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Last year around this time, Reliant Medical Group was in a tight spot financially. Despite high quality and patient satisfaction ratings, Central Massachusetts' largest independent medical group had just announced it was laying off 3 percent of its 2,550 employees because of a projected budget shortfall.
By year's end, the nonprofit was operating at a loss of $9.7 million, according to the company. That was what Tarek Elsawy, Reliant's new president and CEO, inherited when he took the reins in January. By managing total medical expenses, implementing position control and focusing more on accountability, the nonprofit was able to turn that loss into a gain, according to Elsawy. Reliant is on track for a positive operating surplus of $15.5 million for 2016, a 2.3-percent margin gain and no layoffs.
Numbers aside, the new CEO also inherited a multispecialty medical group he says is much further along in the ongoing transition towards population health management compared to other healthcare networks across the state and even the country. Reliant, he said, also provides high levels of care, as demonstrated by its own patient satisfaction and quality rankings – showing 96.6 percent of Reliant patients would recommend their provider to others, and 97.4 percent would recommend their practice.
Looking beyond his first 10 months, Elsawy said he will focus on financial stability, growing Reliant's team-based care model, expanding further in existing markets, and paying attention to the potential for innovation that he said already exists within the fabric of the company.
“I'm wary when people say we could become the national model for anything, but I think we absolutely could become a national model of how to deliver care,” Elsawy said.
Though Elsawy said Reliant will have a surplus this year, annual financial gains have not been consistent, the company's filings with the Internal Revenue Service show.
Besides this year, the company's biggest recent gain was in 2010, when the medical group raked in $13.6 million in net income. The nonprofit reported a more modest $7-million gain the following year, and a small gain of $30,197 in 2012. Reliant lost $615,002 in 2013, but returned to profitability in 2014, with a $2.4 million gain.
The tax forms do not include wholly-owned subsidiaries such as Lakeview Medical, the Reliant Medical Group Foundation and the Massachusetts Assurance Company, Reliant's malpractice company.
Elsawy said he was able to turn last year's loss into a gain by focusing on accountability and position control – essentially streamlining process and having workers stick within the responsibilities of their position – and managing total medical expenses.
“For awhile there was a tendency to not probably pay as much attention to [position control],” he said. “The other thing is ... management of our total medical expenses. We're a group that is highly capitated at full risk, so our ability to control medical expenses is absolutely essential.”
Seema Naravane, the chair of Reliant's board, said factors influencing the unpredictability of the company's profits include insurance reimbursements that don't keep up with expenses. A bad flu season or the introduction of new drugs can also be contributing factors.
“In general, there's a shift towards high-deductible insurance plans, and reimbursements are low. There's also a shortage of primary care physicians – it's multi-factorial,” she said. “It's a tough time to be in the healthcare field.”
Joe Poats, a partner at HBI, which is owned by Burlington-based consulting firm Decision Resources Group, said shifts in reimbursements have been a major driving factor in profitability issues for independent medical groups. Competition for patients with larger, hospital-based healthcare networks is another factor, Poats said.
The transition into population health management is happening because the previous care model didn't focus heavily enough on prevention, Elsawy said, and therefore wasn't sustainable. This is something Reliant was doing “before it was cool,” Elsawy said.
Actually, that's one of the reasons he wanted to join Reliant.
“We have a lot of resources dedicated towards making sure that we do things to keep people healthy, and get them all the appropriate screenings. But then when they do get sick, we have programs in place that allow for coordination of care to happen,” he said.
Population health management is tied to a team-based approach to health care, where a patient's care is managed by several members of a team, not just one doctor.
Reliant has been moving towards that strategy for years. The most recent example of that came in early 2016, with the opening of a model cell at Reliant's Plantation Street offices in Worcester. In the model cell, doctors, nurse practitioners, nurses and medical assistants work next to each other in an open office space that directly adjoins patient rooms.
It's called a model cell because in a lot of ways it's an experiment – everything is mobile, and patients and providers can give feedback on what works and what doesn't in order to create a better caregiving blueprint going forward.
But it's not just about the patients. The provider shortage referenced by Naravene is having a very real effect on healthcare systems across the country, and slowing down the transition into population health management, Elsawy said.
The Association of American Medical Colleges estimates the medical profession will face a shortage of 12,500 to 31,000 primary care physicians by 2025.
Elsawy said Reliant's collaborative care model, which allows multiple people to work together on the same patient, will make it an attractive place to work for providers. Already, providers who work in the model cell seem empowered by the collaborative environment. And accolades help – Reliant has been named to Becker's Healthcare “150 Great Places to Work in Healthcare” and has been honored as one of the Boston Globe's top places to work.
“Our model is really based on team-based care. And the ability to have most people work within a group setting and feel like 'I'm not the only one responsible for your care, there's an entire team of folks doing it,' makes it much much more appealing,” he said.
By choosing to work for an independent group versus a larger, hospital-based healthcare network, physicians may have a bit more sovereignty, said Katie Gilfillan, director of healthcare finance policy, physician and clinical practice at the Healthcare Financial Management Association in Westchester, Illinois.
“Independent medical groups may offer their physicians more influence and ownership in practice operations,” said Gilfillan. “As a result, physicians working for the independent group are more invested or incentivized in ensuring the group is successful from a financial perspective, and the group may find it easier to align physicians toward organizational goals.”
A second model cell opened in July, and Elsawy said Reliant plans to replicate this model even further as it expands in Central Massachusetts and MetroWest. Reliant will choose facilities that can accommodate the model cell structure, he said.
“To be able to show the cost benefit value proposition to patients in terms of quality outcomes, in terms of patient experience, in terms of what the total societal costs are by implementing that team care model – that's something where I think we're significantly further along than most other organizations,” he said. “But the trick is the scalability.”