Growing Your Clinical Service Line to Advance Medical Group Strategies

Today, medical groups are grappling with financial challenges due to the pressures from limited access to providers, private equity, declining reimbursements and rising costs. On this episode of Value-Based Care Insights, Daniel J. Marino sits down with colleague Lucy Zielinski to discuss the opportunities associated with forming strategic partnerships for clinical service lines. Learn about the nuances of service line trends, structural goals and the distinct approaches for primary care and specialist service lines.

KEY TAKEAWAYS: 

• Types of strategic partnership to drive improved financial performance.
• Health systems are managing continued pressure from private equity.
• Consider different types of reimbursement structures based clinical service line performance.

LISTEN TO THE EPISODE:

 

 Transcript:

Daniel J. Marino: 

Welcome to value based care insights I'm your host Daniel Marino as we look around the country and see some of the changes that are happening with medical groups whether you're an employed Medical Group or an independent Medical Group we're seeing a lot of pressure being placed on either health systems or these medical groups related to some of the challenges competition that's coming into their market with private equity or let's say specialty medical groups such as cardiovascular services or gastro or even cancer not being able to sustain their financial performance like they used to and the interesting thing that that we're seeing right now is the pressure that's being placed on these special medical these specialty medical groups are really coming from both sides so the pressures are coming from the payers wanting to obviously lower the reimbursement those pressures are coming from shifts inside of service not so much from shifts in value based care although some areas of cancer and some of the specialty service lines we are seeing a little bit of pressure from value based care from the payers but mostly from fee for service but we're also seeing these pressures what I would call from bottom up which are really the rising costs and some of these specialty care physicians and even primary care for instance aren't able to maintain their incomes like they used to, or their practices are really financially challenged so it's forcing them to look at different alternatives. whether that would be going private equity becoming employed by their hospital or maybe even joining another larger independent Medical Group. 

Well interesting topic one that we've been spending a lot of time talking to hospital leaders around the country and here today to help me with this conversation talk through it a little bit is my colleague Lucy Zielinski. Lucy welcome. 

Lucy Zielinski:

Thank you Dan thanks for having me. So Dan I'm going to flip the tables on you you're the host of the show and I know you've been doing quite a bit of work in this space recently we've had several clients that you've worked with them on some specialty service lines as well as supported many health systems in their strategy to system this you know as you know organizations healthcare organizations these days really want to grow their market share and really improve it quality and and lower costs around value based care So what have been some of the trends that you've been seeing across the country as an as it were as they relate to service lines? 

Daniel J. Marino: 

Yeah it's interesting when you look around the country it's a little different in each of the markets but it's also different by the different clinical specialties so for instance as we know a few years ago when they changed Medicare changed to be in person with cardiovascular services the year that followed was a tremendous amount of movement towards or shift towards employment for cardiology right so even today there is very few independent cardiology or cardiovascular groups are they're really employed now we're seeing that that continued trend occurring on in other specialties. 

So for instance orthopedics if you will they're not so much becoming employed by the hospitals but what we're seeing is private equity coming in and offering these big dollars to take over the groups and it's part of their strategy to shift to say in more of an AC type of a structure or something in that regard also seeing a lot of shifts and changes in gastroenterology and cancer as well and as I said in my opening remarks a lot of it is because of the cost pressures so I I would say that the biggest trend right now is with private equity coming in the market second to that is some of these nontraditional providers like Walgreens on optum has been very aggressive in this space and a few of the other nontraditional providers coming in and employing or purchasing these practices and then third they are looking to either the health systems or other independent groups in their market to merge or to form some type of joint venture. 

Lucy Zielinski:

Mm-hmm and Dan I think many of these health systems are achieving this systemness through strategy driven service lines and what do you what do you think are those goals those top goals for these service line structures?

Daniel J. Marino:

Well yeah you're right I think that the system is that we're seeing here is taking on a couple of different forms it's not necessarily employing these medical groups it's creating these strategic partnerships. so it's not it's not a single solution like it was a number of years ago when cardiovascular became employed so we're seeing different types of strategic partnerships and that's important to understand within the strategy as leaders are thinking about how to protect the particularly the specialty services within their within their community. So you know I think your question is a good one what at the end of the day what's the goal? well the goal is to make sure that you have a sound relationship between the specialty providers especially if they're independent right? these cancer anthology groups for ENT groups or orthopedics. if they're independent you as a hospital leader want to make sure that you have this strong relationship and even for the leaders of these specialty service lines or these independent medical groups you also want to make sure that your financial position is protected. So the goal is to create the relationship but you have to do it in a way that it's a win right focusing on growth focusing on cost management focusing on ensuring that the financial performance and even the well-being of their physicians if you will are really improving and not necessarily creating more pressure on these individuals.

