An idea was born during a 2011 member meeting of the Chicago-based Children’s Community Physicians Association, an independent physician association (IPA) affiliated with Lurie Children’s Hospital of Chicago, one of the nation’s leading pediatric providers. Some of the pediatricians wondered how clinical and financial integration of their practices could provide stability going forward.
In 2012, based on a pro forma done by an outside accounting firm on financials and economies of scale, seven of the pediatric practices decided to come together to form a supergroup. As Kathleen McTigue, MBA, chief executive officer, PediaTrust, LLC, Northbrook, Ill., recalls, the practice owners were being proactive in a changing market: “The health systems were purchasing practices, not necessarily pediatric practices, but they were seeing their colleagues — the internal medicine doctors, the specialists or their own doctors — become employees and they wanted to stay independent,” she says. “So that was really the impetus for merging their businesses.”
At the time they went live on Jan. 1, 2013, PediaTrust consisted of 40 providers and 170 staff members in 12 locations. During the next six years, the group expanded considerably, while becoming a financially integrated entity.
With consolidation came modifications to the staff; though McTigue notes that very few staff members were let go. “We formed a billing office, so whatever they were doing locally that was centralized, they no longer needed those employees,” McTigue says. “Some of them were hired in the billing department, some retired and others maybe didn’t have the right skill set … most people were absorbed in one of the functions we needed.”
PediaTrust also made significant changes in its management, developing a new organizational chart, hiring experienced managers, establishing one human resources department and sharing resources and workloads among practices. However, managerial staff posed some difficulty. “We simply didn’t have the right managers in place when the company formed,” McTigue asserts, noting that a couple retired and some left of their own volition. “We replaced them with much more experienced managers” who were willing to learn new things and step up their game.
Another objective was the consolidation of all business functions, including accounts payable, banking, benefits, billing, contracting, human resources, marketing, payroll and the group’s website. “Not all that happened day one,” McTigue conveys. “But certainly accounts payable, having health benefits, having a single payroll — those things happened day one. Then there were other things that came later like the marketing effort.”
Likewise, every practice worked diligently to get on the same EHR system within the first six to eight months. Once this was completed, PediaTrust focused its attention on meeting its financial goals, developing a strong management team, expanding its clinical services and forming a revenue cycle management company.
Another challenge was getting the practices to agree on a uniform human resources policy. As McTigue notes, outside of malpractice, labor issues are the biggest risk for what she deems a “large small business.”
Ultimately, the challenges were magnified by the three-month time frame management set to become an LLC. The physicians signed a contract on Oct. 1, 2012, and they were under the new tax ID Jan. 1, 2013. Even though most of the physicians were like-minded in the way they viewed the business, McTigue recounts that “With a new payroll system, with a new HR and all new managed care contract credentialing, it was way too fast of a time period.” In hindsight, McTigue believes that six months is more reasonable for this type of consolidation.
Once the group’s business operations were sound, PediaTrust was able to develop the following clinical initiatives:
“We see the benefits of this model,” McTigue attests. “We would like to have other like-minded physicians see the benefits as well for their businesses and remain independent and have the same shared goals.”
And with two groups joining concurrently in both 2016 and 2018, McTigue recognizes that PediaTrust “knows what it takes” to make its model work.
In 2012, based on a pro forma done by an outside accounting firm on financials and economies of scale, seven of the pediatric practices decided to come together to form a supergroup. As Kathleen McTigue, MBA, chief executive officer, PediaTrust, LLC, Northbrook, Ill., recalls, the practice owners were being proactive in a changing market: “The health systems were purchasing practices, not necessarily pediatric practices, but they were seeing their colleagues — the internal medicine doctors, the specialists or their own doctors — become employees and they wanted to stay independent,” she says. “So that was really the impetus for merging their businesses.”
At the time they went live on Jan. 1, 2013, PediaTrust consisted of 40 providers and 170 staff members in 12 locations. During the next six years, the group expanded considerably, while becoming a financially integrated entity.
Changes made
PediaTrust obtained a single tax ID by forming a limited liability company (LLC) and consolidated its business, operations and governance functions and policies. Over time, it also selected a core group of advisors and vendors, implemented a single EHR system and developed its branding to meet the group’s needs.With consolidation came modifications to the staff; though McTigue notes that very few staff members were let go. “We formed a billing office, so whatever they were doing locally that was centralized, they no longer needed those employees,” McTigue says. “Some of them were hired in the billing department, some retired and others maybe didn’t have the right skill set … most people were absorbed in one of the functions we needed.”
