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Whitepaper

athenahealth, Inc.
Published: June, 2014


Executive Summary



It is harder than ever to run a successful independent medical practice. As value-based reimbursement becomes more common alongside the fee-for-service model, physicians will be on the hook for demonstrating clinical outcomes and providing seamless care coordination in order to receive payment.

At the same time, practices must figure out how to meet complex mandates such as Meaningful Use, prepare for an influx of newly insured patients, and handle a rising proportion of self-pay patients—all while providing excellent patient care.

Practices without a strong foundation may be unable to decide their own course through these changes and may find themselves financially unstable or having to merge or sell to a hospital.

But practices can remain independent—and thrive in the current environment—with these five capabilities:

1. Strong Financial Performance

2. Connectivity and Clinical Integration

3. Ability to Win at Risk

4. Competitive Edge

5. Adaptability to Change


The Challenge of Independence

According to the Merriam-Webster dictionary, the most common definition of “independent” is “not subject to the control of others.” When we discuss the topic of remaining independent, it’s important to acknowledge that this may mean different things to different practices. For some, independence may mean staying competitive as a solo or small practice when there are major pressures around consolidation. For larger practices, it might mean competing directly with hospitals by adding ambulatory surgery centers (ASCs) and other services at lower cost and greater convenience than the hospital. At its core, staying independent means deciding your destiny and driving the course of your future.

Setting your own course and sticking to it is harder than ever. Reimbursement cuts, regulatory burdens, revenue cycle problems, and malpractice costs have always been a challenge for independent medical practices.1 Now, after passage of the Affordable Care Act (ACA), physicians are under added pressure to care for more patients, provide higher quality care, at lower cost, with increased reporting and tracking demands, in an environment of high potential liability and declining reimbursement.

In today’s environment of reform, independent practices face:

  • Challenges managing growth. Scaling successfully means managing potentially crippling overhead, spiraling IT costs, and difficulty retaining talent in a competitive landscape.
  • Changing payment models. As pay-for-performance reimbursement replaces the fee-for-service model, physicians will be on the hook for demonstrating clinical outcomes and providing seamless care coordination in order to receive payment.
  • Multiple mandates. Practices that want to avoid hefty penalties must attest to Meaningful Use Stage 2, and handle the transition to ICD-10 to ensure the timeliness of claim payments.
  • A new population of patients. According to the Congressional Budget Office, by 2016 the ACA is expected to reduce the number of uninsured by 25 million, with a 12 million increase in Medicaid enrollment.2
  • Increased patient responsibility for payment. With the implementation of online state health insurance exchanges (effective October 1, 2013), practices must be prepared for a larger population of patients with high-deductible plans and self-pay liabilities.

Because of increasing administrative burdens, physicians today work the same number of hours but earn less. In a 2012 survey, the Physicians Foundation found that physicians spend over 22 percent of their time on non-clinical paperwork, and 62 percent of physicians said they provided $25,000 or more every year in uncompensated care.3

Just as independent groups are struggling to stay that way, hospitals are on an acquisition binge. Hospitals and health care systems are recognizing the need to capture referrals as well as the value of primary care under new payment models. Today, only about 40 percent of family doctors and pediatricians remain independent, according to the American Medical Association.4 If trends continue the way they have been, more than 75% of newly hired physicians will be hospital employees within the next few years, according to a survey by Merritt Hawkins.5



What Does Independence Mean for Your Practice?

Your reasons for remaining independent might include:

  • Ability to practice on your own terms
  • Full control over financial health of practice
  • Deciding to grow in order to compete in local market
  • Ability to make informed, strategic decisions
  • Confident of ability to thrive through industry change
  • Connected and integrated with hospitals while still independent
  • Flexibility to run your practice the way you want


What Practices Need for Independence

Is it possible to remain independent and control the course of your practice in the new health care reality? The answer is yes. It is possible to survive and thrive as an independent medical practice, as long as the right pieces are in place.

Here are the five essentials for staying independent:

1. Strong Financial Performance

Independent practices need to maximize efficiency and financial performance, and be prepared to handle new methods of reimbursement.

Typical revenue cycle management solutions are not sufficient to meet the demands of practicing in a new, value-based health care system. That’s because new models of reimbursement require that revenue cycle systems track and submit cost and quality data, as well as receive and appropriately distribute compensation based on practice performance.

