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Chief Medical Officer, St. Francis Healthcare, Memphis and Bartlett

Michael Lachina is a physician with a seasoned perspective. Having trained in the late 60’s and early 70’s, he practiced pediatrics in the “golden age” of fee for service and ran a large medical group when HMOs were introduced.
He then left a 23-year-old practice and transitioned to administration in 1995, serving as medical director and CMO, respectively, for Baptist Health System of East Tennessee in Knoxville and FirstHealth of the Carolinas in Pinehurst, North Carolina, both large health- care systems.

Following his career change, he earned a Master of Medical Management (MMM) at Tulane University School of Public Health and Tropical Medicine. Presently the CMO of St. Francis Healthcare of Memphis and Bartlett, his vision encompasses where medicine has been for more than three decades, and perhaps where it is headed in the future. While no one professes to have a crystal ball, Lachina has a grasp on what is happening and why. Recently, he spoke to the local MGMA members, who represent practice adminis­trators in the greater Memphis area, about how medical practices should prepare for healthcare reform.

Affiliation Models • Employment • Co-Management • Management Services Organization • Professional Services Arrangement • Strategic Alliance • Governance Model Source: Risk Points, “An Emerging Trend: Hos­pitals Purchasing Physician Practices by Robert Patterson. SVMIC, Vol 9; Fall 2010

Entering the administrative branch of medicine was a turning point for Lachina. He literally made the decision overnight. Frustrated with what was happening to the practice of pediatrics with HMOs and managed care…in addition to putting in more hours for less pay… he realized that physicians did not seem to have much con­trol over what was happening to them. His large group was struggling and in need of a capital partner.

He decided that, in the long term, he could better impact the course of medical practice for his colleagues adminis­tratively. “You have a small sphere of influ­ence as a practicing physician,” he added. He accepted the offer from Baptist Health System of East Tennessee to become senior vice-president and medical director and has never looked back.

A native Memphian, Lachina grew up in a modest neighborhood in the Summer/Highland area with parents in the produce business. His grandfather was an immigrant from Sicily and sold fruits and vegetables on South Parkway. His father dropped out of school to help with the family business and went on to work for the Montesi grocers.

Later, the family moved to Birmingham where Lachina finished his undergraduate work and medical school at the University of Alabama. “I was very influenced by my 10th grade biology teacher. He dropped out of medical school to teach and he inspired my interest in medicine. It’s amazing how one teacher can influence your career path,” said Lachina. “He gave me a PDR and I was intrigued by it.”

After raising his sons and spending years in Knoxville and North Carolina, he returned to Memphis to marry a childhood sweetheart after a 40 year hiatus…both had gone separate ways after high school. Together they have 8 grandchildren, whom they enjoy, along with their koi pond and beautifully landscaped back yard. Lachina is a master gardener.

Affiliation vs Autonomy Affiliation • Short-term financial security • Delegates the management burden • Better prepared for payment reform • Ability to implement IT- EHR funding Autonomy • Maintain control of business – “own boss” • Danger of further decline in income • Less managed care leverage • Overhead creep • IT costly for small practice • Uncertain future

“The landscape of medical practice is changing,” said Lachina. “It is estimated that the percentage of hospital-owned or operated practices has grown from 20 per­cent in 2002, to 52 percent in 2008 to ap­proximately 65 percent in 2010.” These are national figures – still, they are dramatic. “The percentage in the Memphis area is still pretty low. My guess we are at about 12-15 percent – and changing daily. I think by the end of this year, it will be between 20-40 percent – it is going to happen fast. Aggressive acquisition of medical practices is occurring nationally – particularly with specialists. Primary care acquisitions seem to be lower key but the specialists hit the headlines.”

Other changes include a major detour in the desire of young physicians to be em­ployed versus setting up their own practice or affiliating with an established practice. “Forty-nine percent of graduating resi­dents are seeking employment at a hospital or other entities,” a radical change from the past. “There is a shortage of graduat­ing medical students seeking primary care residencies,” said Lachina, “and there is an acute shortage in Memphis of primary care physicians.”

“Most medical graduates want to be employed by a hospital or a group. They want good hours, no weekend or night call and good salaries. They want to focus on their family and a nice lifestyle, whereas my generation tended to be workaholics…we focused on our patients first.” This doesn’t mean that the younger doctors will not be good physicians, Lachina said. “You have to have the service mentality. No one en­ters medicine to get rich.” Though Lachina admitted that things would probably never be like the past, it should fall somewhere in the middle, so that physicians can have a life but not at the expense of their families, using himself as a prime example. “I was never at home and neither of my two sons wanted to go into medicine.”

According to Lachina, “The driving forces of the changes occurring in medi­cine include: the Patient Protection and Affordable Care Act; the declining reim­bursement and rising overhead; painful re­ductions in office ancillary reimbursement from CMS; and the uncertainty about the future. Cardiologists have felt the drop in their incomes as much as 30-40 percent in the past five years alone.” He noted the recent mergers of two large cardiol­ogy practices in Memphis (Sutherland Cardiology was acquired by Methodist Healthcare and Stern Cardiovascular Center by Baptist Memorial Healthcare Corporation).

Resource for Practice Information MidSouth Medical Group Management Association   www.midsouthmgma.org

“There is a gathering wave of mo­mentum for clinical integration. There is the EHR mandate and the adminis­trative requirements to meet ‘meaning­ful use’ guidelines to qualify for incentive payments. And then there are the looming healthcare reforms: goodbye to fee-for-ser­vice, bundled payments are coming; ACOs with payments based on quality outcomes and efficiencies are coming in a year… and the concept of patient-centered medical homes. Finally, some physicians are simply tired of running their practices,” explained Lachina.

Physicians are wondering what to do…Lachina said fear and necessity are never good cause for motivation. “Think long-term, not short term. Reform is going to happen but not overnight. Payment re­form will likely take 5-10 years to become effective and replace fee for service but you will feel the changes in your pocketbook for the next 3 years. Be prepared for how you are going to position the practice,” he advised.

First of all, Lachina said physicians should understand all the affiliation mod­els/options. “Know who to trust. No mat­ter what option is considered, there are always pros and cons. No single option is perfect for everyone.” And finally, he urged physicians, “Don’t sit back and do nothing. Understand what is changing and why.”

Lachina predicted, “The future of medical practice holds more employment of physicians; increasing diversity, espe­cially primary care (over half of PC resi­dencies are filled by IMGs); more mid-level practitioners (NPs, PAs); reimbursement value and outcomes-based instead of vol­ume-based (don’t do more; do it better); patient-centered medical homes; ACOs (a 10 year journey); and concierge medicine (MDVIP).”

The paternalistic model of medicine is disappearing – patients want to participate in decision-making and that’s a good thing. Lachina said today’s mantra focuses on: evidence-based medicine; pay-for-perfor­mance; outcomes and quality vs. quantity; efficiency; and shared savings.

Asked where Memphis lies in the spec­trum of change, Lachina said, “Memphis is not a progressive healthcare city. There is a lot of competition between hospitals which hurts us. It would be good if we could all join together and decide that we need to im­prove the health of this community.” The thing he is most pleased about in regard to his own accomplishments: “As CMO of St. Francis, I am proud that we have reached a higher quality of care – that is what I have been focusing on.”

In brief, Lachina concluded, “More and more physicians are restless and uncer­tain about the future. They need help now more than ever. Healthcare reform WILL change how we are paid and hospitals are in full-physicians hiring mode. Employ­ment is an option but it means swapping autonomy for security...and security is not all bad. This won’t come easily but it will come. Tomorrow’s physicians will look and act differently. Prepare yourself.”

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