Lucy Zielinski:

Yeah Dan and I think quality is probably another one just really improving those clinical outcomes as well as that patient experience because as you know when you have a whole bunch of groups doing the same procedures there there's a lot of variation they're doing it different ways so clinical variation I think is definitely a challenge with multiple groups. I think this is where service lines come into play as well

Daniel J. Marino:

yeah you you're absolutely right and focusing on clinical variation reduction is important certainly when you think about shifting to value based care but also in managing costs. The other thing that I think is a big driver here Lucy is these strategic partnerships that you begin to create helps you solve the access issue and right now there is a significant under supply if you will of physicians of providers by clinical service lines, and there's an over demand by patients right I mean in some cases orthopedics it takes three months to get in to see an orthopedic physician because you know we're working with one cardiovascular group right now and it it's close to 60 days to get for a new patient visit. That's not sustainable. So by creating these strategic partnerships and and allowing the availability of more resources and it's not just human capital resources but it's technical resources you help to create the strategy to improve access. and that has benefits all the way through the health system. 

Lucy Zielinski:

Yeah then and I think another point too is you know the physician burnout right and I think IT service lines really involve physicians so they're more engaged and there's better alignment and they aim at better quality improvement. Because you have team working on things now.

Daniel J. Marino:

Yeah you're absolutely right and you know I I can't help but think that the underlying driver for primary care and some of these changes that have occurred in primary care are really is a big result of primary care physician burnout. right you know and it's very tiresome for primary care physicians. so you know when you've got a Walgreens coming to you or you have a CVS coming to you or you have even an option coming to you and saying look we're going to reduce your administrative pressures by 20 percent you know we're going to cut the time that you're spending completing your you know in basket of your EHR we're gonna give you more resources that's very appealing to a physician who historically has been working 10/12/14 hours a day.

Lucy Zielinski:

It sure is it definitely is so the primary care physicians I think you know are really interested in in some of this service line strategy. How do you think it is different for primary care physicians versus specialists?

Daniel J. Marino:

Well I think for primary care as we talked about, I think the drivers of the incentives are a little bit different they they're focusing on creating a better let's say life environment for themselves. well you know improving their well-being. And then I think for specialists it's really about maintaining their financial performance, and maintaining what they built particularly if you have a specialty group like answer who you know has been around for 20-25 years they're independent they may lead the market you know they wanna make sure they can continue continue to grow. So when you think about that the strategic implications and the directions that you go are slightly different for primary care than for specialty care. So it's important for leaders to really begin to think about what are those drivers that are going to create the right levels of success and you know the question that you had asked that I think is a good one really focusing on on what's the goal as we start to advance our clinical service lines.

Lucy Zielinski:

Yeah So what is the goal like what would you say would be the top goal for especially for primary care service lines?

Daniel J. Marino:

Well I I think I think there's a couple of things that are impacting that goal I think you have to look at what the reimbursement is in your market and how proficient value based care is in your market particularly risk based contracts so I had the opportunity not too long ago to talk with a an administrator a physician administrator actually of a large health system that they're taking a very interesting perspective with their primary care. What they're actually doing they've got probably 152 hundred primary care physicians they've actually carved their primary care out of their fully multi specially employed Medical Group and they've created primary care as a special as a separate entity. And they've done that for one main reason it's because these full risk global capitation contracts are really advancing in their market. So they're basically saying to their medical groups to their specialists in two primary care love primary care we're going to give you the ability to manage this we're going to give you the autonomy to really not only treat the patient make sure you're managing quality efficiency and utilization but we're also wanting you to take the lead on working with the specialist and I'll tell you so I sort of asked once I heard the strategy. I thought it was really interesting because obviously for a big health system it impacts referrals right? I mean that's if I was the administrator so I've been thinking about. 