In addition, independent physicians may not be able to maintain the efficiency and profitability of their practices while keeping up with reform. It is no longer feasible for practice staff to spend hours sorting through changes enacted by commercial and government insurance payers, tracking claims, and managing appeals—all while giving patients the attention and care they require.

Independent practices should look to practice management solutions with both front-end and back-office knowledge and support that can be seamlessly integrated into practice workflow. This allows physicians and practice staff to streamline their administrative responsibilities, boost productivity, and focus on patient care. The right vendor should be able to handle tasks such as patient scheduling, claims submission and tracking, and researching and implementing real-time updates to payer rules—automatically, and at scale, using their own staff and data to drive improvements for everyone in their network.


Practices should look to revenue cycle management systems that offer:

  • Efficient delegation of patient scheduling, billing, invoicing, claims processing and other revenue cycle management activities to keep denials low, DAR down, and the practice focused on patient care.
  • Ongoing visibility into financial performance, so practices can make improvements and plan intelligently for the future.
  • The ability to reconcile group and individual payments against services provided to track costs and outcomes.
  • The ability to take in lump sum payments, and allocate those to appropriate staff according to contract terms.
  • Close coordination with electronic health record (EHR) software to link clinical and financial outcomes, demonstrate success, and identify where improvements are needed to maximize reimbursement and provide the highest quality patient care.

2. Connectivity and Clinical Integration

One of the driving forces in health care reform is the lack of coordination among providers. One study found that in 49% of referrals the receiving physician was given no information, and in 55% of referrals the ordering physician got no information back from the receiving physician.6 Lack of care coordination can result in fragmented health care, treatment errors, preventable hospital readmissions, and unnecessary costs.

A Solution to Fragmented Patient Information

For our health care system to work, we need the ability to exchange health data across systems and settings for the benefit of patients and their providers. Currently, there are too many silos of patient data across a fragmented information system, creating inefficiency, cost and risk. The CommonWell Health Alliance, an independent, not-for-profit trade organization, is proposing a solution to the problem of interoperability: an industry alliance that promotes common health IT standards and protocols for sustainable, cost-effective, trusted access to patient data. The CommonWell Health Alliance is devoted to the vision that health data should be available to individuals and providers regardless of where care occurs, breaking down the technological and process barriers that currently inhibit effective health care data exchange. To learn more visit www.commonwellalliance.org.

Commonwealth Health Alliance


Effective care coordination is a required component of new health reform initiatives such as the patient centered medical home (PCMH) and accountable care organizations (ACOs). It involves “deliberately organizing patient care activities and sharing information among all of the participants concerned with a patient’s care to achieve safer and more effective care.”7 That means patient care is connected seamlessly across the continuum to ensure access, follow up, and streamlined care transitions—all without incurring extra costs.

Some independent practices assume that sharing patient information effectively requires providers to be on the same EHR system. But this is not the case.

Integration and exchange of data is critical, but doesn’t mean giving up independence to join a hospital’s EHR system. Independent practices have good options for getting providers the right patient information at the right time, allowing for choice and independence, and enabling interoperability among affiliated entities.

Cloud-based, service model solutions can meet these kinds of requirements. Cloud-based systems are strong enablers of interoperability among a wide range of systems because: 1) all information is stored in a secure site and accessed via the Internet, 2) the cloud vendor can provide a care management system to harmonize data from multiple sources, and 3) creating interfaces for participating providers is more cost effective since an electronic connection only needs to be built once from the platform to each trading partner. Cloud-based solutions enable a single source of truth for appropriate users on the network. Independent practices can choose the EHR that works best for them while benefitting from true integration with vendors, partners and others in the network.

Connectivity and data exchange can enable independent practices to meet payment reform requirements, cut costs for duplicate testing and redundant care, and ensure that physicians have the data they need at the point of care to achieve the quality care goals some payment reforms will set. In order to do this, practices must:

  • Establish reliable, efficient electronic connections with payers, hospitals, labs, imaging centers, state registries, and other referral partners.
  • Work with an EHR system that enables you to exchange data easily, accurately, and securely with all of these entities.

3. Ability to Thrive in a Risk-Based Environment  

Under the ACA, Congress established the Center for Medicare & Medicaid Innovation (the Innovation Center) to develop and test new health care payment and service delivery models that reward providers for efficient, high quality outcomes. The ACO is a significant trend in CMS payment reform. Private payers are following suit, developing their own versions of ACO-type contracts. 

