There are five core reasons that physician network failure occurs based on HSG’s experience and close work in this healthcare space. The five reasons are:
REASON 1: Lack of a group culture and effective physician leadership.
THE FIX: Form a Physician Advisory Council composed of 7-11 physicians with a representative cross-section of all major disciplines in the group. The Advisory Council should be charged with:
- Bringing a “group practice” mentality to your physician network;
- Assessing and setting standards for quality and patient care;
- Taking accountability for the group’s performance;
- Supporting the hospital’s strategic initiatives; and
- Leading planning and development of the group.
REASON 2: Hiring providers without taking your organizational strategy or culture into account.
THE FIX: Start by developing a strategic plan for your employed network that defines:
- What specialties need to be employed and when;
- What specific physicians and practices need to be targeted; &
- What new markets are ripe for expansion.
The strategic planning process should also include creation of the values and mission statement. This statement sums up what it means to be a physician in the network and helps reinforce the group’s culture.
To reduce the risk of making bad hires, ask your physician leaders to:
- Vet potential targets through the lens of the culture;
- Articulate and reinforce the culture to potential candidates during the recruitment process; and
- Advise you as to whether or not the candidate is a good fit with your organization.
REASON 3: Misaligned provider compensation and reimbursement
THE FIX: Misaligned compensation can be a death sentence for a practice. Let it become a common theme for a multitude of practices and it’s a death sentence for a network.
To improve compensation-reimbursement alignment, make sure your compensation packages:
- Reflect the way your network is paid. In most markets, reimbursement is still predominantly fee-for-service and compensation plans should focus on patient volume. It’s okay to incorporate quality, efficiency and patient satisfaction metrics and incentives as you prepare for value. Just don’t go all-in on value too soon.
- Don’t make a practice of overpaying for physicians. Although it may be required in certain cases, the general rule is if the economics don’t work, the deal doesn’t work and eventually there will be a day of reckoning.
- Reduce base salaries or sever ties with non-performing physicians. If a physician isn’t producing at an acceptable level after a reasonable period, cut bait.
REASON 4: Hanging on to hospital-centric management practices
THE FIX: Managing a hospital is different than managing a physician practice. Too many clients underestimate the challenges. To fix this problem:
- Adopt the best practices and proven methods of the practice management world.
- Hire physician practice pros for billing and management.
- Invest in the technology (EMR) your physicians need to practice and the billing systems your revenue cycle staff needs to maximize collections.
REASON 5: Hospital C-Suite and senior level executive staff don’t embrace the physician enterprise’s role in the organization.
THE FIX: The time has come to embrace physician employment as a necessary tool to help your organization succeed.
- Invest the time, money, and resources to make it successful;
- Hire a qualified physician practice executive to lead your network and give that exec the authority to employ qualified practice supervisors, managers, and coordinators;
- Solicit input and leadership from your physicians;
- Maximize your network’s revenue cycle function; and
- Openly express your vision for the network now and in the future.
Physician network failure can be overcome of these five reasons for failure are addressed and the appropriate time, energy, and resources are allocated to the physician enterprise.
Read more on the importance of physician network development in a recent article by HSG originally published in Modern Healthcare.
