1. HEALTH REFORM AND THE FUTURE OF MEDICAL PRACTICE Presented To

2. BASED ON A WHITE PAPER CONDUCTED FOR: THE PHYSICIANS FOUNDATION

3. President: Lou Goodman, CEO, Texas Medical Association Executive Director: Timothy Norbeck; former Executive Director, Connecticut State Medical Society Vice President: Walker Ray, MD; former president of the Medical Association of Georgia

4. Signatory Medical Societies: Alaska State Medical Association California Medical Association Connecticut State Medical Society Denton County Medical Society (Texas) El Paso County Medical Society (Colorado) Florida Medical Association Hawaii Medical Association Louisiana Medical Association Medical Association of Georgia Medical Society of New Jersey Medical Society of New York Nebraska Medical Association New Hampshire Medical Society North Carolina Medical Society Northern Virginia Medical Societies South Carolina Medical Association Tennessee Medical Association Texas Medical Association Vermont Medical Society Washington State Medical Association

5. WHITE PAPER ADVISORY PANEL Michael Rossi, MD….Executive Director, LeHigh Valley Physician Group David Spahlinger, MD……Senior Associate Dean, Executive Medical Director of the Faculty Group Practice, University of Michigan Medical School John D. Stobo, MD….Senior Vice President, University of California Health System John R. Thomas…..CEO, MedSynergies Ron Yee, MD, MBA...CMO, United Health Centers, Parlier, California

6. WHITE PAPER ADVISORY PANEL S. Wright Caughman, MD….Vice President, Clinical and Academic Integration, Emory University Jane Jordan, JD….Chief Health Council, Emory University Richard Johnston, MD….President, Medical Clinic of North Texas Steven Levin….Managing Director, Chartis Group Claire Pomeroy, MD, MBA… Vice Chancellor and Dean of the School of Medicine, UC Davis

7. FIVE COMPONENTS 1. Reform provisions affecting doctors 2. A national survey of physicians 3. Physician practice model case histories 4. Analysis: physician workforce implications 5. Analysis: legal implications for physicians

8. A FOCUS ON PHYSICIANS. HOW DID WE GO FROM THIS……

9. …TO THIS?

10. AND WHY ARE WE HEADED TO THIS?

11. FROM 1970-2010 WHAT HAS CHANGED…AND WHAT HAS NOT

12. A HAMBURGER IS STILL A meat patty and lettuce on a bun 1970…….25 cents 2010…….$1

13. HEALTHCARE: NO LONGER “TAKE TWO ASPRIN…” Close to 200 Board Certified Specialties Over 10,000 prescription drugs Organ Transplants Face Transplants Teleradiology/Telemedicine Non-invasive Techniques Gene Therapy

14. 2011 HEALTHCARE: FROM BIG…. 1970… 200 million people

15. TO REALLY BIG 2010… 300 million people

16. MORE PEOPLE… AND OLDER PEOPLE 75 million baby boomers started turning 65 in 2011. One every 8 seconds

17. SOMETHING HAS COME BETWEEN US, OUR DOCTORS, AND HEALTHCARE DELIVERY…MONEY Virtually limitless demand vs. finite resources $2.5 TRILLION AND COUNTING A MODEL THAT IS NO LONGER SUSTAINABLE

18. IN TWO DAYS, WE SOLVE THE RIDDLE

19. RIDDLE SOLVED 19

20. THE IMPACT ON DOCTORS What does reform mean to physicians and to their patients?

21. WHITE PAPER KEY FINDINGS: Two types of reform: Formal……………. PPACA Informal…………. Market/societal forces This time, no “FALSE DAWN”

22. KEY FINDINGS: The independent, private practice model will be largely (though not uniformly) replaced. Physicians will consolidate, be employed, or align with larger entities

23. KEY FINDINGS: REGIONAL VARIANCE/PREVAILING MODELS ACOs (Medicare & Commercial) Larger, non-aligned groups Larger, aligned groups Medical homes Community Health Centers Concierge practices Smaller, aligned groups Traditional private practice

24. OBSTACLES TO FORMING AN ACO Physician staffing/alignment...........42% Lack of Capital……………………………..38% Lack of integrated IT systems………..32% Lack of evidence-based protocols…..25% Source: AMN Healthcare 2011 ACO Survey

