Brian Klepper

“Renegade PCPs long for independent practices where their patient care decisions are not so influenced by their employers’ interests……………….By recapturing control of care and cost, they also are re-establishing primary care’s primacy within health care……………..”


February 12, 2019


Brian Klepper

A year ago, 92 primary care physicians (PCPs) in Charlotte, NC broke away from the region’s largest health system, Atrium Health, forming Tryon Medical Partners, an independent, physician-owned group. Then, a couple weeks ago, another 41 PCPs left the area’s second largest health system, Novant, to join Holston Medical Group, a large multispecialty physician practice with more than 80 PCPs headquartered in nearby Kingsport, TN.

In these and most primary care breakaways from large health systems, the complaints are generally the same. Within a fee-for-service, volume-driven environment, primary care’s role, at least in part, is to capture patients and feed the machine. Health systems pressure PCPs to refer patients internally as often as possible for lucrative diagnostics and procedures.

By contrast, most renegade PCPs long for independent practices where their patient care decisions are not so influenced by their employers’ interests. Most aspire to deliver and coordinate the best and most efficient care possible and to be rewarded for excellent medicine. As the health care marketplace increasingly lurches toward risk-based arrangements, more primary care practices are being reconstituted to deliver value. These new practices are not only designed to share in the value they’re creating. By recapturing control of care and cost, they also are re-establishing primary care’s primacy within health care.

Primary care is the most embattled, underappreciated, and constrained medical specialty. American health care’s decades-long subjugation of primary care has ravaged this specialty, demoralizing its practitioners and discouraging medical students who might otherwise seek the deeply personal gratification of a primary care career. With far lower salaries than specialists, only the most idealistic medical students now choose primary care. About 5% of US medical students pursue primary care, while in other industrialized nations the rate is closer to 50%.

Two main culprits have been behind primary care’s difficulties. First is the American Medical Association (AMA), whose secretive  Relative Value Scale Update Committee, or RUC, has had a sole source contract with the Center for Medicare and Medicaid Services (CMS) to value every medical procedure for nearly 30 years. With representation on the RUC dominated by specialists, it has systematically advanced specialties’ interests by undervaluing primary care  and overvaluing specialty services.

The AMA’s approach has been reinforced by commercial payment designs that favored the higher health plan profits associated with specialty care’s higher overall costs. Health plans gradually reduced primary care’s reimbursement. To compensate and maintain overall revenues, physicians reduced office visit durations, which in turn increased specialty referrals. Referral rates of around 12% with a 20-minute established primary care office visit jump to 25%-35% when the visit is halved to 10 minutes. Worse, increasingly rushed PCPs tended to cede control of downstream care to specialists who had a financial stake in the services provided.

Eager to capture primary care’s referrals, health systems around the country have employed an increasing percentage of PCPs in recent years, relieving them of most administrative responsibilities but insisting that they drive referrals into the organization. About one-third of all primary care doctors now work in practices that are at least partially owned by hospitals, but most PCPs have chafed under these arrangements.

Alternatives were inevitable. Volume-based models stoked health system revenues, but increasingly infuriated the businesses and unions paying higher bills. One form of worksite primary care clinic – built on the concept of an advanced medical home – offered patients and purchasers substantially better health outcomes and/or lower costs. These entities were more than primary care. Their clinics had a primary care foundation, but were also designed to oversee and manage care and cost in any part of the health care continuum touched by the patient. An advantage was their use of proven management tools that consistently delivered better results in high-value niches like drug cost management, cardiometabolic care and musculoskeletal care. Companies like Care ATCVera Whole HealthIora Health and Wellness for Life have designed their clinic operations around aggressive full continuum risk management, which allows them to deliver strong health outcomes and cost performance.

Other primary care organizations have pursued the risk management opportunities available through Medicare’s Accountable Care Organization program or through Medicare Advantage programs. Examples abound, but here are a few from the Florida market:

  • Island Doctors, led by Roy Hinman MD and with offices throughout Northeast Florida, has been globally capitated for Medicare Advantage since 1999 and now has more than 23,000 lives under management.
  • ChenMed, based in Miami, has more than 50 full-risk primary care medical practices for seniors in seven states.
  • The Palm Beach Accountable Care Organization (PBACO), self-financed by independent physician practices, achieved the second-highest Medicare savings of any program for three straight years before becoming the top saver in 2016. Serving 79,000 Medicare lives, this ACO is comprised of 275 primary care physicians and 175 specialists. PBACO’s program saved the Medicare Trust Fund more than $211 million over four years. They kept more than $101 million, investing 15% in management infrastructure and distributing 85% among physician members.

One colleague working in the costly South Florida market tells me that the vibrant Medicare Advantage plans there have developed full-risk arrangements with an array of primary care groups that have become extremely sophisticated and that are generating medical loss ratios between  65-75%. These practices are capturing a fair share of the savings that, in older models, would often have gone for inappropriate, unnecessary, or less efficient downstream care. In a market with out-of-control health care costs, he reports that many PCPs in these arrangements have seven-figure incomes.

There’s no question that the transition to value-based arrangements has been and continues to be excruciatingly slow. Even so, there has been an explosion in value-based practices that are grounded in primary care but integrate a host of high performance risk management techniques. In this sense, primary care is becoming not just the front end of the health system, but the platform for full continuum care coordination and management.

It is not unreasonable to expect that the value-based seeds that have been planted in Medicare Advantage, Managed Medicaid, and, to a lesser degree, self-insured employer health plans, will get accelerating traction in the next couple years. Primary care practices that think about managing full continuum risk will experience success that was unimaginable five years ago, while reclaiming far more control over health system dynamics. It is a big part of the solution we seek.

Brian Klepper is a health care analyst and Executive Vice President of The Validation Institute.