The steps to creating an IPA can be summarized in a straightforward fashion but this should not disguise the complexity of implementing a successful business model with constituent acceptance. An IPA should be developed by experienced and competent individuals who have an ability to tap those latent resources also available within the IPA membership.

The following outline lists examples of issues and approaches addressed and/or adopted by IPA ventures developed in concert with clients and The La Penna Group. It is not intended to be all inclusive or to reflect all of the issues which a group of physicians would like or need to address.


The group to be formed will be a physician based organization. The independent practitioner model will be tailored to the local and regional market and will be governed by its member physicians.

The board of the organization will be structured to allow for relatively small board size to assure efficient decision making while allowing for appropriate representation of the physician specialities.

For a full panel IPA the standard complement of officers may be balanced between the primary care and specialty care doctors to allow a full spectrum of participation.

The physician representatives, in order to allow an open and democratic process, will initially hold an open vote for their nominees for board positions. The open ballot will produce a slate of, perhaps, a dozen to fifteen nominees from which the final physician board members can be elected.

There are no “automatic” board designations. Staff, with the possible exception of the executive director, do not hold board seats. Executive committee functions are extremely limited.

Quorums will be defined by representation needs, especially with super majority issues.

Meetings, with rare exception, will be open to general membership.

To assure membership’s overall trust, the board will make certain decisions only through a vote which allows for the majority of elected physicians to determine the outcome of any action. That is, certain issues will require a “supermajority” in order to affect policy (for example a vote of eight out of ten.) The suggested list of supermajority issues are listed for the committee’s consideration.

  1. Acceptance/rejection of any contract for services.
  2. Ratification of any binding subcommittee action.
  3. Approval of any budget or significant capital allocation.
  4. Approval of any membership assessment or fee.

The organization will have a staff which will allow it to function as a contracting services organization. This can be effected initially with a proper interim management team, as well as the office space and the support costs one would normally assume with a startup organization.

Interim support can coordinate board meetings, i.e., agendas, minutes, issues reports and attend meetings to help assure continuity.

Membership and Credentialing

The group will credential its membership independent of any hospital process and in line with appropriate national and regional requirements. Interim support will provide expertise gained in a myriad of similar ventures.

Providers will have the following standards applied to their application in judging their acceptance as members or in allowing their continued participation in the organization.

Only physicians or professionals who have admitting privileges at predetermined medical facilities may be considered as members (at least initially).

Eventually, the group will evaluate continuing membership on the basis of the following standards.

  1. Demonstrated quality.
  2. Contribution to defined need criteria.
  3. Efficiency and cost effectiveness.
  4. Contribution to overall group success and contract compliance.
  5. Participation in business development and contract development which might include case management participation or other access criteria.

Groups may not join, only individual doctors. If a group applies for participation, each member of the group must apply and be accepted.

There will need to be discussion regarding hospital based groups and the manner in which their membership status is treated.

On the matter of primary care, there will either be a definition process or some kind of self-designation.

With respect to contracting, members will be required to coordinate their managed care and direct business or coalition contracts through this group.

Interim management can establish a data base for membership and credentialing including mailing lists, demographic studies, application forms, and participation agreements.

Service Design

The group should consider service programs which can be developed for the membership either through this organization, or one which is parallel.

Act as an ongoing research and reference source for members of the medical staff, or the organization, who wish to become more informed and active with managed care, direct contracting, or disease management (through their own individual efforts).

Develop educational seminars for the medical staff and the membership which will present information related to the IPA business environment and contracting activity in the local metropolitan area.

Act as a lobbyist or advocate on behalf of the membership to communicate concerns and issues to managed care, business and coalition groups.

Analyze contracts on behalf of private physician practices. Make recommendations regarding participation for the individual practitioner. Represent the organization in contracting to develop appropriate relationships with the right number and type of contract entities offering lives to the IPA in the community.

Analyze physician practices regarding their business structures, cost structures, etc., to assist them with project planning and development.

Assist groups of doctors with their efforts to form business relationships and develop projects which support or improve their efforts to maintain strong practices in the IPA market place.

Act as a “messenger service” to inform doctors of the opportunity for contracts and to assist in coordinating the fee structures which make group contracting possible. The interim or contract management services also can provide a cost effective and politically astute layer of direct services.

Act as a unified entity which contracts on behalf of its membership (exclusively) and which is responsible for all the managed care, direct contracts, and business coalition contracting activity for its member practices.