 So I asked the question well you know how are the specialists responding to this and he said great he says it's put sort of the specialist on notice that they have to think about delivering care differently you need to focus on referral management right following up with the PCP's working through clinical pathways and protocols for their specialty to make sure that they are providing efficiencies of care. And to your point earlier cutting down including some of that clinical variation reduction so I think the the primary care strategy in particular it's not a one-size-fits-all. It's really dependent on the market it's really dependent on the reimbursement it's really dependent on whether your primary care physicians are employed or whether they're independent 

Lucy Zielinski:

Yeah and that makes sense Dan you know I think about MSP especially when organizations are in a model where they're they have downside risk it's very critical that they manage that patient population and what better way to do it is through a primary care service line that addresses some of those chronic conditions that are thrown off some of those costs and carry you know putting management services around those.

Daniel J. Marino:

Yeah you're absolutely you're absolutely right and then when you pick a specialty care you know it it needs to be integrated the strategy needs to be integrated but it is a little bit different the strategy for specialty care I guess you know it really depends upon if they're employed specialists or they're independent. If they're independent specialty groups there's a there's a lot more vulnerability there to have another organization such as private equity or some of these non traditional providers come into your market and to employ them. Right? so that strategy really has to focus on how we can continue to support growth. How we can continue to create alignment with the health system or other providers in the market so we are protecting the care that we're delivering to patients in that community. That that becomes really critical

Lucy Zielinski:

Dan you and I I've done quite a bit of work with medical groups in the past around strategy and this just seems to me that medical groups should be considering some of these service lines and as really a Medical Group strategy. 

Daniel J. Marino:

Yeah yeah you know and it's interesting over the years and you know we we've been doing this for years I bet you I've been working with shaggy for 20 some plus years at least. There's there historically has not been a lot of focus on on growing this strategy of clinical service lines. And now with the pressures that are being placed on you know either the medical groups or the health systems or even the communities there is a larger focus there. 

If you're just tuning in I'm Daniel Marino and you're listening to value based care insights I'm talking today with Lucy Zielinski and we're having a a fascinating discussion on the on the clinical service lines and their impact on advancing Medical Group strategies. 

So Lucy yeah you're absolutely right I I think as you start to think about what those strategies are for the the specialist for instance focusing that attention on what the goal is how you begin to integrate how you begin to think about the market and protecting the care that's being delivered to patients within that community or within that geographic region I think it's critically important. 

Lucy Zielinski:

yeah yeah yeah I agree and so Dan I have another question for you we've talked about how service lines can provide better outcomes and how about the financial performance? You know we can't let let that be unseen here it's definitely a critical point for for many health systems as well as service lines. How do how do service lines support maybe your contract negotiations and then performing well how do they perform well in those contracts.

Daniel J. Marino:

Yeah that's a a good question you know the the financial performance of specialty care of these of these specialty groups has changed right it's evolved overtime and the types of contracting and how we're contracting also is continuing to change one of the things that COVID did was it really showed that not all this care needs to be provided in the hospital. That we can really be providing this care in the ambulatory environment in an ASC or even in an office based structure. 

Lucy Zielinski:

Or even or even telehealth Dan

Daniel J. Marino:

Right even yeah you're yeah you're absolutely right so these shifts and site of service and being proactive in understanding how we can continue to shift and evolve to from a queue to ambulatory from ambulatory to even office space I would even say from office space even home the home environment right. 

Lucy Zielinski:

You bet, and we have been seeing health agencies popping up all over the place.

Daniel J. Marino:

Yeah that has to be integrated in the strategy and then it has to be negotiated appropriately with the with the payers because at the end of the day the medical groups can't just accept a lower reimbursement for shifts inside of service because you know then you know they're sort of cutting their own throats but if you can negotiate a fair reduction as you go from the shifts in different side to services I've mentioned the medical groups undoubtedly will pick up some financial opportunity because the cost structure is different when you go through each of those areas. But it needs to be done smart right? You you know you you need to really think about both sides of the equation both the reimbursement and the impact to it as well as the cost and the impact to cost. 

Lucy Zielinski:

Mm-hmm and when we talk about these these services that are shifting in inside of service you know I've seen quite a bit around imaging in some of the procedural services. Can you speak to some of the the other procedures may be specialties that we're seeing the greatest shifts? 

Daniel J. Marino:

yeah you know we're we're seeing these in the ambulatory arena ASC's providing a lot more surgical services than they used to. So you know you you in the past we may have single service line on ASC's around orthopedics or in some cases cardiovascular or GI providing endoscopy you know as there are and and their own ambulatory arena. Now what we're starting to see is these multi specialty ASC's really emerging which I think is is great right? Because you're able to do a lot more with less. We're also starting to see like in radiology and that radiology iconology you know you'll have the hematology oncology group coming together and now partnering with radiation oncology right? Historically that's been separate so that that becomes important as you start to think about consolidating these services. We're combining these services that's how much consolidating but combining these services but you've got a contract around it right? And you have to think about what those that implication are both to the competitors that are in the market but also your growth strategy.

