Long Island doctors, caught between rising costs and lower insurance reimbursements, are increasingly giving up ownership of their practices to big health systems.
Physicians’ financial struggles are leading them to join large health care networks such as New Hyde Park-based Northwell Health and New York City giants Mount Sinai Health System and NYU-Langone Medical Center.
The health systems offer full-time employment in exchange for a practice’s book of business. Health systems and hospitals typically don’t pay the physician for taking over the practice, executives say. But physicians do negotiate their salary, and the health system typically employs the doctor’s existing staff, usually at the office they already occupy.
The health systems can negotiate better prices on the physicians’ behalf, and in turn benefit from expanding their outpatient services — those not rendered in a hospital.
Doctors value their independence. For some, escaping the burden of dealing with insurers and paying for electronic health records is the greatest independence.
For others, independence means working for themselves, not a large health system.
Some independents are retaining ownership of their business but joining associations of similar-minded doctors, which help in negotiating with insurers.
But the offer to join a major system has been too good to refuse for many.
“It’s basic economics,” said Dr. Steven M. Kobren, who entered an employment agreement with NYU-Langone in 2010 and became a full member of its staff. As an independent, “your expenses go up, but your reimbursements don’t change. So something has to give.
“I used to know how much every paper towel roll cost,” said Kobren, who is now medical director at NYU Great Neck Medical. “Now I don’t know how much malpractice insurance costs, and I don’t know how much I’m being reimbursed [for patient care] — and that’s a great thing.”
Last year marked the first time when less than half of practicing physicians nationwide had an ownership stake in their practice, according to a Physician Practice Benchmark study, which used American Medical Association data. About 47 percent of practicing physicians owned their practice in 2016, down from 53 percent in 2012.
The number of hospital-employed physicians rose 48 percent to 141,000 between 2012 and 2015, according to a Physicians Advocacy Institute survey compiled by Avalere Health, a Washington-based health care consultant.
Independents such as Dr. Mohammed Azaz, a primary care physician at Island Medicare Care in Commack and Ronkonkoma, say that it is more difficult financially to be on their own.
But giving up control to a large system could make it seem to a patient that there is a conflict of interest, Azaz said.
“The fundamental role of a physician is to be a patient advocate,” Azaz said. “I only want to serve one master: my patients. If I need to hand a patient off to a specialist, I want to be able to send them to the best, and not send them to one system.”
Doctors in health systems are encouraged, but not required, to refer patients within the system, experts said.
Shrinking insurance reimbursement is the top reason cited by doctors who have decided to join a health system. Large networks have the negotiating power that solo practitioners lack when reaching deals with insurers on reimbursement.
“Years ago, patients would pay us, and then insurers would reimburse the patients,” said Dr. Fouad El-Baba, a pediatrician in Garden City and North Babylon who joined Northwell in 2014 after more than 25 years as an independent.
“It got progressively worse, and in recent years some insurers were paying us $30 or $40 to see a patient,” he said. “After phone calls went unanswered, we finally had meetings with them, and they increased payments to $50. But it took too much time. Now I don’t have to worry about any of this, and I can focus on being a doctor.”
Electronic health record systems could cost a practice up to $10,000 per month on the high end, which is what the big health systems use. The cost could include buying equipment, maintaining the system, customer support and licensing.
Technology costs were one reason why primary care physician Dr. Eric C. Last gave up ownership of his Wantagh-based practice to join Northwell in 2015.
Last said he spoke to four different organizations about partnerships.
“Electronic medical record costs are staggering,” Last said. “When we moved back into this building in 2005, we computerized everything and the basic costs were horrendous.”
Health systems can also add services that independent doctors lack. El-Baba said that after he joined Northwell it hired a social worker who works with his patients who have mental health needs. That service is free for his patients.
But there are pitfalls to joining a health system, said Robert W. Seligson, the president of the Physicians Advocacy Institute, which commissioned the 2015 study on physician practices.
