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 physicians2003 2008

$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 937- 498 - 5503Wilson Memorial Hospital, Sydney OH

Adrian Byrne 440 - 247 - 7876Dynamis Advisors, Inc. Cleveland, OH