Lucy Zielinski:

I and I think I I saw a recent statistic that you know by 2030 that more than 80% of hospital patient department cardiovascular procedures could be allowed in ambulatory surgery centers. That’s a huge shift.

Daniel J. Marino:

Oh yeah it's a huge shift and we're seeing that now so we you know we just got done working on a cardiovascular strategy and a big part of that strategy was how they needed to continue to evolve on the surgical services the procedures from an inpatient Cath lab if you will to more of an outpatient Cath lab or moving you know imaging to more outpatients and as I said I think this trend is going to continue. It's going to continue to more even office based procedures. I had an interesting conversation with one of our clients who's an ENT physician and he's actually going through his surgical all his surgeries right now he's looking at by CPT code and he's actually having conversation with an anesthesiologist to say what can we do in the office based procedure versus ambulatory, because the reimbursement is going to be the same, right? And he actually can build some of the technical component around it and it just improves his overall financial performance and it's much better for the patient. 

Lucy Zielinski:

yeah and it's isn't it fascinating that the physician is involved in looking at this and I I see these physicians being involved in more and more and more in the strategy planning with systemness with service lines and so on. So having these dyad structures and triad structures of leadership I think is really key. How have you've seen these leadership structures change? I mean obviously we've seen physicians involved right?

Daniel J. Marino:

oh gosh yes and the physician leader has really evolved over the last couple of years. And they're continuing to evolve very quick and in some cases is putting the physician leader in a little bit of a difficult position because they've never had training around that, yet the need for them to really step up to be part of the strategy to think about how they need to advance some of their clinical services in some type of a strategic partnership is absolutely critical. And what helps them with this is to your point is having the strong administrative partner that you can work hand in hand.

Lucy Zielinski:

So Dan what time what advice would you have for these CMO's chief medical officers or administrators?

Daniel J. Marino:

Yeah I you know oftentimes folks will ask me well where do we start and I think the place to start is having the conversation right be proactive don't wait because if you wait there's going to be external pressures that are going to come into your market that are either going to come in and and purchase these independent medical groups or steal some of the employed groups and put them into a larger group. Have the conversations now.

Lucy Zielinski:

And those employees visit or those employed physicians are more likely to leave for better work life balance you got to retail clinic sometimes we've seen that happen quite a bit.

Daniel J. Marino:

Oh yeah you you are absolutely right have the conversation create the strategies the strategy it's not like the the strategic plans need to be a 10 year strategic plan right? it's a one year three-year strategic plan have the conversation. And especially if if you're working with an an independent Medical Group you do not have to talk about merging you can talk about having a strategic partnership a joint venture you know strategic partnerships take a lot of different forms, and I'm I'm happy to share some of those with you, but I think the key to it Lucy because you have to have conversations and you have to have pro you have to be proactive.

Lucy Zielinski:

Yeah Dan it sounds like having conversations with the physicians with the multidisciplinary team is is definitely important to start planning on what where should you start what service lines make the most sense for your organization and then you know how do how to build into some of these value based contracts because there's typically better performance when you're managing the whole service line.

Daniel J. Marino:

Oh you are absolutely right I mean so many components so many implications that you really need to to consider. And it's fascinating to see where these clinical service lines these independent specialty care groups are going to go. Well Lucy I want to thank you for joining me today fascinating discussion I I enjoyed kind of being a little more than the host being the participants today it's it was fun so thanks again for for coming on I really appreciate it.

Lucy Zielinski:

No problem Dan, it was fun to ask you some questions and turn the table. So can you tell us where listeners can go to For more information? 

Daniel J. Marino:

Yeah please if anybody is interested in advancing the Medical Group strategy, I think we talked about this on our last episode with Jeff Peters, please feel free to go to luminahp.com/insights. There is a Medical Group strategy page and just a wealth of information. We have a lot of articles there, webinars, and even some of our podcasts. Or if you're interested in in just finding out a little bit more just having conversation around your clinical service lines and advancing some of the strategies feel free to reach out to me my e-mail is dmarino@luminahp.com. 

Well Lucy, again, I want to thank you for joining me today great discussion I really enjoyed it. And to our listeners I especially want to thank you for listening today. Until our next insight, I am Daniel Marino bringing you 30 minutes 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