Is the Private Practice of Medicine Coming to an End? What Alternatives Exist? OHA Conference June 2008 Adrian R. Byrne, Dynamis Advisors, Inc David L. Andrick Wilson Memorial Hospital

The Physician Shortage  Nationally the population is growing at a rate of 1% a year. (approx 3 million people) (Ohio’s rate is flat)  As 79 million baby boomers begin entering retirement age, so are their doctors.  21% of Active Physicians in Ohio are over 60 years.  Life expectancy today is 77 years and rising.  Changes in the practice of medicine have driven specialization and increased the number of available procedures.  New younger physicians have different work ethics.  Uncertainty about the future of healthcare industry.

Impact of Shortages Affecting access to care Underserved and rural areas are hurting Supply and demand market forces Quality of service lines Hospitals are thrust into the limelight Alternative approaches to delivering care are being tested

Impact of Shortage on Costs Avg. cost to recruit physicians $36,000 $55,000 Cost of needing to refer patients out of the community Lost revenue opportunities E.D. Coverage Community costs

Economic Impact of Physicians Estimated average value of a physician to a hospital $1,496,000 a year Specifically: non-invasive cardiologist $2,240,286 general internist $1,987,253 pediatrician of $697,516

Recruitment Strategies Who is your competition – Everyone! Physician strategy must be a part of the Hospitals Strategic Plan Retention as a strategy Get creative Retainers or FFS with recruiters Prepare for more women entering workforce Employment or Private practice options Stark Limitations

Recruitment Tools Loan forgiveness Signing Bonus Income guarantees Join existing practices Recruiting a mature practice issues Medical directorships Stark again….. Employment

Why Employment, Why Now? Changes in work ethics Life style expectations More women physicians Provides lower risk for new physicians (and less commitment) Less attractive reimbursement More complex practice administration Liability concerns Others are offering the option

Employment - Doing it Right Hospitals have learned a lot from the last attempts to hire physicians Practice accounting; revenue and cost management is better Physician retention strategies are formalized There will always be three employment agreements! Create reliable referral networks for specialty service lines Active marketing as part of the hospitals network Stark again……

Physician Network Integration - Affiliated Practices Increasing levels of integration >>> Employed or Hospital Affiliated Practices Joint Ventures or Equity Model MSO IPA or PHO and Medical Staff Privileges

Physician Hospital Partnering Partnering with physicians will provide alternatives to employment but can be riskier and ultimately costlier. Can include: Gain sharing Real Estate ventures Outpatient and ASC joint ownership MSO ownership Group Practice ownership

The Future of Private Practice Some established employed physicians may set up on their own Unique services that are immune to general reimbursement issues (cosmetic plastics) Specialists with unique capabilities and reputation Continuation of large existing group practices with member shareholders Smaller communities will see physician employment as the only option to continue

After November 2008? All bets are off the table…… Single payer system? Dual payer system? More of the same?

Planning for the Next 10 years there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know.“ Donald Rumsfield 2007

Questions?? Please fill out the program evaluations Contact Numbers : David Andrick Wilson Memorial Hospital, Sydney OH Adrian Byrne Dynamis Advisors, Inc. Cleveland, OH