Independent practice associations: Advantages and disadvantages of an alternative form of physician practice organization.

BACKGROUND

Value-based purchasing (VBP) favors provider organizations large enough to accept financial risk and develop care management infrastructure. Independent Practice Associations (IPAs) are a potential alternative for physicians to becoming employed by a hospital or large medical group. But little is known about IPAs.

METHODS

We selected four IPAs that vary in location, structure, and strategy, and conducted interviews with their president and medical director, as well as with a hospital executive and health plan executive familiar with that IPA.

RESULTS

The IPAs studied vary in size and sophistication, but overall are performing well and are highly regarded by hospital and health plan executives. IPAs can grow rapidly without the cost of purchasing and operating physician practices and make it possible for physicians to remain independent in their own practices while providing the scale and care management infrastructure to make it possible to succeed in VBP. However, it can be difficult for IPAs to gain cooperation from hundreds to thousands of independent physicians, and the need for capital for growth and care management infrastructure is increasing as VBP becomes more prevalent and more demanding.

CONCLUSIONS

Some IPAs are succeeding at VBP. As VBP raises the performance bar, IPAs will have to demonstrate that they can achieve results equal to more highly capitalized and tightly structured large medical groups and hospital-owned practices.

IMPLICATIONS

Physicians should be aware of IPAs as a potential option for participating in VBP. Payers are aware of IPAs; the Medicare ACO program and health insurer ACO programs include many IPAs.