Physician Strategy News: March '08
Physicians & Service Line Development
Core measures. Pay for performance. Gainsharing. Public accountability. Physician competitors.
When hospital executives read these words, they have a variety of reactions. But the reaction they need is resolve, coupled with the understanding that alignment with physicians is their long-term answer to numerous challenges. Quality outcomes can only be achieved if the physicians are engaged in the process. And, increasingly, they are engaged only when they have a stake in the action. Having that stake provides a reason for the physician to work with, rather than compete with, the hospital.
Much of that integration around the country is happening at the service line level. The highest integration occurs when the hospital and physicians are part of one organization. At the other end of the spectrum, physicians are minimally integrated if they serve as medical directors or the hospital promotes the physicians as part of its service line marketing strategy.
| High Integration | One Organization/Employment Gainsharing Models |
| Medium Integration | Performance Based Contracts Joint Management |
| Low Integration | Joint Marketing Medical Direction |
So, how does a hospital executive, faced with a need to build a service line, approach the issue of physician integration? While it is crucial to understand political realities and the physician culture that might limit your choices, it is equally important to know how to evaluate the level of aggressiveness you should employ in pursuing high levels of integration. The following eight questions are useful in assessing the situation.
- Are fundamental changes in clinical processes going to be required to achieve the desired results for the service line? If yes, significant changes in the physician / hospital relationship will likely be required, and the highly integrated approach might be your only hope of creating such drastic change.
- How large is the gap between your existing performance and the best practices required to produce quality outcomes? Greater variation may be an indicator of the need for more fundamental change in the relationship and, thus, a higher level of integration.
- Is the existing structure able to build the physician numbers and expertise required to achieve your objectives? This factor, more than any other, is driving physician employment with our clients. As the economics of private practice weaken, their ability to be the engine of growth quickly diminishes. And, even if the economics are satisfactory, the practice may not expand its expertise if its vision is significantly at variance with that of the hospital.
- Are any emerging factors, such as disruptive technologies, impacting the specialty? If yes, physicians need to spend time understanding the trend and planning their reaction, an activity that is more likely to occur n a highly integrated environment.
- What is the culture of the medical community, broadly and in key groups, that affects your decision about integration? In some communities, highly integrated approaches are contrary to the culture, making it harder to pursue that aggressive of a strategy.
- Do the physicians have the resources to develop the IT and other resources needed to reach the outcomes required? In many specialty areas this is not a problem, but in others integration might be required to acquire the needed resources.
- How much physician time and effort is required to achieve the outcomes desired? If the effort is small, the status quo might be adequate to accomplish your goals. If not…
- Is success in the service line crucial to the hospital's overall success? If it is crucial, then a high degree of integration should be considered.
There are certainly other questions to ask, but these offer a good start.
Traditional service line planning has not typically addressed physician integration. The physician model was a given that had to be worked with or around. But with the increase in stakes and changing environment, new approaches are important to consider as you move forward with service line business plans.
For more information contact John Hill at jhill@healthcarestrategygroup.com or by calling (502) 814-1185 or David Miller at dmiller@healthcarestrategygroup.com or by calling (502) 814-1188.