Independent practices should regard these efforts as an inevitable, if very gradual, shift towards fee-for-value models. To succeed under new payment models, some independent physicians will decide to sell to or merge with a hospital-led ACO, or join a physician-led ACO.


Accountable Care Organizations (ACOs) are a significant factor in the evolution of health care reimbursement. But winning at risk does not have to mean formally joining an ACO.

But there is an increasingly strong case for remaining independent and succeeding under payment reform. First, initial reports have shown that the CMS ACO programs have had mixed results.8 And private payers are creating an expanding array of risk-based reimbursement contracts outside of the formal ACO program. For example, the Massachusetts Blue Cross Blue Shield Alternative Quality Contract (AQC) is improving the quality of patient care while simultaneously slowing the growth in health care spending. In addition, Humana’s Provider Rewards Program offers financial rewards for improvements in cost, quality and outcomes. Blue Cross Blue Shield of North Carolina is also offering a range of quality-based programs that reward providers for achieving certain outcomes.

Winning at risk does not have to mean formally joining an ACO or other risk-based quality program. But no matter what, independent practices must focus on improving quality and efficiency to ensure that they continue to be competitive with and receive referrals from ACOs and other risk-based entities in their region.

To do this, primary care physicians who want to remain independent will need the right tools for tracking patient outcomes and provider performance, coordinating care, and managing payments from a risk-based contract. Independent specialists will need to be attractive to those operating in a risk-based environment by becoming quality-focused, low cost providers.

To succeed under risk-based payment reform, independent practices need to have:

An EHR that streamlines workflow for the practice, gives providers access to evidence based guidelines, and offers intelligent work delegation to maximize practice efficiency.
Secure communication and interoperability with multiple clinical partners, including seamless and secure data exchange with local ACOs, to meet care coordination requirements.
Health information technology that facilitates tracking and monitoring of patients both within and outside the practice, so that practices can measure and report on patient outcomes. Future reimbursement will be linked to patient outcomes and care quality.

To succeed under risk-based payment reform, independent practices need to have: 

  • An EHR that streamlines workflow for the practice, gives providers access to evidence based guidelines, and offers intelligent work delegation to maximize practice efficiency. 
  • Secure communication and interoperability with multiple clinical partners, including seamless and secure data exchange with local ACOs, to meet care coordination requirements. 
  • Health information technology that facilitates tracking and monitoring of patients both within and outside the practice, so that practices can measure and report on patient outcomes. Future reimbursement will be linked to patient outcomes and care quality. 

4. Competitive Edge


As an independent practice, you must be an attractive choice for patients and referral partners. In addition to having strong financial performance and clinical outcomes, that means promoting a culture of patient engagement.

4 Myths About Staying Independent

Myth #1: True independence is not a viable option in the current health care environment. 
Reality: Independent practices are under increasing pressure to demonstrate clinical and financial outcomes, and may feel the need to merge or sell to hospitals in order to survive. But it is possible to put the right support, data, and connectivity in place in order to maintain autonomy and adapt to change in the long term. Co-sourced, cloud-based services and software offer the most cost- effective, flexible, and robust solutions for practices that want to stay independent.
Myth #2: If we remain independent, we must continue as a solo or small group practice.
Reality: Independent practices have many options to remain financially and clinically strong. Depending on your goals for the practice, you could put a sustainable growth plan into place so that your independent practice becomes a large, thriving, multi-specialty center that competes with local hospitals and health care systems. If you choose to pursue a growth strategy, you will need a technology partner with a track record for rapidly on boarding new providers and visibility into provider-level performance to ensure your strategy is paying off. If you prefer to stay small, consider putting the right systems and support in place so that you can focus on patient care without the administrative hassles of staying profitable in today’s reform environment.
Myth #3: It will cost too much to make the changes necessary to remain independent.
Reality: Cloud-based services offer the support you need to remain independent without high up-front costs. The cloud-based services model does not require large start-up or licensing fees. Cloud-based software is continually updated behind the scenes so there are no fees for maintenance or upgrades. And most practices have what it takes to get started right away: a computer and Internet connection.
Myth #4: Our practice needs to join a hospital’s EHR system to meet data exchange and care coordination requirements.
Reality: It is not necessary for all providers be on the same system in order to exchange clinical data securely and seamlessly. Cloud-based services can easily build and maintain interfaces with clinical partners including payers, hospitals, labs, imaging centers, and state registries to ensure that the right provider has the right information at the right time.          