25. KEY FINDINGS: THE MEDICAL PRACTICE ENVIRONMENT: FURTHER EROSION Through acts of omission and commission, “reform” is, on balance, a net loss for physicians and will further erode the medical practice environment No payment fix (SGR) Tort reform not addressed Onerous compliance regulations More patient volume Higher patient acuity Problematic cost/quality tracking Increased office expense ”Status quo” (pre-authorization, multiple forms) largely intact

26. KEY FINDINGS: REFORM WILL EXACERBATE THE PHYSICIAN SHORTAGE Supply provisions inadequate to meet demand Access issues for Medicaid, Medicare and other patients Primary care/specialist disparities to continue Many physicians will cut back or opt out Physicians will redefine their roles, rethink delivery models

27. DID ANYBODY ASK WHAT PHYSICIANS THINK? SURVEY OF PHYSICIANS AND HEALTH REFORM ”Thank you for asking”

28. RESULTS: WHAT WAS YOUR INITIAL REACTION TO PASSAGE OF HEALTH REFORM?

29. HOW DO YOU FEEL NOW ABOUT HEALTH REFORM? RESULTS:

30. DO YOU BELIEVE THE VIEWPOINT OF PHYSICIANS WAS ADEQUATELY RESPRESENTED TO POLICY MAKERS AND THE PUBLIC DURING THE RUN-UP TO PASSAGE OF HEALTH REFORM? RESULTS:

31. HOW DO YOU THINK REFORM WILL AFFECT PATIENT VOLUME AT YOUR PRACTICE?

32. RESULTS: DO YOU NOW HAVE THE TIME AND RESOURCES TO SEE ADDITIONAL PATIENTS IN YOUR PRACTICE WHILE STILL MAINTAINING QUALITY OF CARE?

33. RESULTS: HOW DO YOU BELIEVE HEALTH REFORM WILL AFFECT THE AMOUNT OF TIME YOU ARE ABLE TO SPEND PER PATIENT?

34. RESULTS: HOW DO YOU BELIEVE REFORM WILL AFFECT THE QUALITY OF CARE YOU ARE ABLE TO PROVIDE?

35. RESULTS: WHICH BEST DESCRIBES YOUR ATTITUDE TOWARD MEDICAL PRACTICE BEFORE REFORM WAS ENACTED?

36. RESULTS: WHICH BEST DESCRIBES YOUR MEDICAL PRACTICE NOW THAT REFORM HAS BEEN ENACTED?

37. RESULTS: DO YOU BELIEVE REFORM WILL COMPEL YOU TO CLOSE OR SIGNIFICANTLY RESTRICT YOUR PRACTICE TO ANY CATEGORY OF PATIENT?

38. RESULTS: IF YES, PLEASE INDICATE ALL THAT APPLY: CLOSE SIGNIFICANTLY RESTRICT Medicaid………………………………. 51% …………………………..42% Medicare………………………………. 30% …………………………. 57% Indigent………………………………… 43% …………………………. 38% Patients covered through exchange… 24% …………………………. 44% Some HMO/managed care patients… 17% …………………………. 42% All New patients……………………..… 5% …….……………………. 37% Self Pay………..……………………..… 10% …….……………………. 24% Privately Insured……………………..… 3% ……..……………………. 18% Other…………………………………..… 6% ………..…………………. 9%

39. CONSIDER YOUR PRACTICE PLANS OVER THE NEXT THREE YEARS AS REFORM IS PHASING IN. DO YOU PLAN TO: RESULTS:

40. WHICH BEST DESCRIBES YOUR VIEW OF THE INDEPENDENT, PRIVATE PRACTICE MODEL? RESULTS:

41. IF YOU COULD MAKE A STATEMENT TO POLICY MAKERS AND THE PUBLIC ABOUT HEALTH CARE REFORM AND THE STATE OF THE MEDICAL PROFESSION TODAY, WHAT WOULD YOU SAY? 1,200 written responses “The bill is too long and comprehensive to. I fear the unknown know what is coming. I fear the unknown.”

42. SURVEY CONCLUSION Physicians are being systemically disengaged from the practice of medicine The Result: LIMITS ON PATIENT ACCESS

43. REFORM AND THE PHYSICIAN WORK FORCE WHO WILL SEE THE 32 MILLION NEWLY INSURED? THE 75 MILLION BABY BOOMERS ACCESSING MEDICARE? THE 50 MILLION NEW ADDITIONS, 2000 – 2020?

