In a marketplace heavily influenced by managed care, more U.S. physicians are forming or joining group practices than ever before. A new AMA report shows that one-third of all physicians belong to groups. The number of group practices has increased 361 percent since 1965 and 16 percent between 1991 and 1995.

"There has been a total paradigm shift in the way health care is delivered in this country," according to Leonard Goldstein, M.D., a member of the Institute for Behavioral Healthcare's Council of Behavioral Group Practices. "While managed care met a market need to organize fragmented systems of care, the rise in physician groups is an attempt to take back control of the medical risk-taking entity to manage and deliver care."

Goldstein, the founder of the Northern Virginia Psychiatric Group in Alexandria, noted in an interview that physicians also form groups to have greater access to patients and provide a broad range of services including weekend and evening hours, different specialties, internal quality assurance, and peer review.

Psychiatrists can spread the heavy clinical responsibilities and very ill patients among members of a group, according to Alan Axelson, M.D., medical director of InterCare Behavioral Health in Pittsburgh. "Group practices also help with on-call and reduce administrative overhead, which has grown more complex and expensive with managed care contracting."

In terms of composition, multispecialty groups now claim 54 percent of all group physicians, compared with 42 percent for single-specialty group physicians, and 4 percent for family practice group physicians, according to the AMA report Medical Groups in the U.S.: A Survey of Practice Characteristics. Although the rapid growth rate of single-specialty groups may now be slowing, they still make up 70 percent of all groups, compared with only 22 percent for multispecialty groups, and 8 percent for family practice groups. However, the size of multispecialty groups is four times larger on average than that of single-specialty groups. Family practice and internal medicine account for the highest percentage of these multispecialty groups.

"The growth of multispecialty groups reflects an attempt to look at a population in terms of prevention and maintaining health longer on an outpatient basis, in the community, and in the workplace," commented Goldstein.

Psychiatry is represented in 9 percent of multispecialty groups and 2.5 percent of group physician positions, according to the AMA publication. "With one-third of all patients visiting doctors reportedly having behavioral health problems, hiring a psychiatrist would eliminate unnecessary tests and procedures. I see this as a great opportunity for psychiatry," said Goldstein.

The AMA report noted that groups providing a wide range of medical services are preferred by managed care organizations.

More than four-fifths of all medical groups contract with HMO's and PPO's to provide services, noted the report, and 16 percent do business with HMO's on a referral basis. Goldstein attributed this trend to greater managed care penetration of the market, resulting in more contracts for both solo and group practices.

"The fundamental shift is how health care is financed. In terms of groups, psychiatrists have taken the lead in developing provider- and patient-friendly systems that we can manage ourselves versus having an extra layer of expense, such as a third party payer," said Goldstein.

The vast majority of medical group practices are professional corporations (PC) owned by physicians (95 percent) rather than hospitals (3 percent), according to the AMA report.

"For a period of time," said Axelson, "hospitals in my region were buying up practices but then found them hard to manage efficiently and got out of it."

Limited liability corporations (LLC's) are also gaining popularity among medical groups, noted Axelson. His group changed from a PC to an LLC this year. "Although an LLC offers the same liability protections as a PC, it is cheaper administratively to maintain and in some states has a more favorable tax status."

Despite reports to the contrary, physicians maintain significant decision-making control in medical groups, although this may be more restricted in the future by their relationships with managed care, employers, and other payers, stated the AMA report. In 73 percent of medical groups, only physicians selected the pharmaceuticals appearing on formularies, and in 65 percent of the groups, only physicians made decisions about recruitment of other physicians.

(Psychiatric News, September 20, 1996)