State Leadership Conference

Health-care reform has caused a lot of anxiety among solo and small group practice practitioners who worry about how they'll be able to compete in a changing health-care environment, said Shirley Ann Higuchi, JD, associate executive director for legal and regulatory affairs in the APA Practice Organization.

Fortunately, Higuchi told participants at the State Leadership Conference in March, APA and the APA Practice Organization are helping psychologists develop innovative new practice models with varying levels of collaboration and reaching out to discover what models psychologists are already creating. These models range from simple, low-investment, low-risk steps practices can take all the way to complex collaboration models, such as management services organizations that can contract with accountable-care organizations. "Practices can try these models like stepping stones as they move toward greater collaboration," said Higuchi.

Kevin Ryan, JD, a member of Epstein, Becker & Green's Health Care and Life Sciences practice in Chicago who advises APA and health-care clients on business and regulatory matters, laid out the spectrum of options for joint ventures:

  • Referral network. In this model, psychologists contract with possible referral sources, such as primary-care organizations, hospitals or home health agencies. While this requires time and effort, said Ryan, it is the least integrated and therefore least risky alternative practice model. "The truth is, a contract probably isn't even necessary," he said. "You could just go to the entities and say, ‘I'm here for you.'"
  • Co-location. The next step up is sharing or renting office space with potential referral sources, either part- or full-time. While still easy to do and low risk, this model usually involves a lease.
  • Independent practice association (IPA). In this model, independent practices come together to achieve common goals. Often that means having the IPA contract with a managed-care organization or health system to provide services. While this model may give psychologists access to more opportunities than they could achieve on their own, there are more legal risks, including antitrust concerns.
  • Management services organization. These are like "IPAs on steroids," said Ryan. The organization is a separate legal entity — often with its own name and branding — that develops a network of providers that can contract with multiple payers on a much broader geographic scale. (An IPA, in contrast, typically contracts with a single payer or hospital.) Creating a management services organization involves much more legal risk, Ryan warned, citing multiple contracts and the potential risks of marketing under a common name.
  • Accountable care organization (ACO). Though some psychologists may consider participating in an ACO, psychologists aren't likely to put together an ACO themselves. The extensive ACO requirements tend to be more hospital-, primary care- or physician-oriented, said Ryan.
  • Merger. In a merger, two entities become one or form a new entity. Or one entity simply acquires the other. "Mergers are the ultimate in clinical and financial integration and the highest legal risk," said Ryan. Plus, they're much harder to get out of than the other models. At this end of the scale, he added, the model is not a joint venture but a single legal entity.

"As you go up the scale, you get increased risk and liability," said Ryan. "Where you want to jump on this train depends on your own risk tolerance."

Case studies

Some psychologists have already made that jump. At one end of the spectrum, the Rhode Island Psychological Association (RIPA) is creating a behavioral health referral network, said RIPA President Peter Oppenheimer, PhD. Much higher on the spectrum, Keith A. Baird, PhD, and colleagues are developing a more elaborate model. The organization they're creating hopes to become the behavioral health-care provider for many of northern Illinois's ACOs and to lower health-care costs while improving care.

Somewhere in between those two extremes is the model involving co-location and referral contracts described by Michael Goldberg, PhD, founder and director of Child and Family Psychological Services Inc./Integrated Behavioral Associates in Massachusetts.

For Goldberg, the transition from a simple, traditional practice to a full-fledged alternative model came in stages.

The practice began with Goldberg as a traditional solo practitioner. He added a couple of group members in 1994. In 2005, a physician who often referred patients to the practice agreed to rent them space in her office to see pediatric patients. That co-location model is still going, but now the practice is also integrated into three primary-care offices, a neurology office and an obstetrics/gynecology office in addition to the practice's two independent outpatient behavioral health offices with Goldberg's practice accepting most of their mental health referrals.

"When I talk to other psychologists, I often hear, ‘I'm a small practice or a solo practitioner; I can't do that,'" said Goldberg. "That's absolutely incorrect and self-defeating thinking."

This integrated practice model requires just three legal components, said Goldberg. One is a base agreement that defines the goals of the two entities. The second is a lease for the shared office space. The third is a service-specific agreement to cover services that aren't covered by the traditional, fee-for-service arrangement, such as having a geropsychologist make house calls as a way of keeping patients out of the emergency room.

Developing this model was really pretty simple, said Goldberg. "You can do it in a step-wise manner," he said.

Antitrust issues

Of course, there are serious antitrust issues to consider when economic competitors come together in a venture that jointly negotiates fees with insurance companies or other entities, warned Alan Nessman, JD, senior special counsel in the APA Practice Directorate's Office of Legal and Regulatory Affairs.

"Price fixing is normally considered bad because it decreases competition, increases prices and brings higher costs to consumers," Nessman said. But, he explained, the antitrust agencies recognize that "properly integrated collaborations promote cost-effectiveness, lower prices for consumers and improve quality and that some ventures will need joint negotiation to be viable." As a result, the agencies have issued guidance on the integration necessary to keep collaborations out of antitrust trouble.

The key is sufficient financial integration — substantial sharing of financial risk — or clinical integration that achieves higher quality, lower costs and more efficient delivery of health care. Most psychologists prefer the clinical integration route, said Nessman. There are a dozen elements of clinical integration that collaborations should include, such as development of clinical protocols reflecting current developments in treatment and measureable goals to monitor the quality of treatment provided. APA Practice will be providing more details on these elements and other issues in the near future, he added.

Rebecca A. Clay is a journalist in Washington, D.C.