44. HOW MANY MORE PCs? 32 million newly insured patients X 2 additional patients visits per year = 64 million patient visits divided by 4,000 = 16,000 additional primary care doctors Source: The Lewin Group

45. REFORM: CONSPICUOUS FOR WHAT IT DOES NOT DO  Does not remove the cap on GME funding  Just 889 “new” residency slots through redistribution

46. RESIDENCY CHOKE POINT Medical School Enrollment: 18,000+ and growing Residency: 25,000 and stagnant In practice: Negative growth by 2016 Source: MGT of America

47. THE PHYSICIAN SHORTAGE: RESULT Health Reform throws one bucket of water on the fire and two buckets of gasoline

48. THE PROBLEM: MEDICAL STUDENTS ARE GOOD AT MATH Average income, Primary Care, with Medicare increases, vs. Specialists Family Practice: $178,000 + 2.5% increase…………………………….….. $182,450 Internal Medicine: $205,000 + 5% - 10% increase….. $215,250 - $225,500 Pediatrics: $183,000 + 0% increase…………………………………………….. $183,000 Anesthesiology…………………………………………………………………….…………. $335,000 Radiology…………………………………………………………………………...…….….… $402,000 Cardiology (inv.)…………………………………………………………………….………. $532,000 Dermatology……………………………………………………………………………...…… $331,000 Orthopedic Surgery……………………………………………………………..….……… $521,000 Urology…………………………………………………………………………………………….. $453,000 Source: Merritt Hawkins 2011 Revenue of Physician Recruiting Incentives

49. PHYSICIAN MALDISTRIBUTION TO CONTINUE 6,200 Health Professional Shortages Areas (HPSAs) 67% in rural areas 65 million Americans $1.5 billion over 5 years (2011 – 2015) to National Health Service Corps for Loan Forgiveness 38% of MERRITT HAWKINS SEARCH ASSIGNMENTS FEATURE LOAN FORGIVENESS

50. ED CROWDING WILL PERSIST ER visits grew 7% in Massachusetts from 2005 to 2007 PATIENTS ARE SEEKING CONVENIENT CARE RATHER THAN EMERGENCY CARE Source: CDC “Emergency Department Visitors and Visits: Who Visited the ER in 2007”, The Boston Globe

51. WE HAVE SEEN THIS MOVIE BEFORE

52. 340,000 of the state’s 600,000 uninsured gained coverage RESULT: SOURCE: *UPI, July 27, 2007 ** New York Times, April 4, 2008 A TEST CASE: MASSACHUSETTS

53. REFORMED MASSACHUSETTS  40% of family physicians in Massachusetts no longer accept new patients, up from 30% in 2007.  Almost 60% of general internists have stopped taking new patients, up from 49% in 2007  Yet Massachusetts has 130 primary care physicians per 100,000 population, first highest in the country (the national rate is 90 per 100,000 pop.) Source: Massachusetts Medical Society

54. ACCESS TO CARE WILL BE LIMITED Average Patient Appointment Wait Times Source: Merritt Hawkins 2009 Survey of Patient Appointment Wait Times

55. MEDICAID / MEDICARE PATIENTS WILL DEPEND ON SAFETY NET PROVIDERS 16+ million new Medicaid enrollees Temporary bump in physician fees WILL YOU CLOSE OR SIGNIFICANTLY RESTRICT PATIENT ACCESS TO ANY CATEGORY OF PATIENT? Medicaid…….93% Medicare…….87% Source: Physician Foundation 2010 Survey of Physicians and Health Reform

56. DOCTORS WILL VOTE WITH THEIR FEET No changes to practice……………………….….. 26% Retire, cut-back, work part-time, close practice, seek non-clinical role, seek non medical job, work locum tenens, concierge, etc……………………………………………….……. 74%

57. WILL DOCTORS REALLY CHOOSE TO LIMIT ACCESS? They already have… Source: JAMA study cited in HealthLeaders, Feb 25, 2010 Hours worked per week: 1977 – 1997……………….. 55 1996 – 2008..……………… 51 Equals 36,000 fewer FTEs Fewer hours strongly correlated to lower reimbursement

58. A MESSAGE FROM NEW AMA PRESIDENT, CECIL B. WILSON, M.D. AMA anticipates a deficiency of 125,000 physicians by 2025. 2014 will be the year of shrinking access

59. WHAT’S EMERGING? A NEW WORKFORCE PARADIGM THE “CONE OF COMPLEXITY” Medical specialists Primary care physicians Pharmacists (Pharm D) Advanced practice Nurses/PAs Nurse specialists Therapists LPNs Nurses aides

60. TOMORROW’S DOCTOR WILL REDEFINE THEIR ROLES Concede the less complex patients to PAs and NPs Let pharmacists help directly manage patients with chronic conditions CAVEAT: Only 37% of PAs and 67% NPs practice primary care.

