Knowledge Expansion

Executive Session: Jim Trounson on the future for entrepreneurial physicians

Podcast

MGMA Staff Members
MGMA senior fellow David N. Gans, MSHA, FACMPE, recently spoke with Jim Trounson, founder, MedMan Medical Management, Boise, Idaho, to discuss his role in growing one of America’s first physician practice management companies and its focus on improving the health of its providers and the communities they serve, as well as how a focus on individual patient care and physician leadership is imperative to the success of medical groups.

Q. When you left the Army, you were one of the youngest hospital administrators in the nation at the age of 25. Can you tell us a little about your experience and your transition from working on the hospital side to managing a group practice?

A. I’ve been blessed my whole life with wonderful opportunities. As a young man, I got a job as a hospital CEO and since I had [similar] experience in the Army, I could step right into a very good job back home in Idaho. When I was there, I noticed there were hospital management companies … and I was an independent administrator running an independent hospital but, frankly, I felt envious of their capital, their systems, their consultants and [their ability to buy] groups.

I was later recruited by the University of Washington to help start the family medicine residency program, as family medicine became a specialty, and that was another wonderful opportunity for me to get exposure into ambulatory care. I thought this is where the world should go — less expensive, less bureaucratic, less political. I went to an MGMA meeting in Portland in the ’70s and noticed that so many of the practices were small, mom-and-pop operations. I realized that this industry was going to consolidate and get more complicated and it was going to take more for these clinics to prosper. I went back to my hospital days and I knew how lonesome it could be for a clinic manager, so maybe this was an idea I could apply to a different aspect of healthcare. In 1977, I started a medical group management company, years before physician practice management companies (PPMCs) became a national phenomenon.

It was very difficult to do for the first time because there was no prototype or template. I struggled with questions of, “how do I charge for this?” or “how do I communicate with providers?” In the beginning, we made all kinds of mistakes, but then we started keeping clients and they liked the idea that it was a company looking out for them as opposed to an individual. As a team, we have institutional memory of a place and if somebody leaves, the whole thing doesn’t fall apart. This started catching on and it’s been a great ride to come up with things that hospital management companies did and apply that to ambulatory settings.

When you were managing MedMan, you provided a complete turnkey executive suite, as well as marketing, assisting with understanding how a practice could bill for its services and strategic planning with the doctors.

We would do everything but the medicine. [Were were] a one-stop shop, which doctors were very happy to outsource. Physicians are smart but they just don’t have time [for managing], and we could do that better than they could and better than a siloed approach. A team is well-rounded with different capacities for legal, accounting, planning — and our idea was not to be consultants, but to be true partners [with the doctors].

Q. MedMan has succeeded for 42 years since you founded the company in 1977. When you started looking at your own retirement and your own exit plan, what did you do with your employees and what has happened to MedMan today?

A. Wonderful things. I had to start thinking about MedMan as a sustainable company. I truly think that America is better off with it, so we had discussions about how to do that. Early on, I started selling shares in MedMan to our employees, and a few months ago it led to some of our managers buying the entire company. They’re young go-getters and they’re going to take it places I couldn’t as a solo entrepreneur. I’m [now out of the business] and on the side rooting for them, and I’m loving the things they are doing.

Q. Let’s talk about what is happening in healthcare today for medical groups, especially smaller independent practices that are under a substantial amount of pressure with higher costs and relatively static payments. What advice can you give to a small practice wanting to remain independent and not necessarily looking at becoming part of a health system?

A. My first love is the entrepreneurial physician who thinks there’s a better way to serve the community and wants the latitude to do that. As a former hospital CEO, I’m very appreciative of the inherent problems of recruiting doctors, especially in rural areas, so I’m not opposed to integrations at all. I think there’s a place for that but I also think we need to have options for our communities, because not all [doctors or] patients want to be in a bigger system.

I see a lot of leverage happening [among] independent doctors. For example, we have Independent Doctors of Idaho (IDID), and I’m very involved in the Association of Independent Doctors, and they’re doing wonderful things to help doctors not have to reinvent the wheel with standardizing templates. There are ways to get some services from other entities — your specialty societies, for example. I think there’s evidence of some normalization in this consolidation/integration kick, especially with the current administration in Washington. I was doing some lobbying and was very impressed by a lot of the attitudes, which looked at innovations and somewhat capitalistic approaches to how we can take care of [patient] populations. I see encouragement at both HHS and CMS with some of the initiatives they’re doing, especially for primary care and to eliminate some of the administrative burden.

In the end, I think it’s going to come down to a bit of a race to see who can reduce costs because that’s part of the Triple Aim that hasn’t worked out with consolidations. They do wonderful things with financing and working with population health, but they are not cutting cost.

Q. As a doctor’s practice, you must provide a better product — meaning good outcomes at the lowest possible cost. At the same time, you must balance the charges you have and the payments you receive to stay in business. How do you do that?

A. By doing a better job of waving our flag; we’re the lost-cost, high-quality provider out there. Cost is very quantifiable. Through local CINs (clinically integrated networks), for example, I see some that are doing a very good job and are making a compelling argument to the payers to not be so hospital-centric. I also think the government is going to take away some of the potentially unfair competitive advantages, such as facility fees and drug discounts that larger systems rely on, a which will change this playing field. Hospitals are going to have to look at ways to have friendships with doctors without having his or her on its payroll.

A private practice has an immediate cost advantage over a hospital for ambulatory care because a private practice bills at the professional fee schedule level, whereas a health system bills both a physician fee schedule amount and a facility fee. That’s an area that many private physicians don’t leverage by informing their patients that their insurer will pay less and the patient may have a lower copay.

Another element [in addition to showing how you are a low-cost provider] is a better patient-provider relationship and to provide that level of personal attention that is far more difficult in larger organizations.

In my post-MedMan life, I’m finding lots of innovations that would help small, independent practices have a more intimate relationship with thier patients. Technology is not going to be the enemy but a force multiplier to help smaller practices capitalize upon personalized care. That’s tough for a big system to compete with.

I agree completely. When used by a small practice, technology builds on the patient-doctor relationship and can also potentially lower costs.

We will see that, and I think there will be a renaissance of independent practices. … So, my advice to doctors is to stick it out. I’m sure there will be some better times for these entrepreneurial doctors who want to hold onto a very good model that is good for Americans.

Another advantage to the small practice is decision-making.

Yes. You’ll remember from our Army days, that any medical facility was commanded by a physician … and it worked pretty darn well. When a doctor is making decisions about healthcare, the patient always comes out first. When managers make decisions, you may instead get efficiency, and I think patient care should trump efficiency any day.

[Doctors and managers] have gone into different careers because our brains think differently. If we can start thinking more in the middle ground, we’re going to get along with doctors much better. We should think more like doctors, and my new company is focused on what difference that will make to an individual patient. Otherwise, it could get very confusing and amorphous when we’re talking about healing the world.

Q. Summarizing your thoughts, if you do well with the patient, you’ll do well as an organization. Any last comments you would like to make to our MGMA audience?

A. We are so fortunate to be able to be I a place to influence patient care; healthcare is not a zero-sum game. If any person in the world gets healthier, I’m better off for it, you’re better off for it, and the world is better off for it. Celebrate this gift we have been given of being able to work in an industry that does good work.

- Edited by Kelsey Brading, MGMA content production coordinator
 

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