Building an Integrated Ambulatory Network: Forty-Five Years of Medical Group Strategy

Forty-five years after a Chicago hospital pioneered an integrated network strategy, the healthcare landscape has undergone a significant shift towards prioritizing preventative care. In this episode of Value-Based Care Insights, Jeffry Peters, an expert on medical group strategy, along with Michael Antoniades, President of the University of Chicago Medicine, explore the groundbreaking challenges and strategies that revolutionized healthcare delivery, and how they are still being tackled today. Gain insights on the evolving focus towards preventative care, the measures used to evaluate healthcare delivery, and the pivotal role of primary care in bolstering the entire healthcare ecosystem.

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Transcript:

Daniel Marino:

Welcome to value based care insights. I am your host, Daniel Marino. Over the last 30, maybe 40 years. There's been this growing trend of physicians to become employed by hospitals, by health systems. And over the last, you know, maybe 15-20 years, that trend is has changed. In some cases it's there's been more momentum towards employment. Some there's been less. But one thing that hasn't changed is how the integration of healthcare systems with their medical group and their medical group strategy, how that is an important component on serving care in the community. 

Well, recently there's been a great article that has been published by HFMA. A Healthcare Financial Management Association, in the March 2024 edition of HFM. And the article is entitled a 45 year case study of one IDN successful evolution. and the article speaks to how this medical group strategy, this this comprehensive ambulatory care network was put in place 45 years ago, which at that time was, was really revolutionary, if you think about it. But how it was put in place to create a tremendous amount of value for a hospital. That was that was really, you know, it's in the south side of Chicago, It's an under served community. How it not only supported the patients in the community, but how it created a tremendous amount of value for that organization, and then later, the organization is Ingalls Memorial Hospital. It was later purchased and aligned with University of Chicago. That 45 years and the activity that has occurred over that 45 years has created a tremendous amount of value for University of Chicago Medicine and the health system as a whole. 

So I am I'm really excited today to have the President of University of Chicago Medicine, Ingalls Memorial Hospital, Michael Antoniades  with us today as well as Jeff Peters. Jeff is a national expert in medical group strategy and has helped numerous organizations across the country and their financial performance. Michael Jeff, welcome to the program. 

 

Jeffry Peters:

Thanks for having us 

 

Daniel Marino:

Great article, Jeff, and I know you. You did this with tom Jackowitz, who is the President of University of Chicago health system. Michael, you know you were a recipient of a lot of the opportunities associated with Engels. Jeff, maybe we could start with you thinking back when you kicked off this strategy, This was really new, right? It was. It was really revolutionary. It was a whole new idea. What were some of the challenges that you had is you were thinking about launching this integrated network strategy with either the leaders at that time, or even the physicians that were very involved in the organization? 

 

Jeffry Peters:

Yeah. So back then, Ingalls, as you referred to was geographically disadvantaged. A high percentage of government pay no pay. And 99% of their revenue was based at the hospital in this challenging market. So the hospitals viability depended upon solidifying its market share to the east, growing it to the south, and most importantly increasing its market share in the western portion of the suburbs, where it only had 1% market share, but was in the most attractive market that the hospital needed to penetrate, to change its pay or mix. So the whole strategy was, how can we broaden the service area and by broadening the service area, how could we change the mix? So that's why we initially put in freestanding emergency rooms use those to generate referrals to primary care as they got busier specialists which supported ancillary's and Ingalls same day surgery. 

 

Daniel Marino:

So that strategy, like I said, it was really new at the time, because, you know, way back, when you know everybody went to the hospital for the care. There was very few facilities that were standalone that were out in the community. That really serve the community. So you know, Michael, let me turn to you real quick. When you think about that trade. I mean today, everybody does it right? There's a lot of satellite facilities, but speak to the importance of that strategy as a referral mechanism, maybe as a feeder mechanism, but probably more importantly, to connect the care with the community, If you will. 

