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Small Medical Practices Benefit from Independent Practice Associations and Physician Hospital Organizations, Study Shows

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Requirements of the health reform law are pressuring small physician practices to use information technology and new ways of delivering care to improve patients' wellbeing. Yet only a quarter of small- and medium-sized physician groups partner with organizations that share technology and care-management programs that make these otherwise unaffordable resources available to them, according to new research by Weill Cornell Medical College scientists.

The Affordable Care Act, signed into law in March 2010, provides incentives to adopt and make effective use of electronic health record systems, perform well in the public reporting of quality measures and develop accountable care organizations — organizations of providers that agree to take responsibility for the cost and quality of coordinated high-quality care delivered to their patients. In order to gain access to these services, small practices can turn to collaborative organizations that share resources.

Dr. Lawrence P. Casalino, chief of the Division of Outcomes and Effectiveness Research and the Livingston Farrand Associate Professor of Public Health in the Department of Public Health

Researchers at Weill Cornell Medical College wanted to know just how many small- and medium-sized physician practices are participating in such collaborations, which are generally done through an independent practice association (IPA) or a physician-hospital organization (PHO). An IPA is a network of physicians who remain in independent practices but agree to participate in an association to contract with health insurance plans and to work together to improve the quality of care they provide. PHOs are like IPAs, but include one or more hospitals. The Affordable Care Act specifies that IPAs and PHOs can qualify as accountable care organizations.

The researchers' study, published in the August issue of the journal Health Affairs, is the first to investigate the participation of independent small- and medium-sized physician practices in IPAs and PHOs. Using data from a national survey conducted from 2007 to 2009, before health care reform, the researchers discovered that only a quarter of practices participate in these arrangements.

"There aren't that many high-performing IPAs and PHOs — it takes excellent leadership to create and lead an IPA or PHO that functions well — and most physicians probably do not have one in their community that they see value in joining," said lead author Dr. Lawrence P. Casalino, chief of the Division of Outcomes and Effectiveness Research and the Livingston Farrand Associate Professor of Public Health in the Department of Public Health at Weill Cornell Medical College. "However, it is possible that a higher percentage of practices participate in IPAs and PHOs since health care reform became law."

The survey asked 1,745 small and medium-size physician practices, comprised of one to 19 physicians, about their participation in IPAs and PHOs. The survey asked respondents whether care-management processes employed at each practice for four chronic conditions — asthma, congestive heart failure, depression and diabetes — were provided in-house or by an IPA or PHO.

"We found that nearly a quarter of practices in our survey reported participating significantly in an IPA or PHO," Dr. Casalino said. The study, co-authored by Dr. Andrew M. Ryan, the Walsh McDermont Scholar in the Division of Outcomes and Effectiveness Research and associate professor of public health at Weill Cornell, was funded by the Robert Wood Johnson Foundation.

"For these participating practices, IPAs and PHOs provided enough care-management services, on average, to double the number of resources offered to the practices' patients. To our knowledge, this is the first study to report this information, which supports the hypothesis that IPAs and PHOs can provide care-management services to practices that lack the resources and scale to implement these mechanisms themselves."

The care-management processes that IPAs and PHOs provided were those that required large numbers of patients to make them cost-effective (for example, the use of nurse care managers) or needed expensive information technology capabilities to be efficient (for example, providing internal performance data to physicians).

"Practices can share nurse care managers through an IPA to help improve care for patients with chronic illnesses such as congestive heart failure and diabetes," Dr. Casalino said. "A small practice on its own wouldn't have the financial resources to hire their own care manager, and wouldn't have enough patients with congestive heart failure to keep the care manager busy."

"Our findings provide some encouragement to those who hope that IPAs and PHOs can create the best of both worlds, making it possible for physicians to share resources while remaining in their own independent practices," Dr. Casalino added.

But questions about the relationship between these care-management systems and health care quality remain, the authors said. For instance, it would be valuable to compare the performance of large medical groups to that of IPAs, they said, as well as the performance of hospital-employed physicians to those in physician-owned practices.

"IPAs and PHOs may be able to provide an additional, potentially viable alternative during an era of major changes in how health care is delivered and paid for," Dr. Casalino said. "Our findings suggest that it is a reasonable decision for leaders at the Centers for Medicare and Medicaid Services and commercial health insurers to sign accountable care organization contracts with IPAs or PHOs, reasonable for physicians and hospital leaders to try to create high-functioning IPAs and PHOs and reasonable for the Federal Trade Commission not to pursue anti-trust action against these IPAs and PHOs."

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