Act as a sponsor and coordinator for promotional efforts of the member practices to create a marketing cooperative which can develop brand or trade status within the community.

Act as a broker which can develop a sales force to act on individual members, a group of member practices, or the entire group, in a sales capacity to potential health care purchasers.

Develop liaison relationships with other groups which are also involved with the managed care. Essentially, coordinate global efforts of individual practices (horizontal integration).

Act as the primary liaison between the physicians and participating hospital and ancillary providers on all matters relating to managed care contracting. This implies communications, public relations, informational exchange, joint strategic or tactical planning and/or venturing.

Act as the sole entity which contracts on behalf of the hospital and member physician groups for the purposes of contracting with managed care entities.

Act as a business development unit which the member physicians and other organizations use to invest in initiatives which might augment the services either group presently provides. The initiatives or businesses may or may not relate to managed care, direct contracting or business coalitions.

Provide management services on either an ala carte or total program basis through a venture with a management services organization (MSO) or totally within the IPA infrastructure. Services would likely include support for practice management on a contract basis and also to assist in the monitoring and necessary efficiencies connected with growth in managed care.

Develop services for the members’ physician practices which can be conceived as consultative or supportive in nature to the physicians. The following list might include some of the services which the group might develop for its member practices.

  1. Billing and collection.
  2. Group purchasing.
  3. Evaluation and assessment (consulting).
  4. Personnel pooling.
  5. Benefits pooling.
  6. Site management.
  7. Bookkeeping and payroll.

Provide group services which might assist or augment contracting efforts. The following services might be included in such an effort.

  1. Compliance review.
  2. Utilization review.
  3. Disease management.
  4. Quality assurance or assessment.
  5. Credentialing or privilege delineation.
  6. Statistical and efficiency reporting.
  7. Risk pool management analysis.
  8. Actuarial analysis.
  9. Web page development
  10. Physician on-line interchanges

Act as a risk assumption vehicle for the members. For example, formulation of risk pools and development of co-insurance funds and catastrophic coverage purchases, i.e., stop-loss policies and relationships.

Develop the resources necessary for the assumption of non-traditional lines of business (bundled pricing, threshold bids, direct contracting, etc.).

Develop the resources and the staff necessary to initiate network and system development activities on behalf of the membership. This might include the development of satellites, the purchase of practices from retiring physicians, etc.


The Finance Committee would suggest a flat fee per member for a two year term, i.e., $2,000. This will produce, assuming 500 members, a budget of $1,000,000 per year with additional revenues from insurer, direct contracts and business coalition management fees, i.e., $1.50 per life per month. In addition, potential revenues from pharmacy pool incentives and the like can also be budgeted based on the current and expected local environment.

The Finance subcommittee also would need to review PSO requirements for capitalization, including potential lines of credit, which could be activated by a supermajority vote of the board.

The IPA has initiated partial and full risk payments whereby the IPA is paid a capitation on a per life basis (per member per month: “PMPM”) and methodologies for reimbursement to IPA network providers, the accounting for incurred but not reported claims, and the like are to be addressed by this committee.

Other Issues

There must be a process for resolution of conflict and access to outside mediation. Who will provide this service?

Are we talking one organization, or two? IPA? MSO? PHO? PPMC? Combination?

If physician members limit their participation in contracts through this group, how will they be paid in relation to other physician members? Other nonmember ?

Should members be required to give their “best or most advantageous” price consideration to this organization?

How will any present offices for managed care integrate their services with this group?

Must members participate in contracts which the organization receives in order to maintain their participation in the organization itself?

What other membership programs might the group require for participation? Some which might be discussed include promotional activities, TQI or CQI, outcome measurement studies, disease management, risk pool participation, medical record and registration coordination, etc.

Should there be a distinction in funding requirements between primary and specialist?

How will members be selected to participate in capitation?

What method will be utilized when capitation panels spread across multiple physicians and/or groups?

Should members be required to participate in capitation?

How will the group integrate its efforts with the planning process?

How should we address grievance and conflict procedures, board involvement in staff and member sanctions?

How can we best address and develop:

  1. a definition of officer functions and proposed subcommittee structures?
  2. communications protocols for the medical staff, if appropriate, the members, the subcommittees, staff and the board?
  3. bylaws language?
  4. an ongoing planning process?
  5. a planning timeline?
  6. membership criteria and related information?
  7. a public relations packet and a question and answer sheets?
  8. a calendar of proposed educational sessions?
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