 

Mike Antoniades:

Absolutely, I want to take a step back. I joined the industry in the nineties right early, early 90s. So what Jeff just shared, this is groundbreaking, pioneering type of work like no one even thinking about this, with the exception of physician offices, that will basically, you know, out in the community serving their commuters across the country. Hospitals were the only destination. No one had outpatient, that that term, outpatient or ambulatory almost was nonexistent. Even when I joined the industry in the early nineties, you know. Now you're fast forwarding 30, 40 years later. And you know we coin terms like consumerism. I remember when I first joined the industry. I use the word customer to one of the supervisors that I was talking to. I was being introduced to the industry. And I was basically told you don't use that word here. You don't use customer, you use patient. So Jeff really started. I just really, you know, foresight as a strategist is, you bring the care closer to those who need it right. And you begin to introduce services that don't really have to be at the hospital. Now a lot has evolved since then, and the ability to have EMRs has really allowed us to grow more. That would just result on manually. Back then. So. But you bring the care to the patient. You're introducing a level of consumerism. This is 1970. S. That term probably didn't even exist. And here we are at Ingalls Memorial, in the southland of Chicago, bringing the care closer to the folks, so they don't have to drive 5 miles. They can drive a quarter mile. 

 

Daniel Marino:

The care is really in their community. It's built around convenience. And frankly, you're really meeting the needs of the patients. So, Jeff, you know, with the article I thought was great, and in the article you talk about strict 6 strategic phases. 3 of them really caught my attention. The one was creating a primary base. Second was expanding the feeder programs, and then the other one that caught my attention was expanding horizontally. Maybe we can dive into that a little bit. Creating the primary care base again to Michael's point in the seventies, we never really thought about that. Around consumerism. Patients had their doctor, they built the relationship. And you know you just went to doctoring, and you got your care. Nowadays. Primary care is so important as that as that gatekeeper of care of that connector with the other specialty services. How or why is creating that primary care base? Why was it so integral to the strategy at that time? 

 

Jeffry Peters:

Well, I think it's not only integral to the strategy at that time. It's integral to the strategy. Now. Primary care is the foundation, which supports the rest of the healthcare delivery system. As your primary care volume grows, you're generating more referrals to specialists. You're generating more profitable surgeries. And in the case of the University of Chicago Medicine, it's their primary care base as you expand it. And as it gets larger that actually give out the Tertiary and quaternary referrals that actually support the entire mothership or the entire enterprise. So organizations that are successful even academic world destination health centers as they pay attention to their primary care base. The entire enterprise does better. And I think that's what we recognized. And you want to make it convenient for patients to access a primary care physician, put them close to where they live, make it easy for them to park, make it easier easy for them to get in. And the other thing you need to do is you need to make sure that the patient satisfaction with their primary care visit is that the ninetieth percentile or above,  

 

Daniel Marino:

Right. So there's so it's really a broad, based, primary care strategy that's integrated into this overarching, ambulatory integrated network strategy. Right? So you really need to think about how that primary care component not only supports the needs of the patients, but then really creates that integrated approach, almost as a as a feeder structure into the rest of the system. So you know, Michael, the second point is that Jeff mentions and Mr. Jeffowitz mentions in the article was. The strategy was used to expand feeder programs right? So as Jeff is talking about that I was, I was thinking through well, primary care at that point, probably, was the referral into some specialty services which were done at the hospital. But now those specialty services again is even involved to where it's in the community, right with ASCs and so forth. How has that feeder program philosophy evolved over time to the point where it's really been something of value for Ingalls Memorial Hospital today? 

 

Mike Antoniades:

Yeah, that's a. It's. It's a great point to make. I think the word foundation that Jeff used is the exact. It's the right word. Think about the evolution of healthcare right? Go back to the seventies or eighties or nineties. If you didn't go back that far. And when did people go to the doctor? When they had something wrong with them? Right? So you introduce primary care local, and you begin the evolution to come to us before you get sick, right? The entire pendulum has shifted to. How do we keep you healthy as opposed to come to us when you're sick and would do a major surgery or something. Everything change. So primary care was not just evolutionary in the terms of, you know, providing access. It also changed the mindset. With you, healthcare, it's healthcare, not after you're sick. Get it before it became preventative care. The term, I think, Jeff, you probably recall the term gatekeepers right there. The primary care physicians were called gatekeepers out on the back in the eighties or nineties, you know. They really helped navigate the entire healthcare experience of any patient. So it is and continues to be today foundational. Because when there's something wrong with you, you know, if you have the sniffles. you know you don't need to go see a specialist. You just need to see a primary care, you know. Clinician to be able to hopefully on. 

 

Daniel Marino:

But that support, I think, has expanded through primary care, but also that connectivity to the other areas, whether it be the specialty providers, or even some of the ancillary services, has also been a critical component, I think of where Ingles has gone and creating that feeder structure. 