Patient engagement is a goal of major health care reform initiatives including Meaningful Use, PCMH, and ACOs. For example, Meaningful Use Stage 2 will require providers to enable patients to view online, download and transmit their health information. Providers must also use secure electronic messaging to communicate with patients. Failure to meet these measures will result in penalties; practices that achieve the threshold for these measures will be eligible for incentives.

Having the right technology and services are central to successful patient engagement. Patient portals enhance patient-provider communication and enable patients to check test results, refill prescriptions, review their medical record, and view education materials. Patient portals can streamline administrative tasks such as registration, scheduling appointments, and patient reminders. They allow practices to generate electronic statements and facilitate online payments. In addition, a patient portal that supports live operator and automated messaging can foster better patient retention and loyalty in the face of increasing competition. Together, technology and patient communication services can help satisfy patients who demand convenient, 24/7 access to their health information, and can increase revenue with more efficient self-pay collections and incentive payments for meeting Meaningful Use Stage 2 requirements.

It is also important to consider how easy it is for referral partners to do business with your practice. Cloud-based services offer a single, shared instance of software that is continually updated. These kinds of solutions provide an instantly updated, streamlined order process for your clinical partners. In addition, your practice gets full visibility into order patterns, and patients get better care.


5. Adaptability to Change

One thing that is certain in the current health care environment: change will continue. Independent practices need to be ready to adapt to new payment models, new clinical care models, declining reimbursement, and initiatives such as Meaningful Use and the transition to ICD-10. 

Optimizing clinical and financial performance is critical for building a thriving independent practice. But a static practice will not survive. The key to thriving in the current environment is having a flexible, robust system in place to anticipate and stay on top of new requirements without large, ongoing investments. 

Cloud-based service partners that align their incentives with yours— and go at risk with you as well—are best positioned to help steward you through all the changes to come. They offer built-in, behind-the scenes support to research and anticipate changes without extra cost. They have the people and processes already in place to optimize collections, eliminate workflow inefficiencies, aggregate disparate data, and provide deep visibility into your business processes, clinical activity and referral patterns. Your practice has access to expert research to capture new revenue opportunities, along with industry benchmarks and best practices, which help your practice run at its full potential. You get better visibility and transparency into business processes, with targets for improving your organization’s workflows and cash flows, translating into increasing value over time.

What to Look for in a Patient Portal

    ✔ User-friendly features, including online bill pay, secure messaging, and patient registration
    ✔ Built and branded for your practice with flexibility to add and customize features
      ✔ The right balance of online, live and automated services
        ✔ Compliant with new mandates, including ICD-10 and Stage 2 Meaningful Use, at no additional cost
          ✔ Integration with your medical billing and EMR systems
            ✔ Low up-front costs and low financial risk
              ✔ Easy, continuous upgrades
                ✔ Excellent support


              Do You Have the Right Partner?

              The successful independent practice of the future needs tools and services to help manage growth and support efficiency, care coordination, patient engagement, and the transition to value-based payment models.

              Practices should look for partners whose incentives are aligned with theirs, and offer cost-effective, flexible, and robust solutions for remaining independent. A partner should offer cloud-based services including a combination of software, networked knowledge, and back-office support with low upfront costs. This kind of service partner has the motivation and capabilities to help your practice adapt to future payment models and many other changes to come.

              With a cloud-based service partner, practices benefit from the power of a network while remaining independent. That is, each practice on the network adds intelligence about payer standards, denials, pay for performance opportunities and many other reimbursement issues, allowing other practices on the network to maximize reimbursement and avoid common mistakes. The more participants there are on the network, the smarter the entire system gets. What’s more, a cloud-based service pairs that experience with world-class expertise that informs the network and, in turn, all of the practices on it. Due to its size and scale, what’s often referred to as “comparative advantage,” a cloud-based service can take on costly administrative work and either automate it or execute it at scale, reducing costs and overhead for practices. It can also offer highly knowledgeable experts, including health care professionals, to advocate for client practices and share learning with all providers on the network.

