The last 24 months have seen unprecedented numbers of urology specialists moving to employment with hospital health-systems, with others supporting group merging mania and consolidated into larger groups. The surge appears to have slowed. Hospitals continue digesting the cost and complexity of successful physician on-boarding and large groups moving to effectively consolidate the new infrastructure, define delivery models and culture, and capitalize on market based value.
PRS Consulting works with and represents numerous physicians, new groups, mergers and consolidations and hospital systems; we see all sides of the conundrum. While the employment trajectory appears to have softened, serious organizational and financial issues are unmistakable for all players – one size does not fit all, the playing field dynamic and expectations are rarely aligned. I will briefly share some issues surrounding defining and obtaining the true value of urology services for individual physicians and group practices considering hospital employment.
Simply, each situation is unique and will include a number of critical issues including: the commercial reasonable and fair market value of a urological practice, aggregate value of in-network, community based urological care and service for example: office based evaluation and management, procedures, injections, in/out patient, surgery, service out migration value, hospital coverage and relationship, and more. Also, straight w-RVU based models are sensitive to rate adjustments (2013 sequester -2%), and a diverse compensation package, specifically aligned with the work the practice would drive, will assist with insulating the effects of future w-RVU rate declines. Any of these issues can easily constitute a deal breaker or potential downstream conflict.
Situation review: Three urologists (mid-career), one site, well-established and growing practice, good relationship with both local market hospitals and strong referrals. Good until one hospital added a new urologist and two NPP’s to the hospital medical group 11 months ago to support the new cancer center – referrals quickly began declining from the hospital medical group. While this scenario is not unusual, unfortunately, the financial and downstream impact on the private urology practice is real: including declining referrals, loss of new patients and urology market influence, and systematic revenue declines. All of these issues were evident during the practice budget and strategic planning and downstream revenue projections discussions in October 2014, and were validated at the practice’s EOY review in early January 2015. As you can imagine, the practice is facing a serious assault on revenues and a strategic business dilemma. Some key discussion options included:
Reallocate services and coverage support to the other market hospital.
Join the hospital’s MSG as a group with individual contracts, allowing the hospital to immediately have the largest urology group in the community (strategic plan).
Do nothing. Continue as normal, and hope for the best. Regarding the last option, far too often we see this is as a default option triggered simply by non-action. Hope is not a good business plan.
In closing consider that urologists are a finite in-demand specialty and the demographic driven baby boomer generation’s unprecedented demand for specialized care significantly increases the value of in-network, community based urological services.
If you would like to discuss these or other practice issues, please contact us direct at 800-972-9298, extension 111 or e-mail me at lkemp@prsdata.com