If you're just tuning in, I am Daniel Moreno. You're listening to value based care insights. I'm talking today with Michael Antoniades, Jeff Peters. And we are talking about kind of reviewing a great article that was in HFMA, Healthcare Financial Management Associations Journal, entitled The Integrated Delivery Network, a 45 Year Case study of a medical group strategy.  

Jeff, let's talk for a few minutes about I think the fourth area that it's least number 4 in the article. It's expand horizontally. And I think, as I read that to me, it just logically makes sense that you create a horizontal based model that truly integrates the care of the patient at different care settings. Right? So you know. And you reference the family care center. How you how you move forward with putting in place multi different, many different specialties. To create that horizontal model. Talk a little bit about what you went through at the time. But how critical that is to even the care that's being delivered today. 

 

Jeffry Peters:

Yeah, I think what you want to do in any healthcare enterprise is you want to expand your market share, and as you look at expanding your market share, you not only have to put your services out into a community that that you may not have a large market share with. But you also want to develop those services and make them more responsive to the patient's needs, to the consumers needs for convenience and high quality. So we view that was really important to sort of create a hub and spoke strategy where we pushed it out. I think the other thing in the back of our minds was, we knew, long term that Ingalls could not survive as a community hospital just on its own. So we not only wanted to make the hospital successful, we wanted to make it attractive to world class facilities like the University of Chicago, so they would be interested in potentially acquiring or merging with us. So we weren't just supporting the system. We were also had a vision of we wanted to be a critical component of a world class healthcare delivery system like the University of Chicago medicine. 

 

Daniel Marino:

Yeah, that's great, and that, you know. And and I would think, for University Chicago medicine, that horizontal based approach is just so critical to not only how they're serving the the patience of the Chicago metropolitan area. But nationally. I mean, you get folks that come in all over the place, so that ability to connect is just is just incredible. Today, I'm gonna throw this one out to both of you and give you a chance to to kind of respond to this. Many healthcare organizations over the years create their medical group strategy, and they think about different elements of that strategy on either how to expand or recruit physicians, or grow different service lines. And there's obviously a cost right? There's an investment that goes into it, and such is hard to identify that return with what was included in the article and the impact over these 45 years. Clearly, that return is there. And it's and it's quite significant. So you know, Jeff, maybe we can start with you as you think about these strategies, many, many organizations, many leaders, sometimes pull the plug on these strategies, because the right return isn't there. So how do you begin to measure that over time to ensure that you stay true to the strategy? 

 

Jeffry Peters:

Yeah, II think you're right, Dan. Nationally, what we're seeing is a loss on an employed physician of between 150 and $200,000. But you've gotta look in a higher portion of that losses within primary care. So the way the strategy works that gives you the return that you need to justify the investment is you've got to create the foundation of primary care, but you've got to surround them with profitable specialists that generate referrals and use high margin. Services like CT, MRI, surgery infusion centers. So the way that it works is using those primary care losses to support profitable specialists and profitable ancillaries. And that's where you get returns that that actually can exceed a 20% annual return on your investment. 

 

Daniel Marino:

Right. So really focusing being true to it. But then, focusing on those key service lines that you can that can be built and built upon in the strategy to create that that ongoing return. So, Michael, when you think about then for Ingles, I mean to me, it's quite significant, right? I mean, when you think about the amount of cases and how you built in that over time. How's the strategy really, you know, supported, supported where you wanted to go, either maybe with additional cases, or how you continue to see the ROI paying dividends today? 

 

Mike Antoniades:

Well, obviously. You know the pay and makes does help a little bit when you have better pay, makes no reimbursement. It's a whole other conversation we can spend multiple. I'm sure you have already multiple reimbursements and all the challenges that we're facing it's it. It's a business decision. Right? So how do you make this work? You know, even though there is an investment that goes in for physicians, just because their reimbursement is just not good enough to help to support or even, you know, break even with the cost of having the physician and having the infrastructure around them. Is having the right services, that will one benefit the community. Because if you put a service that nobody needs. And you're not going to get a return. So you got to connect what makes sense from your business and what your capacity and capabilities are, and what the community needs. You got to tie the 2 together, which is what the FCCS have done. Is connecting the services that are important to the community. and then you cannot forget the basics. Right? One is where you put it. Location is critical. If you hide it somewhere and nobody's going to find it. So even in this day and age with, you know, Google Maps and all, you got to have a good location. Make it easy for people to get in. Be very accessible, you know more hours when they can make it convenient for the patients. And then you got to have also patience. You're not. These are not businesses that are going to turn in 6 months and generate the margins that we all want to see, to be able to survive and reinvest right? You have to give it time. You got to continue to invest, and if you do your homework early by choosing the right location, the right services having the right people managing and give everybody a great experience when they come in through your doors, the return will come. 

