"The writing was on the wall," he says, recalling the genesis of CAO three years ago. "We were reading the tea leaves saying, 'We need to get bigger in order to survive in the private practice model.' "
The concept of staying in private practice but forming a single company attracts practices because it offers economies of scale administratively. Already Tritinger says the CAO has already saved on medical malpractice insurance and medical supplies by at least 20 percent. CAO also has leveraged its size with payers, something none of the practices had been able to do on their own.
"They wouldn't negotiate with us, they dictated to us," says Louis Levitt, MD, Secretary Treasurer of CAO. Levitt's practice in Washington D.C. is made up of four "soon to be five" physicians in a single location, and represents the average size of practices that are part of CAO.
Grosso adds that pre-CAO his negotiations with payers were "like David and Goliath," but with 128 physicians behind him, payers were a lot more willing to talk. In fact, CAO negotiated two-year contracts with the major insurers with reimbursement rates that are 10–15 percent higher.