For cardiology groups, the path from hospital-owned to independent practice is filled with many crucial questions. What will our new patient care model look like? How will we structure operations? Where can we find support for staffing, technology, benefits, and legal requirements? What type of reaction can we expect from payers, patients, and hospitals in our region?
To help physicians find answers on their journey to independence, we recently co-hosted “Beyond Hospital Employment: Navigating the Path to Independence” with MedAxiom. The no-holds-barred virtual event offered honest insights from our panel, which included:
- James Flynn, MD, Managing Physician of Cardiovascular Specialists of New England (CSNE), a practice that successfully transitioned from hospital-owned to independent;
- Carolanne O’Sullivan, VP of Operations with CSNE and CardioOne
- Jasen Gundersen, MD, CEO & Co-Founder, CardioOne
Read on to discover seven key considerations your practice can use to shape its path to independence.
1. Disintegrate and take control of your future
The physicians who now make up CSNE were formerly part of a group of 20+ physicians and 20+ advanced practice providers employed by a New Hampshire hospital. Over time, a few of those employed doctors, including Dr. Flynn, became frustrated with inefficiencies in core areas like patient scheduling and follow-up. The final straw came when a for-profit group acquired the formerly not-for-profit hospital.
“A lot of us felt a lack of control when that happened,” Dr. Flynn says. “We had been employed by the hospital for decades, and for the first time, one of our key physicians chose to leave. That was a big red flag. We saw it falling apart.”
Disintegration was the best way for Dr. Flynn and other like-minded employed cardiologists to regain a sense of control. “We saw independence as a way to build our vision and deliver the quality of care we wanted, free from bureaucracy and dysfunction,” Dr. Flynn says.
2. Don’t expect a warm response
Before deciding to make a clean break, Dr. Flynn and other future partners asked the hospital to consider a joint venture. That approach was quickly shot down.
After that contentious board meeting, the team took a six-month pause to reconsider its options, and then decided to move toward full independence. Dr. Flynn’s advice to other physicians seeking disintegration from their hospital system: “Don’t be fooled that the hospital wants you to succeed—they don’t—but don’t let it become a distraction.”
Eventually, as Dr. Flynn and his partners built the foundation for CSNE, they enlisted the help of legal counsel to develop agreements for on-call, cath lab and electrophysiology lab coverage, preserving collegiality with the hospital system despite the early rift.
3. Identify your core team and establish a structure
For starters, Dr. Flynn identified 11 physicians from the hospital-owned practice that would comprise their core team as an independent practice. “It was very important for us to give each person the opportunity to voice their ideas, concerns, and vision,” Dr. Flynn says. Nine of those original 11 doctors eventually switched to the newly independent CSNE.
The partners then evaluated potential business models and chose a limited liability corporation (LLC) structure. Partners contributed funds to help the new practice secure a line of credit. “Some of our veteran doctors put in a little bit extra so the investment was a bit more palatable for our younger doctors,” Dr. Flynn says.
4. Understand salary impact–and how to mitigate it early on
CSNE’s providers planned for less income over the first three years to cover their startup costs, but the tax advantages of operating as an LLC helped soften the blow. “Because we don’t have to take as many taxes out, the money to us almost feels the same,” Dr. Flynn says.
The practice also envisions multiple potential revenue upsides in the near future thanks to its investments in comprehensive outpatient testing and advanced cardiac imaging services. “We provide echo ultrasounds of the heart, nuclear stress testing, PET scans, Holter monitors, and other wearables, and we’re the first hospital in the region to provide internal loop recorders in the office, a procedure people had to go to the hospital for previously,” O’Sullivan says.
And as a bonus, Dr. Flynn estimates that the practice can deliver these services at a 50% to 90% lower cost of care than a hospital system, lowering the total cost of care within their communities by a significant margin.
5. Take a ‘divide and conquer’ approach to practice setup
While CSNE’s partners built out their practice’s vision, they sought a partner to help them handle multiple business-related tasks. CardioOne checked all the boxes. “They took care of everything, including recruiting and hiring, legal, accounting and practice finance, compliance, benefits, 401(k) plans, and productivity workstreams,” O’Sullivan says.
CardioOne also helped the practice secure Medicare and payer contracts—94% of which were in place a month-and-a-half before launch—and provided ongoing support at launch. “There are always kinks in those early weeks and months, but with CardioOne, everyone in the practice had someone by their side to work through it all,” O’Sullivan says. They also helped lead a variety of efforts: the recruitment and training of over 50 staff members, the implementation of their purpose-built technology platform, launch of their digital-first marketing program… just to name a few.
6. Know that patients will find you
Because a majority of providers in New Hampshire are hospital-owned, CNSE worried that patients may not follow them to their new practice. But those concerns dissipated quickly. “We found that there were more independent practitioners out there than we realized, and they were really interested in working with us,” Dr. Flynn says.
What’s more, patients on Medicare can choose where to receive care, and many of CSNE’s existing Medicare patients remained loyal. Today, the practice estimates that 20% to 40% of their patients are net-new.
7. Keep up with evolving reimbursement changes
Data shows that independent practices deliver higher quality care for less cost, yet payers have been slow to design models that take advantage of these savings. “It’s almost like they don’t know what to do with this opportunity,” Dr. Gundersen says.
As healthcare shifts toward value-based payments and accountable care organization (ACO) models, Dr. Flynn envisions more opportunities to contract with commercial payers and Medicare. “Right now it looks like a big lift,” he says. “But if you’ve mastered the whole process of managing the outpatient side, you’re going to be way ahead of the curve.”
Additionally, Dr. Gundersen says, groups like the American Independent Medical Practice Association (AIMPA) are lobbying lawmakers to implement site neutrality, bringing hope for a more balanced playing field in the future.
Closing thoughts
As hospital systems experience continued cost pressures, Dr. Gundersen expects more cardiology groups to follow CSNE’s lead and seek disintegration. “This is a model where, fundamentally, patients will win,” he says. “We need to drive it forward.”
The independent practice model, Dr. Flynn says, is viable for cardiologists at any stage of their career, including those just leaving medical school who want to embrace their entrepreneurial spirit.
“Younger doctors tend to underestimate their capabilities and options, so they sometimes fear running a business,” Dr. Flynn says. “But with CardioOne, you have a comprehensive company around you with experienced people who know how to get it done.”
Ready to consider breaking up with your hospital system? Get a step-by-step primer in our free guide, From Employment to Independence: A Guide for Cardiologists.
