership's board. "We need to find a way of bringing doctors and hospital systems together to accomplish the end goals of reducing redundancy, improving quality and reducing cost as much as we can."

The roots of the partnership are in health care reform and the likelihood that it will bring declining reimbursements and an emphasis on cost containment and measuring quality.

Providence invited physicians to come up with a clinical-integration model that would begin the process of standardization among the more than 3,000 physicians who practice in Providence's five Southern California hospitals and other facilities. In a state where hospital employment of physicians is discouraged by statute, about 65 percent of physicians are independent practitioners working alone or in small practices, Carmody said.

Solo practitioners join in
"Every year … you see that your ability to be self-contained and self-sufficient is being eroded," said Dr. Raymond Schaerf, a cardiothoracic surgeon and sole practitioner from Burbank, Calif., who joined the partnership. "For the first time in memory, we can enter into a partnership with the hospitals without going to work for them, and I think this was attractive to a lot of us."

Schaerf said that if the partnership can demonstrate through data exchange and standardized clinical practices that it can produce high-quality outcomes and lower costs, it will be in a strong position to negotiate with payers.

The partnership includes executives from the five Providence medical centers and physicians from throughout the San Fernando Valley and South Bay areas. It is led by physicians, Carmody said. Nine of the 15 board members are physicians, and membership is nonexclusive, meaning the physicians who join may continue to practice at other health systems.

The alliance has the sort of integration and transparency that are the goals of accountable care organizations, a structure promoted by the U.S. Department of Health and Human Services that is intended to motivate doctors, hospitals and other providers to better coordinate care and improve care quality, while controlling costs. Armato emphasized that, while it could evolve in that direction, the alliance is not an ACO. "This is a clinical-integration model that does not require an ACO to be successful," he explained. "It's a means by which you can have docs work together to share practices and to share information about what works best for patients."

Based on the initial syndication, Providence Partners for Health began with about $1.4 million in working capital, funds that will be used to hire a director and a data analyst and begin the process of gathering data and launching the clinical projects. The partnership's board is still working on the specifics for future funding, but the leadership expects that support could come from both public and private payers. As examples, they cited funding available for Medicare demonstration projects, bundled payment options and shared-savings programs. The latter programs can capture and redistribute savings resulting from the clinical integration of hospitals and physician providers that reduce costs and improve care delivery and outcomes. Carmody said Providence will share documented savings derived from the partnership equally with its physician partners.

Other revenues could come from improved contracts with private payers, if Providence Partners for Health can demonstrate consistent cost savings, physician alignment and transparency. And, Carmody added, the partnership is exploring the possibility of developing a "narrow network" health care plan for its employees and their dependents. Still a work in progress, that plan structure likely would pass along lower costs to beneficiaries who go to a Providence Partners for Health provider for care.

Many details — including the first of the clinical areas in which the partnership will focus — are still to be worked out. The joint venture's committees for data analysis and quality measures will begin meeting soon.

Carmody said the partnership may open its doors to new members in another 12 to 18 months. "I think there are others waiting on the sidelines to see how this goes," he said. "If a year from now, we end up demonstrating that we've done something, we could end up with a syndication that is even bigger."


Copyright © 2012 by the Catholic Health Association of the United States
For reprint permission, contact Betty Crosby or call (314) 253-3477.

Copyright © 2012 by the Catholic Health Association of the United States

For reprint permission, contact Betty Crosby or call (314) 253-3490.