“Physicians who are employed by hospitals or health systems forfeit some level of autonomy, which can be very challenging for physicians who are accustomed to making decisions based strictly on what they view to be the best care for their patients,” Seligson said.
This could include being asked to see more patients, he said. They also lose control in how they run the office, including purchases of equipment and technology, and even staffing.
“Losing a voice over these decisions, and the day-to-day impact that these factors have in care delivery, can prove very challenging for physicians,” Seligson said.
Independent doctors can join groups to gain negotiating leverage with insurers, said Dr. John Franco, president and medical director for the Independent Physicians Association of Nassau/Suffolk Counties, which represents about 1,500 independent physicians on Long Island and in New York City and Westchester County.
“We represent physicians in communicating with insurers,” Franco said. “We want to improve quality of care, and we hold our members accountable by tracking outcomes, and this, in turn, leads to healthier patients and lower costs.”
Azaz, a current member at the IPA and a former board member there, said assistance from a group in dealing with insurers is helpful. Otherwise, “with some insurers, we get as little as $29 for a visit, and we aren’t big enough to negotiate with them.”
Specialty doctors, such as a cardiologist or podiatrist, pay $3,000 to join the IPA. Primary care physicians don’t pay a fee, because “they’re the gateway to good health care,” Franco said.
The IPA of Nassau/Suffolk Counties also works with technology vendors to improve independent physicians’ buying power, Franco said.
Many health systems
Doctors eyeing an exit from independent practice have plenty of expanding health systems to choose from.
NYU Langone has 250 non-hospital sites in the metro area, with 2,150 doctors on staff, up from about 600 doctors about 10 years ago. This doesn’t include NYU Winthrop’s affiliated network, which has yet to be folded into NYU Langone’s network.
The movement of doctors to health systems is expected “to continue for about two more years,” said Dr. Andrew W. Brotman, senior vice president and vice dean for clinical affairs and strategy for NYU Langone. “Then there will be a few very big networks. At that point it will slow down a bit.”
Winthrop has 500 physicians in its group, said Ed Chewens, a senior vice president at NYU Winthrop in Mineola. The expansion began in earnest about 10 years ago, when the system started to take on cardiologist practices, he said.
Northwell Health has grown from employing 2,900 physicians in 2013 to 3,900 at more than 550 outpatient physician practices and other non-hospital facilities this year. The health system projects it will have 4,300 doctors in 2018.
Catholic Health Services of Long Island, which has acquired independent physician networks, declined to comment for this story.
Hospital groups diversify
Adding physician practices helps traditional hospital groups build their ambulatory services, as networks move away from more costly hospital-based health services.
About 65 percent of NYU Langone’s revenue in 2016 was from outpatient services. Ten years ago, 85 percent of revenue came from hospital services.
At Northwell, about 54 percent of revenue in 2016 came from hospital stays, down from 63 percent in 2010.
Northwell integrates Long Island doctors’ practices into Northwell Health Physician Partners, which is the health system’s medical group, said Deborah Schiff, senior vice president of ambulatory strategy and business development at Northwell.
“If we’re bringing a new primary care practice on board, we may strategically locate a specialty care practice nearby to provide the primary care practice with other clinical services,” Schiff said. “Conversely, if we’re bringing a new clinical specialty practice on board, we may open a primary care practice nearby.”
The primary care physician is often the entry point for patients at Mount Sinai Doctors Long Island, said Dr. Scott Ingber, the medical director at the Huntington-based multi-specialty practice that Mount Sinai bought in 1991.
Ingber, a gastroenterologist, said patients who have established relationships with a primary care physician in the Mount Sinai network are often sent to him.
Ingber said he still gets referrals from doctors outside the Mount Sinai network, but “I’m not sure how long that will last. Patients are going to be encouraged to stay within their health systems because the health systems will be able to control quality.”
But Dr. Robin DaCosta, a physician at Azaz’s Island Medical Care, said she wants to be the arbiter of quality. “I want to be able to make adjustments to provide the best care for my patients. I want to decide what is best for them.”