24 September 2009
The economic turbulence of 2008 and 2009 has led many to throw their arms in the air when considered 2010 planning. During the past two years the focus has been on reengineering the care delivery process. Systems who embraced physician integration and an integrated system approach to care patted themselves on the back while the other were left scrambling to update their strategic plan and business plans to adopt the new paradigm – undoubtedly following attendance at a think tank session addressing survival in the recession. Physicians, hospitals, payers, integrated delivery systems are in a state of flux – each wanting to continue business as usual, responding to economic turbulence, and somewhat blindfolded when it comes to the outcome of government healthcare reform. Rather than listening to the words of Ernest Rutherford, the father of nuclear physics: “We haven’t got the money, so we’ve got to think,” a multitude of health systems are approaching integration with frontal attacks of purchasing and groups of physicians are seeking shelter from the environmental turbulence.
Decades of healthcare industry rancor over change have resulted in an industry held together with bandages rather than the seamless stitching of a neurosurgeon. The approach most often taken is similar to that of subspecialists managing the human system: identify a disease, remove it, and move on. Physician colleagues have heard the clarion’s call of holistic care voiced currently by the American Academy of Family Practice and its medical home solution. There is an understanding within the industry of the impact of co-morbid conditions and their treatment; when the dialogue shifts to medical records, information technology, or disruptive technologies the knowledge gained is lost.
A key learning from this previous generation of physician and healthcare leadership is that the relationship between physicians and healthcare system is symbiotic. In the 1800’s the physicians found themselves in need of technology and staffing unavailable in their private offices and clinics – the hospital was born. The early to mid 1900’s brought about a shift in power as disruptive technology in treatment and care management exploded requiring the hospital to be the epicenter of the industry. As the same technology evolved benefiting home-based care and outpatient, ambulatory services a shift of the pendulum occurred once again moving the physician into the catbird seat and hospitals on a journey for new revenue to replace what was leaving. The threat of reform, new generations of nanotechnology, and physician-led journey to recoup compensation once held is creating a fork in the road with all signs pointing to the hospital or healthcare system assuming leadership due to its ability to bring capital to the discussion.
· There is greater sensitivity to the physician executive. Recognizing the role of the physician as a catalyst in the healthcare system, there are ample best practice models of physician leadership based on their unique knowledge. Case in point Cleveland Clinic Foundation’s clinical “wins” based on centers of excellence.
· Concurrently, competencies to manage healthcare as a business versus health ombudsman for all have taken hold. The MHA administrator has been replaced with the MBA senior leader. Several years ago we were interviewing for a VP of Marketing and Communications at our system. My singular question was, “Are you a healthcare professional focused on marketing competencies or a marketing leader working in the healthcare industry?” The puzzled looks were astonishing.
· Silo management of the patient negates wellness and disease management. The unapproachable physician who functioned as a lone wolf, head of a tribe, omniscient being has given way to an active listener, partner in managing the wellness and health of a community, and a strong communicator. If the former exists, there are cadres of consumers who will leave and seek out the later.
· Empowered employers actively engaged and owning a mission and vision create the most successful businesses. (Jason Jennings in Hit the ground Running, offers an amazing review of leaders and empowerment.) Leadership philosophies at Staple, J.M. Smucker, and Goodrich Corporation also work in healthcare – Mayo Clinic, the ambulatory surgery center market, medical imaging. These were lessons lost during the first wave of physician employment in the late 1900’s. The reaction to that was the rapid rise in group practices and physician desire for self-empowerment. The current rush for employment is occurring with a more shared governance intention,
The need for a new value proposition aligned driven by the societal tumult of the last two years is called for. The driving forces noted have led to a new, fast-paced era of physicians approaching health systems and hospitals about practice purchase and employment.
1. Physician compensation for about half of surveyed physician specialties in the 16th annual Modern Healthcare Physician Compensation Survey had not kept up with inflation. Medicare and Medicaid reimbursement increased minimally while the number of consumers requiring care with no coverage or insufficient coverage increased.
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2. The potential for healthcare reform legislation is likely; legislation will not create new revenue streams or significant increases in compensation.
3. Health systems’ liquidity has decreased while costs are rising. 2010 agenda include investment of unfunded needs from the last two years and the initial costs of physician employment in record numbers. The result is a cash shortage. The need to develop an engaging physician plan is required. Elements of the plan should include a prioritization of physician to be employed, recruitment based on alignment with overall system mission and vision, and creative compensation packaging. Current compensation packages incorporate income guarantee, signing bonuses, education stipends, debt forgiveness, and assistance with housing when relocation in a soft market is required.
4. Health IT investments are not business luxuries. Albeit financial stimulus support for EMR adoption, solo-physicians and small group practices are fearful of the daunting costs anticipated for e-medicine.
5. The disparity in physician compensation continues to grow. Citing MGMA survey results, family medicine physicians earned an average of $181,535 and pediatricians’ average compensation was $183,848. This is compared to orthopedic spine surgeons whose median compensation was $641,728.
6. Quality of life is essential to younger physicians; financial security and regaining lost investment years from the recession is essential for older physicians. The result has been consistent for on call pay by most physicians.
The root cause of this wave of physician employment is different than its most immediate predecessor. If physician employment – collaboration or affiliation, is a long-term strategy or a differentiated strategy for a community, the value proposition reflective of today’s needs is indicated. The Top 8 for Great physician affiliation:
1. Physician practice purchase price is based on fair market value including an expectation of purchasing a practice’s good will.
2. Governance by new or seasoned hospital administrators – service line or department, is typically ineffective. Hospital operations and practice operations are not the same. Day to day management is not similar. Co-management by physician leader and administrative leader is a win/win; assuming the physician is compensated for the time not practicing and engaged in leadership.
3. Integration requires integration of brand promise, electronic medical record, communication tools between physicians and sites of care – hidden costs providing the essence of an integrated system.
4. A good employee is a good employee – there is a need for positive communication, consistent messaging, and ownership in strategy, shared values and aspiration. Not every employee is a lifelong member of the team; every physician is not going to be the perfect fit.
5. Appropriate measurement and metrics aligned with the vision of physician engagement and collaboration require systems to track data, analysis of the information, and communication of the outcome prior to action. These processes and IT support are part of the integration.
6. The pace of this era of physician affiliation is quick and hospitals are notorious for moving slowly and plodding through meetings. Empowering a team to negotiate, communicate, and drive the affiliation is essential to maintaining a tight timeline. The physician wants to negotiate with a person and not a committee.
7. Employer of choice for nurses, technicians, and clinical staff does not easily translate to employer of choice for physicians. Physicians come with outstanding debts and are trained to make decisions quickly and decisively. Employer of choice understands that and has systems in place to be supportive.
8. Fairness and equality are key values for all stakeholders. Special deals have no place in this process. Unless working in New York City, Chicago, Los Angeles, or Dallas, it is likely there are a limited number of legal and financial consultants available who are trusted partners with medical staff. To think they don’t speak to one another and share what one client received with another is foolish!
A shared vision of the future with tangible measurements is a successful formula for strategic growth. Physician practice isn’t different. Ultimately the driver of a positive physician – system relationship is if the reason d’être for that relationship is aligned and offers long-term value. Anything short of this will lack the engagement required for success. It also will lack the understanding required when the tough decisions need to be made.
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