While hospital employment has become the national norm for primary care physicians, many hospitals still have independent PCPs on their staff. These physicians are worth your time and attention, with many contributing significant downstream revenue to your organization. Healthcare Strategy Group recommends focusing a portion of your primary care strategy on these independents. Your assessment should start with a few simple steps.

1) Succession Planning. Declining Medicare and Medicaid reimbursements have made many independent physicians in the 60+ age group reluctant to recruit younger partners, let alone put a post-retirement practice plan in place. For those independents important to your bottom line, we recommend developing a transition plan that can include:

  • Employing the physician;
  • Providing assistance with recruiting a new partner for the practice; or
  • Employing a newly-recruited partner under an “incubator” model, where the hospital leases space from the practice for the new physician.

Where do you start? Place top priority on independent PCPs with the least number of years until retirement. Then, examine each practice’s payer mix. The goal is to maximize commercially-insured patients and add as few Medicaid/self-pay patients as possible.

2) Evaluate Loyal vs. Splitting Physicians. Divide your independent primary care physicians into two categories:

  • “Loyals,” who send all their work to your hospital and affiliated specialists, and
  • “Splitters,” who split their volume between your organization and a competitor.

Your hospital definitely wants to be at the table should a “loyal” physician decide to pursue employment. With so many hospitals adding primary care physicians to their employed networks, you run the risk of losing them before you have a chance to counteroffer. Broach the subject first.

With “splitters,” employment can help increase volume and revenue for your hospital. Alternatively, a strong physician liaison can work with your “splitters” to determine what referrals are going out-of-network and why, and then try to shift those referral patterns.

A simple way to identify “splitters” is through downstream revenue reports. Nationally, PCPs generate about $1.6 million annually in hospital gross revenue. Comparing a physician’s gross revenue to the national average will help you make the initial cut on which physicians should be targeted. If hospitalists are throwing off your downstream revenue reporting, look at outpatient revenue. Then, cull the list through qualitative assessments of how busy each physician’s practice is perceived to be and what the practice’s payer mix is.

For a more complete picture, HSG’s Physician Network Intelligence provides detailed information on referral patterns, volumes and opportunities.

Travis Ansel

Chief Executive Officer and Managing Director, Strategy