Clinical integration: The key to your future

Legally Speaking

Daniel F. Shay
Alice G. Gosfield

Daniel F. Shay, Esq. and Alice G. Gosfield, Esq., are health care attorneys at Alice G. Gosfield and Associates, P.C.

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How dermatologists can succeed in a value-based reimbursement environment

The health care landscape is awash in acronyms, innovations, and new nomenclature: “ACOs,” “bundled payment,” and “value purchasing,” among others. All of these innovations, with which this country has very little experience, are aimed at changing provider behavior and, among providers, physician behavior most of all. Changed payment models are expected to change the incentives for physicians, driving them to be more efficient in their delivery of care without simply churning CPT codes in a fee-for-service model, which pays for volume rather than value.

Value means lowered costs, with improved quality and enhanced patient experience of care. Because physicians order most of the health services delivered in this country, and they render many of the most expensive, complex, and intimate services patients will receive, their engagement around the changed paradigm is essential. Altered reimbursement formulas are intended to get their attention to perform differently. Make no mistake. Almost all physicians will have to change something about the way they deliver care to succeed in the developing environment. Dermatologists, despite the reliance by some on cash-based cosmetic services, are by no means exempt.

In light of the fast-changing landscape, many practitioners are at a loss as to how to begin to make changes in the way they deliver care, especially those, like dermatologists, who primarily practice in outpatient settings. Some believe that becoming employees of larger entities will position them better. Others seek to remain independent and potentially network with larger entities. Still others are seeking to find common cause with other independent practitioners. While there is no single answer for all dermatologists, one common point is relevant to all physicians regardless of the architecture within which they practice: what will improve the lot of physicians in the coming environment will be clinical integration. [pagebreak]

Historical background

The concept of clinical integration as a basis for otherwise competing physicians to be allowed to bargain together for improved rates was set forth in 1996. Technically, it is not a safety zone, but the description of a physician network joint venture against which the Federal Trade Commission and the Department of Justice stated they would not take action, even where the physicians were not financially integrated, meaning taking financial risk together as in global capitation or percent of premium payments.

What the regulators understood to be clinical integration in 1996 would hardly be sufficient for physicians to succeed in today’s value-driven environment. They stated that they would not enforce against physicians who would be paid on a fee-for-service basis if they were part of an independent physician association (IPA) which would “implement systems to establish goals relating to quality and appropriate utilization of services by IPA Participants, regularly evaluate both individual Participants’ and the Network’s aggregate performance with respect to those goals, and modify individual Participants’ actual practices where necessary, based on those evaluations.” The enforcers went on to say that the IPA would engage in “case management, preauthorization of some services, and concurrent and retrospective review of inpatient stays.” These terms mean very little in today’s world of gainsharing and value purchasing. The enforcers then said the IPA would develop “practice standards and protocols to govern treatment and utilization of services, and would actively review the care rendered by each doctor in light of these standards and protocols.” Other descriptions included that failure to comply with the Network’s standards and protocols would be a basis for remedial action.

With regard to fee information, the enforcers stated that the Network would retain an agent to develop a fee schedule to negotiate fees and contracted payers on behalf of the venture. “Information about what participating doctors charge non-network patients will not be disseminated to Participants in the IPA, and the doctors will not agree on the price that they will charge patients not covered by IPA contracts.” [pagebreak]

Taken together, this description was focused around how physicians might improve performance together and thereby be permitted to bargain together for higher fees. But whether anyone pays a dermatologist differently going forward is no longer a sufficient motivation to change behavior. Rather it is public reporting of performance, becoming more efficient in the delivery of care to improve financial margins, and the demand for better quality care, which are the driving forces to clinical integration.

What is it?

A definition of clinical integration for today’s world would be the following: Physicians working together systematically, with or without other organizations and professionals, to improve their collective ability to deliver high quality, safe, and valued care to their patients and communities. The key words here are “systematically” — not periodically, not once a year, not every now and again, but regularly, in an organized way — and “collective,” meaning physicians working with each other for their collective good. For dermatologists this can mean within their own practices, as hospital-employed dermatologists, or across practices, whether in a formal IPA or an informal aggregation of a book club-type undertaking.

A principal theme to clinical integration is standardization: of documentation; of clinical processes based on clinical practice guidelines, protocols, or pathways; of the use of ancillary personnel; of who referrals are taken from and to whom they go. Standardization, according to integration advocates, saves time and deploys resources, including physicians, to their highest and best use.

A second theme is measurement of performance and transparency of data among the participants. Quality truisms include “you cannot improve what you do not measure” and “what gets measured gets done” so “be careful what you measure.” Still, one of the purposes of clinical integration is to improve performance, which cannot happen without measuring performance. [pagebreak]

The financial context of clinical integration is also key. What is the predominant external payment model and how does the enterprise move toward new models of payment? What is the compensation system for the clinicians? Well-integrated programs increasingly move toward compensating physicians based on quality and value. To really make change, all physicians, including dermatologists, need to understand the external payment predicates — the intent of the incentive design. Unfortunately, far too many purportedly new models of payment are simple recharacterizations of past payment practices. For example, there are a number of bundled payment programs that simply quantify how much the payer spent on the particular service line and care last year (e.g., cardiology, orthopedics) and then lump all those expenditures into a bundle which is to be shared among providers who are otherwise independent of each other. There are significant governance, contractual, and dispute resolution issues which too many players are not addressing as they enter into these relationships.

True clinical integration also requires clear motivations which manifest themselves in the values of the undertaking. Are we transparent in our governance of ourselves? Do we have a clear mission and purpose that all participants can understand and agree with? Are we appropriately selective in choosing those with whom we will integrate? Does everyone share our values regarding patient centeredness as well as that “value” itself is a value, meaning we all must work together to lower costs while improving quality?

How to begin

Clinical integration, whether of a dermatology group, a multi-specialty practice, or within an ACO-type entity begins with conversations. To stimulate and make meaningful the nature of the dialogue, we have developed a self-assessment tool, available at There, 17 attributes of clinical integration are set forth and considered in the context of: (1) a group practice or among hospital-employed physicians; and (2) an organized medical staff or a hospital-affiliated ACO. Yet another version ( is available for otherwise independent practitioners who wish to come together in a network. [pagebreak]

For each attribute, three scenarios are imagined — one where physicians are barely underway, another where they have begun to make change but have not accomplished their goals, and a third where the enterprise is committed and capable of real change toward its imagined future. For example, a network of physicians that has just begun to integrate may see its compensation model driven by individual fees and the use of ancillary services owned by members of the network. But a group midway along the continuum may focus more on earning pay-for-performance incentives and using the money to fund infrastructure, while an organization that is committed to change and full integration may focus on improving the value it delivers to payers. Many of the attributes focus on standardization among colleagues — of referral relationships, use of guidelines and protocols, documentation and electronic records, and culture and values.

By sitting in groups and considering where you are on the continuum for each attribute, it becomes more real to think about what change and a move toward more integration will require. Not everything is addressed in these tools, and not all attributes are relevant in all settings. But these documents have worked to help physicians actually create new processes by which they deliver care and are accountable for it.

While the volatility and transformational nature of the current environment is disquieting to many physicians, it is also an enormous opportunity for physicians to step up and master their own destinies by clinically integrating with each other. The work is real and it takes time. There is no Prince Charming. Only physicians can truly help themselves in this. But we are beginning to see evidence that when they do, their financial margins improve, their quality performance improves, they get more time back in their lives, and they engage better with their patients. Opportunity awaits.