Magazine article Medical Economics

How Two FP Groups Prepared for Direct Contracting

Magazine article Medical Economics

How Two FP Groups Prepared for Direct Contracting

Article excerpt

MinnHealth Family Physicians (with 45 FPs) and East Metro Family Practice (with 26) were wellaware last year that they were being eyed by hospitals and health plans that wanted to acquire them. But the decision by the Buyers Health Care Action Group to do direct contracting provided the two independent FP groups with the extra push they needed to join forces.

By entering into a joint arrangement to become a care system-they stopped short of merging assets-the physicians stayed independent. "And we became too large to ignore," says MinnHealth medical co-director Mark Wiest.

Becoming a BHCAG care system was relatively simple, according to Tom Luchi, chief operating and financial officer of the new group, called Family HealthServices Minnesota. The investment was minimal; in fact, the two groups saved $175,000 in expenses by combining their operations. The new group, which has combined annual revenues of $35 million, was able to meet BHCAG's quality standards by participating in a multiclinic program to develop clinical guidelines. It also had an appropriate geographic spread: 15 clinics that cover a radius of 40 miles.

Pricing care was also relatively easy. "Our physicians have accepted capitated risk since the '70s, so they know their per-member-per-month costs," says Luchi. Family HealthServices, which competes in BHCAG's high-cost tier, isn't worried about lowering its costs to attract patients-at least not yet. "We didn't want to shoot ourselves in the foot by lowballing the price," says Luchi. …

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