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Criteria For A Successful IPA

Criteria For A Successful IPA

  • CRITERIA FOR A SUCCESSFUL IPA ======================

by Thomas C. Zyroll
Avanti Health Systems, Inc.
Kingwood, Texas
(713) 358-1567

Increasing activity in contract medicine has created a dynamic and progressive environment for the medical community. HMOs are attracting patients away from private practices, and experts predict that capitation, a uniform per capita payment, may soon become the most pervasive method of provider payment.

Some physicians, reacting strongly to this drain on private practice medicine, have organized to defend fee-for-service medicine. Others believe that the best and only reasonable option for private physicians is an “individual practice association.”

As stated in a recent article in American Medical News, “rather than fighting HMOs, a growing number of state and local medical societies are joining them by forming their own IPA-model HMOs with physician controlled boards of directors … The societies hope that creating their own IPAs will enable their members to maintain control over quality, design reasonable reimbursement systems, and effectively compete with other prepaid plans….” According to the AMA Department of Health Care Delivery, there are 49 such IPAs started by medical societies, and 26 are currently under development.

What Is an IPA?

IPA, an abbreviation for “individual practice association” or “independent physicians association,” is defined by the federal Office of Health Maintenance Organizations as “a partnership, corporation, association or legal entity which has entered into a services arrangement with persons who are licensed to practice medicine, osteopathy, dentistry, podiatry, optometry and other health professions in the state, and the majority of whom are licensed to practice medicine or osteopathy.”

In simplified terms, an IPA is a confederation of health care providers legally associated to conduct mutually beneficial business activities. Though IPAs have been formed primarily to interact with alternative delivery systems, it is important not to overlook the fact that there are multiple business benefits and opportunities for IPAs that extend well beyond the ADS. These opportunities may include purchasing as a group, sharing management information and billing systems, participating in leasing arrangements, and marketing the individual practices.

What Makes an IPA Successful?

To insure a successful IPA, the members of the IPA must offer the community the highest quality medical care. To achieve this quality, fair and objective credentialing procedures must be designed that require each physician to have the education, training, and experience to guarantee state-of-the-art medical care.

Physician accountability should be controlled through a review program whereby physicians evaluate physicians. To provide an expedient and fair review, an effective system for data management is also required.

Stability as well as quality within an IPA is paramount. Physicians must be willing to make a commitment for at least a year and often beyond. Although most IPAs are formed from existing medical staff, the new organization should be separate from the original one. The IPA need not include every physician on the staff, but it should seek the membership of physicians whose practices are cost-effective and efficient.

Internal cooperation is also essential. Physicians should try to minimize competition among themselves and remain compatible with the missions and goals of the hospitals at which they practice. In the past, hospitals and physicians have had difficulty relating to one another because of a lack of mutual objectives. To excel in the contract medicine environment, however, both trust and open and ongoing communication between a hospital and physician are compelling requirements.

Success also will depend on exclusivity. The importance of physican allegiance to the organization cannot be overstated. While controlled growth of membership is preferred, a broad spectrum of primary care and specialty physicians must be represented. Domination of the local market can be achieved only if the physicians’ collective clinical skills encompass a complete range of expertise.

In addition, the IPA must have marketability. Consumers must realize a benefit not available elsewhere. In most cases, this means a free choice of providers. Selection of members should be based in part on an organization’s established reputation for being consumer friendly and for providing comprehensive services. A strong community image should be presented and maintained through imaginative marketing strategies that are skillfully executed.

Flexibility of the IPA is important since participation in various types of arrangements is inevitable, particularly in large metropolitan areas. A capacity for working with different hospitals, HMOs, PPOs, insurers and employers, as well as networking with other physician groups, is necessary.

The willingness of physicians and hospitals to share financial risks and rewards in a contract medicine environment is an integral element of success. Joint ventures with shared ownerships are desirable. An egalitarian relationship among the participating players, i.e., hospitals, IPAs, and insurers, is basic and essential.

Equitability for IPA members must also exist. Compensation methodology that provides fair distribution of income and incentives for primary care will guarantee solvency and satisfied members for the IPA. Rewards should be developed for the delivery of quality care with high productivity, efficient practice styles, and innovative cost-effective measures.

Legality and the authority for organization governance also must be addressed. All members of the IPA must have a voice in rule making. However, to be effective and to preclude challenge regarding restraint of trade, physicians must relinquish some autonomy. This is accomplished by granting authority to a small group to act for the whole membership. The governance group, usually a board of directors, should be made up of both primary care physicians and specialists. It must make decisions for the common good of the membership, not self-interest groups, and must have the power to establish fees and commit to contracts.

A final but no less important criteria for a successful IPA is an active risk-management process. The IPA should have its own directors’ and officers’ insurance and limited liability insurance to protect its members in their peer review activities.

Summary

The development of IPAs is part of the changing character of the health care industry. Contract medicine will have a more significant impact as changes in the health care environment evolve. Physicians will have a better opportunity to control their destiny in this environment if they are organized into an association that exhibits the principles addressed in this article.