61. THEY WILL EXPAND THEIR HOURS Practices that can arrange for patients to see a doctor or nurse after hours Source: 2006 Commonwealth Fund International Policy Survey of Primary Care Physicians

62. OR, THEY WILL WORK PART-TIME 21% of all doctors now work part-time Hospitals and Groups must accommodate the rise of the part-time physician Source: American Medical Group Practice Association

63. THEY WILL EMBRACE TELEMEDICINE April, 2010, Park Nicollet rolls out online diagnosis/12 month pilot program Online diagnosis of minor problems (cold, flu, acne, bladder infections/allergies) $25 per visit PAs provide diagnosis

64. THEY WILL BE PAID FOR “EXTRACURRICULARS” Telemedicine E-mails Telephone calls Doctors will be compensated outside of the traditional billable appointment.

65. THEY WILL EMBRACE “SAME DAY” OR “OPEN ACCESS” SCHEDULING 15 minute rather than 10 minute appointments. Higher patient satisfaction scores

66. THEY WILL OFFER SHARED MEDICAL APPOINTMENTS (SMAs)/”GROUP APPOINTMENTS” 6 to 15 patients 90 minutes Physicals Well-child check-ups Pre-natal care Chronic illness management “There is sufficient data to support the effectiveness of group visits in improving patient and physician satisfaction, quality of care, quality of life and in decreasing emergency department and specialist visits.” Source: Journal of the American Board of Family Medicine

67. THEY WILL ALIGN WITH HOSPITALS 67

68. Healthcare Trends 68

69. THEY WILL ACCEPT VALUE BASED COMPENSATION Most physicians surveyed by Price Waterhouse said half their compensation should be a fixed salary. The other half should be quality, cost and production based. Source: PWC “From Courtship to Marriage: A Two-Part Series on Physician-hospital alignment”

70. THE PHYSICIAN ORGANIZATION OF TOMORROW…. Could well be… you!

71. PHYSICIANS: A PRACTICE PARADIGM SHIFT: Hospital employment… 56% of Merritt Hawkins searches feature employment Not just Primary Care, All specialties

72. PHYSICIANS: A PRACTICE PARADIGM SHIFT: Larger groups…economies of scale, strength in numbers Concierge….no more third party payors Part-time…lifestyle rules Locum tenens….Have Stethoscope, Will Travel Cherry picking….no Medicaid, Medicare or other low payors

73. THE DOCTOR OF TOMORROW WILL…. RETIRE! “I’m mad as hell and I’m not going to take it any more” HHS estimates 1/3 of today’s practicing physicians (268,000 out of 815,000) will retire within the next 10 years.

74. STAFFING PLANS MUST INCORPORATE ALL TYPES OF PHYSICIANS Employed………….(over 50% of all doctors) Independent Full-time Part-time Concierge On-site Remote (telemedicine) Locum tenens Male Female International

75. WHERE IS MEDICAL PRACTICE HEADING? FIVE CASE HISTORIES SHOW vs. TELL

76. 5 CASES HISTORIES A Medical Home 2 “ACOs” Concierge Practice – or “flat fee” Community Health Centers Hospital Aligned Practice

77. THE BURDEN OF COMPLIANCE $350 million to enforce fraud Medicare payments suspended during investigations of “credible allegations of fraud” HHS to define “credible allegations” More latitude to whistleblowers Overpayment must be repaid in 60 days “Intent” no longer a factor Specialty hospitals limited Encourages states to write their own Stark laws Relationships must be disclosed ALL PRACTICES’ NEED A COMPLIANCE PLAN

78. If you would like a complimentary copy of the Merritt Hawkins White Paper, please contact Kurt Mosley at: Kurt.Mosley@amnhealthcare.com

79. FOLLOW US Join our social community: Twitter: www.twitter.com/merritthawkinswww.twitter.com/merritthawkins LinkedIn: www.linkedin.com/company/merritt-hawkinswww.linkedin.com/company/merritt-hawkins Facebook: www.facebook.com/merritthawkinswww.facebook.com/merritthawkins Text like merritthawkins to 32655 Candidate Corner Blog: http://bit.ly/jpQBKAhttp://bit.ly/jpQBKA Ask the Experts Blog: http://bit.ly/kVn8Qhhttp://bit.ly/kVn8Qh

80. HEALTH REFORM AND THE FUTURE OF MEDICAL PRACTICE Presented To