              Cloud-based services with a combination of software, networked knowledge, and back-office support also help practices stay independent with:

              • Intelligent division of labor. With a co-sourcing approach, your vendor works on behalf of your practice. You can offload the burdens of tasks such as patient scheduling, billing and denial management, while benefitting from built-in, behind-the scenes support to research and anticipate changes such as Meaningful Use and the conversion to ICD-10.
              • Continually updated software. The cloud-based vendor offers one version of software, continuously updated across the network. That means fresh information is embedded directly into the user’s workflow. Without added cost, your practice has access to expert research to capture new revenue opportunities, along with industry benchmarks and best practices, which ensure your practice is running at its full potential.
              • No upfront costs. Cloud-based software has no hefty licensing fees, no costly upgrades, and no maintenance fees. What’s more, it is continuously updated at no extra charge.
              • Painless efficiency. A cloud-based service can embed updates into workflows where they are easy for staff to capture or act on. This means information is available within the workflow to allow providers to make high value, high quality clinical decisions at the point of care. In addition, the cloud-based network can continually update and revitalize workflows based on industry best practices or new standards and guidelines.
              • On-demand data. Data ties into every aspect of payment reform. Cloud-based solutions provide more than just data reporting. They give your practice actionable insight into your financial performance and your population’s health. This allows your practice to identify patients for outreach, intervene to improve health and reduce utilization, and track compliance and performance against contractual quality goals and published guidelines—all required for success in value-based payment models.

              The athenahealth Difference

              athenahealth is a leading provider of cloud-based, Best in KLAS electronic health record (EHR), practice management, and care coordination services to independent medical practices. Our mission is to be the most trusted service to medical caregivers, helping them do well by doing the right thing. To learn how our services can help your practice, visit us at athenahealth.com.

              athenaOne®
              Increase your network’s productivity with our integrated suite cloud-based services, helping improve performance while keeping providers focused on patient care. athenaOne includes our Best in KLAS practice management and EHR services*, plus a comprehensive patient communications solution. With our cloud-based software, networked knowledge and back-office service teams that take on practices’ most burdensome work, athenaOne improves every step of the workflow. Providers stay up-to-date and prepared for every industry change, from ICD-10 to Stage 2 Meaningful Use.

              CommonWell Health Alliance
              athenahealth is a founding member and plays a leadership role in the CommonWell Health Alliance, an independent, not-for-profit trade organization open to all health information technology suppliers devoted to the vision that health data should be available to individuals and providers regardless of where care occurs. The Alliance believes that provider access to this data must be built in to health IT at a reasonable cost for use by a broad range of providers and the people they serve. The Alliance is working to define and promote a national infrastructure with common standards and policies, creating an open, vendor-neutral platform to break down the technological and process barriers that currently inhibit effective health care data exchange. To learn more visit www.commonwellalliance.org.

              Endnotes

              1. The Physicians Foundation. October 2010. Health Reform and the Decline of Physician Private Practice. Available at: http://www.physiciansfoundation.org/uploads/default/Health_Reform_and_the_Decline_of_Physician_Private_Practice.pdf
              2. Congressional Budget Office, “CBO’s May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage,” Table 1.
              3. The Physicians Foundation. September 2012. A Survey of America’s Physicians: Practice Patterns and Perspectives. (Available at: http://www.physiciansfoundation.org/uploads/default/Physicians_Foundation_2012_Biennial_Survey.pdf)
              4. Goodnough, A. March 2, 2014. “New Law’s Demands on Doctors Have Many Seeking a Network.” New York Times. (Available at: http://www.nytimes.com/2014/03/03/us/new-laws-demands-on-doctorshave-many-seeking-a-network.html?_r=1)
              5. Zamosky, L. April 25, 2013. “Independent Physician: 6 steps you can take to remain independent—for now.” Medical Economics. (Available at: http://medicaleconomics.modernmedicine.com/medical-economics/news/6-steps-you-can-take-remain-independent%E2%80%94-now?page=full#sthash.zp3NhOkn.dpuf)
              6. “Coordinating Care – A Perilous Journey through the Health Care System,” Thomas Bodenheimer, M.D., The New England Journal of Medicine, March 6, 2008, p. 1065.
              7. Agency for Healthcare Research and Quality. Care Coordination. (Available at: http://www.ahrq.gov/professionals/prevention-chronic-care/improve/coordination/index.html)
              8. CMS Data Show Mixed Results From Medicare ACO Programs. (January 31, 2014) California HealthOnline. http://www.californiahealthline.org/articles/2014/1/31/cms-data-show-mixed-results-from-medicare-aco-programs