 

Daniel Marino:

Yeah, yeah, I agree with you. I agree with you. And II one of the things that is, you were talking about that that caught my attention is that the services and that strategy certainly has evolved a little bit right. Because the needs of the community have changed the pay or mix changes a little bit. So your strategy has to be somewhat dynamic, but you also has to have to stay true to what the needs are. And then how you're meeting those needs as that as that continues to evolve. Jeff. I think a lot of organizations as they move forward the strategy. That's the part where they feel like. Well, it's either not working, or they choose to pivot or kind of derail the strategy, if you will, and it sounds like with University of Chicago, Madison, and certainly what you've been able to do with Ingalls staying true to that has really helped. 

 

Jeffry Peters:

It's generated significant returns for everybody. I think it's also important to realize. Investments like this are really positioning organizations to succeed under value-based care. Having these integrated services in one location makes it much easier for the primary care provider to manage patients with chronic diseases. It also allows you to set up delivery systems on a low-cost ambulatory basis that can provide high quality care to some of the more costly events that you need to not only have good outcomes on, but you need to prove to payers that you can deliver in a more cost, effective manner. At one of the family care centers. You can do a mammography. You could diagnose breast cancer. You can do a biopsy at the same location. And then there's the various modes of cancer treatment that you can do right there at a cost that's less than half of the cost of an inpatient setting. And this is by world class oncologist, from the University of Chicago. So it's been a successful strategy up to now. It's really created the right nil you to succeed under value-based care. And I think that's what forward organizations like the one Michael is running is doing. 

 

Daniel Marino:

Yeah. It is great and congratulations to both you on this. It's just a fantastic success story, Michael. We have a lot of our listeners who are healthcare leaders. Certainly medical group leaders and putting together strategies and so forth. If they're thinking about expanding their medical group strategy or an ambulance building. A similar network is to what Ingalls has done and University Chicago medicine. What pieces of advice would you offer? 

 

Mike Antoniades:

Yeah, I like to think always longer. Term right? These are not short-term investments that are going to give you the return that you want in 6 months or a year or 2. So you always want to have a long term view where the community is where the community is going. Understand the dynamics. Even, you know, get involved locally with the development of the communities to understand where the future and make the investment. I think the basics around any type of consumer driven type of investment applied to healthcare, too,  

 

Daniel Marino:

Absolutely, community is absolutely key staying. True, that strategy, but having it evolve, I think, is is a critical point. 

 

Mike Antoniades:

Yup Yup, I mean, in a University of Chicago. This is outside of Ingalls. That's the University of Chicago health system just about to open an incredible facility in Northwest Indiana. This is about geographically expanding up beyond Illinois. With a just a gorgeous facility, is going to open in the end of April. And it's another example of what was done similarly, 40 something years ago at Ingalls. Now it's happening as part of the greater University of Chicago health system to serve a growing community in Northwest Indiana.  

 

Daniel Marino:

And how you've been able to build on that strategy over time. That's incredible. So real quick, Jeff, just last question for you. Did you think about the strategy now? And looking at where healthcare is going? You mentioned value-based care you mentioned level of reimbursement. What's the next generation of medical group strategy look like? 

 

Jeffry Peters:

I think the next generation of medical group strategy is, is, is really finding a way to deliver healthcare that's convenient. That's low cost. And that's getting really good quality outcomes. So it's paying attention to what consumers needs. It's pushing all of the services out into the community closer to where the patient lives. But because so much of our patient base is paid somewhat on a risk basis. We've also got to constantly pay attention to. How are we managing that risk most cost effectively? How can we lower the cost? And these types of multi-disciplinary facilities are a good platform to succeed in the next generation. 

 

Daniel Marino:

That's great. I'll tell you. Well again, gentlemen, congratulations! Wonderful success. Story. Special congratulations to you, Michael. You're doing a great job running the organization. Look forward to following it along, and certainly the expansion that University of Chicago medicine is taking as they build the strategy. Again to our listeners. Thank you all for tuning in. We really appreciate it, and until the next insight, I am Daniel Marino, bringing you 30 min of value to your day. Take care. 

 

 

 

About Value-Based Care Insights Podcast

Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners