Dr. Johnson and his three partners are all independent physicians who have a small private group practice office site where they perform minor gastrointestinal procedures such as endoscopies, colonoscopies and other minor outpatient procedures. Dr. Johnson and his partners are all also on staff at three local hospitals where they perform their more complex procedures such as biopsies and minor tumor or lesion removals. At present time, Dr. Johnsons group participates in multiple health plans including the local Blue Cross/Blue Shield Plan, Medicare, Medicaid and numerous other Commercial Health Plans (with 3 primary commercial insurance plans) thus making these plans the top six payers for the Johnson groups patient base. One of these commercial plans is Uni-Care Insurance, which is a large commercial plan owned and operated by the Uni-Care Health System, which is also owns and separately operates a large integrated health delivery system and is thus a direct provider of health care services, including owned/employed physicians, outpatient centers and acute care hospitals.

For the last several years, Dr. Johnson and his partners have been reconsidering their future and whether or not they would like to 1) remain independent, 2) become a partners or employees in a larger group practice or 3) whether to become a joint venture doctor practice/partner with a larger health system or 4) become direct employees of a larger health system. If they choose options 1 or 2, not much will change in terms of their ability to accept all current patient health plans, except that they will be able to take home higher salaries as a result of lower economies of scale costs in the case of option 2 and higher insurer payments due to the larger groups ability to negotiate better payment rates with all commercial health plans. If they choose option 3 with Unicare (Option 3A), they will be forced to accept only Unicare commercial insurance and to eliminate their participation in their other two current commercial plans. Their base pay will be virtually the same but they will receive higher benefits and more paid time off being part of this larger joint venture project. If they enter a joint venture with a different health system (Option 3 B), they will receive higher pay, higher benefits, more paid time off, but patients will be forced to payer slightly higher co-pays and co-insurance due to the nature of the contracting arrangements of the JV with commercial plans such as Unicare. Patients will however, in both Joint venture option (3A and 3B) be in a health care settings that are more enforced in terms of JCAHO quality, and stricter regulations on quality of care than in an independent practice setting. If they choose Option 4 with a large system (Option 4A), much will stay the same as currently in place in terms of their pay, benefits, time-off, except that the health plan will offer quality and productivity base bonuses to the physician. Much of this bonus money is feasible as under Option 4 the physicians outpatient practice will be re-established as a hospital-based outpatient provider which receives higher payments than an outpatient physician office for Medicare and other large commercial plan patients. Patients will see higher co-pays with Medicare and all commercial plans as they will now pay 2 copays, one for the technical component of outpatient procedures done in this new hospital-based outpatient site, and one for the professional office visit itself. Option 4B is the same as Option 4A except that the new hospital based outpatient site will only accept the Unicare Commercial plan, Medicare and Medicaid.

CASE RECOMMENDATION/DISCUSSION

In the context of provider/clinical factors what are the pros and cons of each Option?

In the context of financial ethics what are the pros and cons of each Option?

Discuss the problems you see with current reimbursement systems, such as Medicare and Commercial contracts that differentiate between hospital-based vs. physician office-based payment mechanisms. Do you feel these payment variations are justifiable? Be sure to explain your answer.

How does this case promote or deter from social welfare and defined by Jesuit principles and values? Explain your answer.

Based on all of the above, what should the Johnson group do?

Assuming you are a patient advocacy consultant, what actions would you take, and with whom, to balance the scales in terms of patient rights and patient needs. Discuss the anticipated counter-arguments that will likely occur from those you approach for this desired change and what a middle-of-the-road compromise plan may look like.