The Intake

Insights for those starting, managing, and growing independent healthcare practices

What is an Independent Physicians Association?

IPAs can often take some of the risk off your shoulders, provide cost savings, and even lead to some care coordination opportunities.

a provider evaluating IPA insurance pros and cons

At a Glance

  • Joining an independent physician association (IPA) can offer benefits like risk reduction, cost savings, and care coordination opportunities, especially in the transition to value-based care.
  • When considering an IPA, evaluate factors like organizational structure, fiscal management, business operations alignment, and information technology compatibility.
  • An IPA may also entail trade-offs, including reduced autonomy, membership costs, potential conflicts, operational adjustments, reimbursement concerns, and data security considerations. Carefully weigh your preferences and goals before committing.

As you consider whether to stay independent or start an independent practice, there are many options to weigh and questions to ask. One of these is whether or not to join a group like an independent physician association (IPA). Here are some IPA pros and cons before you sign on the dotted line.

What does an Independent Physicians Association do?

Typically, IPAs serve to negotiate contracts with insurance companies on the behalf of their members. Participating physicians are usually paid on a capitated (a fixed amount of money per patient per unit of time paid in advance to the physician for the delivery of health care services) or modified fee-for-service basis, but may also care for patients outside of the insurers contracted through the IPA.

As the industry moves towards more of a value-based model and away from fee-for-service, these groups can be well-positioned to make the shift since they are often already set up this way. They also have a structure that makes it easier to shift to an accountable care organization (ACO) model.

Optimize Operations

Often, the IPA has a staff who negotiate contracts, disburse payments to participating physicians, and manage other tasks based on its structure. By centralizing many administrative costs, using the group’s bargaining power in negotiations, and offering benefits like group purchasing, an IPA can help smaller practices reduce overhead.

While your practice remains independent, an IPA is a legal entity and you’ll sign a contract in order to join. It’s important to be clear on the IPA insurance pros and cons. As IPAs can vary widely, be sure to read the fine print.

How to evaluate an IPA

Before joining an IPA, consider the following questions:

  1. Does the IPA have a solid organizational structure? It should have an effective board of directors, an experienced leadership team, and a well-qualified staff. There also needs to be a large enough staff to manage the aspects of the IPA. Some groups grow too fast without the infrastructure to support that growth. As a result, they may fail — or flail — both of which can hurt the physician members and their patients.
  2. Is there sound fiscal management? You don’t want to join a group that doesn’t manage its money well or spends more than it earns. Ask to see the financials as well as the budget, profit and loss, and long-term plans for financial success.
  3. Are the business operations and service style a match? You want to be part of an organization that reflects your values. Don’t get into bed with a group that has a radically different approach to customer service or management.
  4. Information technology: Does everyone in the IPA use the same practice management and electronic health record (EHR) technology? How is that paid for? What does making the switch involve? What is the cost to your practice? Ask all these questions and request a hands-on demonstration of any software you’ll have to use.

As you weigh these questions, it’s also important to consider the cons of joining an IPA. These include less autonomy, membership costs, potential inter-association conflicts, operational adjustment costs and time, reimbursement model concerns, a diluted individual brand, and the need to ensure data security. 

If you prefer control over your payers, contract negotiations, and any billing and administrative details, an IPA might not be for you. If you just want to provide care and would rather hand off other tasks, an IPA might be the right fit. Because an IPA functions like a larger medical group, it can also help you to grow a small or new practice faster.

Ultimately, the choice between retaining control or delegating responsibility depends on your individual preference and goals. Take the time to consider every angle before making the commitment.

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Lea Chatham, medical practice writer

Lea Chatham writes educational articles to help medical practices improve their businesses. Lea has written for Medical Manager Health Systems, WebMD Practice Services, Emdeon, and Sage Software.

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