Feature: Looming cuts force layoffs, practice/hospital integration

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Since the Centers for Medicare & Medicaid Services (CMS) made several reimbursement cuts to cardiology in 2010, including a 36 percent cut in SPECT imaging, private practices have cut hours and have integrated with hospitals at a fast rate.

Results of a American College of Cardiology (ACC) Cardiovascular Practice Census showed that 50 percent of the 2,046 cardiovascular (CV) practices surveyed reported they would be unable to order new equipment and would be forced to lay off staff as a result of the reimbursement cuts.

In addition, 45 percent of survey respondents said that they would need to reduce physician incomes and salaries and 40 percent would need to reduce benefits.

Ten percent said that they would need to reduce office hours and availability, 9 percent said that they would limit the number of new Medicare patients to the practice to cut down on overhead costs and 1 percent said that they would need to close their practice entirely.

To survive the cuts, many individual practices have begun looking at merger and integration possibilities. In fact, 60 percent of CV practices surveyed said that they have already participated in integration or merger talks with other hospitals and other practices. Forty percent said that they had already begun integration with a hospital, or planned to do so within the next year.

For cardiologist Eric Steinberg, DO, MD, of Comprehensive Cardiology of Long Island in New York, succumbing to hospital integration may be inevitable for his one-man practice after the 36 percent CMS cuts to nuclear medicine (some of which have been reversed) have forced him to lay off staff and cut back significantly on the number of stress tests performed each week.

Prior to the cuts, Steinberg purchased $650,000 worth of brand new nuclear stress machines and 3D echocardiography equipment. Six months subsequent to this purchase, the CMS cuts were initiated. Steinberg said attempting to stay afloat financially was difficult, mainly due to the high cost of staff salaries and the $15,000 per month cost to lease the new equipment.

“These almost 40 percent cuts in our nuclear stress reimbursements were a major blow to our overall financial situation,” he said. Despite the cuts, patient volume still continued to grow, he said. “You are working hard, if not harder, to fulfill the needs of your patients and practice and all of a sudden the whole financial model of your practice changes. It’s very stressful.”

In the midst of it all, Steinberg was forced to lay off a full-time physician assistant, front desk administrative assistant and a marketing person. Due to the financial strain, he was also forced to cut his nuclear technician's hours down from a five-day full-time position to a two- to three-day a week contractor position with no benefits.

“What’s happening to guys like me who are in a one-, two-, and three-person practice is that hospitals are looking to aggressively scoop us up."

Steinberg said that prior to the cuts, the practice saw reimbursement rates of $1,200 for each nuclear stress test performed. Now, he is only seeing a reimbursement of $600 to $700 per test. However, he said that hospitals performing the same nuclear stress test that Steinberg is capable of performing, get more than double this—$1,500.

Currently, Steinberg is in the midst of negotiation talks with two hospitals who sought out his practice. “They want to pay me a set salary, take over my overhead costs and take that aggravation of cash flow issues away from me. My employees would become employees of the hospital, and it would probably let me sleep better at night,” he said.

From the hospital perspective, he said that integration “is a no brainer.” It would cost the hospital less to take over his office and provide them with more money because they make double the amount he does for performing a nuclear stress test. “It’s a win-win for the hospital," he said.

“I was trying to resist this whole aspect of integration,” said Steinberg. “I really wanted to weather the storm, but the truth is when I sit down with practice evaluators, they tell me I’m too late in the game to thrive as an independent practice. If [the hospital] offered me a nice package, it would be something I would seriously consider.

“If you are swimming in the ocean you don’t want to be a tuna fish swimming with a bunch of sharks,” he said.

Private practices will have two options: tough it out or close the nuclear testing segment of their