PediaTrust also made significant changes in its management, developing a new organizational chart, hiring experienced managers, establishing one human resources department and sharing resources and workloads among practices. However, managerial staff posed some difficulty. “We simply didn’t have the right managers in place when the company formed,” McTigue asserts, noting that a couple retired and some left of their own volition. “We replaced them with much more experienced managers” who were willing to learn new things and step up their game.
Objectives
In forming a supergroup, some of PediaTrust’s key objectives were providing a voice for its pediatricians and collectively making each practice stronger through its expanded roster of physicians. As McTigue affirms, other specialties have a stronger voice than pediatricians serving on a hospital committee or as part of a medical staff when it comes to making decisions such as shared savings and apportioning money. By forming PediaTurst, the seven practices were able to “gain some efficiencies and have some negotiating leverage,” McTigue says.Another objective was the consolidation of all business functions, including accounts payable, banking, benefits, billing, contracting, human resources, marketing, payroll and the group’s website. “Not all that happened day one,” McTigue conveys. “But certainly accounts payable, having health benefits, having a single payroll — those things happened day one. Then there were other things that came later like the marketing effort.”
Likewise, every practice worked diligently to get on the same EHR system within the first six to eight months. Once this was completed, PediaTrust focused its attention on meeting its financial goals, developing a strong management team, expanding its clinical services and forming a revenue cycle management company.
Challenges
For PediaTrust, the biggest challenge was striking a balance between physician autonomy and ensuring efficient operations. “If we have to get permission from everybody, we can’t be very efficient,” McTigue says about getting physicians on board with vendors and advisors, for example. “Because they’ve run their businesses for so long, they were very invested in how things were and who was used for what.” Therefore, it was important that all the providers and staff trusted the managers’ decision-making on centralized accounting and EHR systems, along with one accounting firm and one labor attorney, for example.Another challenge was getting the practices to agree on a uniform human resources policy. As McTigue notes, outside of malpractice, labor issues are the biggest risk for what she deems a “large small business.”
Ultimately, the challenges were magnified by the three-month time frame management set to become an LLC. The physicians signed a contract on Oct. 1, 2012, and they were under the new tax ID Jan. 1, 2013. Even though most of the physicians were like-minded in the way they viewed the business, McTigue recounts that “With a new payroll system, with a new HR and all new managed care contract credentialing, it was way too fast of a time period.” In hindsight, McTigue believes that six months is more reasonable for this type of consolidation.
Results
Although full integration took some time, PediaTrust has become a successful supergroup. In early 2019, it is composed of 12 practices, which includes 70 providers and 275 staff members who work in 20 locations. “When we formed, I thought it was so the physicians could stay independent and gain efficiencies, which is all true,” McTigue states. “But then once we came together, they all wanted to support some clinical initiatives that an individual practice couldn’t support.”Once the group’s business operations were sound, PediaTrust was able to develop the following clinical initiatives:
- Lactation program: Consultation services offered at seven locations.
- After-hours care: Offered 365 days a year at one location and on weekends at two others; much less expensive for patients than visiting the ER or even urgent care.
- Travel clinic: Offers vaccinations, pre-travel physicals, secure prescriptions for antibiotics and anti-malarials and tips on health safety and protection for patients travelling internationally.
- Obesity program: Specialized nutritional services from a licensed dietitian, in collaboration with providers.
- Integrated psychology services: Partnered with Primary Care Psychology Associates LLC in promoting behavioral health with psychologists in three offices.
- Care delivery model: Achieved NCQA Level 3 Certification in Patient-Centered Medical Home (PCMH)
- speroMD: Physician-owned revenue cycle management company, focusing on maximizing collections and pursuing full payment; offered to other physician groups.
- Consulting: Offered to other physician groups.
- Strategic recruitment: Grow the group incrementally by adding new practices.
Next steps
Going forward, the physician owners will continue to explore more clinical initiatives, including a telemedicine program, which PediaTrust is getting ready to launch. They are also open to further expansion.“We see the benefits of this model,” McTigue attests. “We would like to have other like-minded physicians see the benefits as well for their businesses and remain independent and have the same shared goals.”
And with two groups joining concurrently in both 2016 and 2018, McTigue recognizes that PediaTrust “knows what it takes” to make its model work.
