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Five things to know about IPAs, mergers and smaller practices

May 3, 2018

Independent Physician Association (IPA)

Many small or solo independent practices would like to agree with the humorist Mark Twain, who once quipped that “the reports of my death are greatly exaggerated.”  However, the truth is that independent practices are disappearing, with many being absorbed into larger hospital or other organizational networks. According to a survey by the Physicians Foundation, the number of physicians who were employees of hospitals or other medical groups increased from 44 percent to 53 percent in recent years.

Threats of ejection from payers’ networks, along with declines in reimbursement and adding the strain of keeping up with changing government regulations and incentive programs have caused many providers to wonder if it’s still possible to maintain an independent, profitable practice. While some may eventually turn to employment, for those wishing to stay independent it may be worth investigating joining an independent physician association (IPA) or similar entity.

What are Independent Physician Associations?

An independent physician association (IPA) is a group of independent physician members seeking improved payment negotiations and relationships with insurance companies while reducing administrative burdens for its members, who continue to maintain their own independence and make their own reimbursement decisions.

IPAs may take on a variety of structures, including as a nonprofit organization, limited liability company, a corporation or similar kind of shareholder-owned entity.

Other kinds of provider-networks

  • Accountable care organizations (ACOs)
  • Management services organization (MSO)
  • ACOs and MSOs have a more formally structured legal, management and leadership operational expertise, with the existing independent practices remaining intact. Within most MSOs, tasks such as billing, collections are now transferred to the MSO entity to be shared among the member practices.

Why is there so much interest in mergers such as IPA?

  • IPAs and MSOs/ACOs may be able to offer provider members the benefits of management services organizations, including payroll, benefits management, bookkeeping, compliance assurance and group purchasing.
  • An IPA or MSO can function as a technology platform for the whole membership, ranging from simply linking practices with data warehouses to providing the ability to connect disparate EHR technologies.
  • A recent Health Affairs study of 1,164 responding practices found that providers in an IPA or similar group provided approximately three times the care management processes for patients with chronic conditions as did nonparticipating providers, or 10.45 percent compared to 3.85 percent of respondents with 20 or fewer physicians or providers.

What are the downsides to IPAs, MSOs and ACOs?

  • Some newer IPAs and other groups may be underfunded.
  • A good minimum for a group is at least six providers; below that and your group may have trouble affording improved infrastructure, facilities and updated technologies.

Other downsides include:

  • Dues-based funding for most IPAs
  • Fewer economies of scale
  • Logistic difficulty managing risk and utilization

Before joining or starting an IPA, ask about:

  • What’s the IPA’s legal structure? If for-profit, how do they distribute shares?
  • What are services offered, and are these included in membership or available only with an additional fee?
  • What are members’ dues and obligations?Are there different classification levels of membership?
  • Does the IPA expect a complete integration of participants and if so, how does it define integration?

Consult with a healthcare attorney when joining an existing or setting up a new organization.

How can independent practices benefit from using a billing and practice management service?

For the smaller or solo practice choosing to remain independent but undecided about merging, there is another option: using the services of an experienced billing and practice management company. M-Scribe can offer some of the technological advantages of an IPA by streamlining billing while maintaining compliance, resulting in increased revenues. Contact them at 888-727-4234 or email for a free confidential analysis of your practice’s needs.


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