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Carilion's call

Philip Betbeze, for HealthLeaders News, July 9, 2007

Ed Murphy's got something going on down Virginia way.

At first glance, his quest might seem quixotic, but he hopes Carilion Clinic (the former Carilion Health System) will soon be practicing medicine the same way as do some of the best-known, most trusted, and longest-tenured health centers in the world. Ed was on the cover of the June issue of HealthLeaders magazine as an important source for me in writing about the resurgence of the model practiced until recently in isolation by such stalwarts as the Cleveland Clinic, Mayo Clinic and other prestigious medical centers that exclusively employ physicians in a team-focused approach to healthcare. He's busy trying to convert a traditional health system to practicing medicine the old-fashioned way, before Medicare and the emergence of the third-party payment system. In those days, doctors built hospitals to care for patients and hadn't ceded control of the business to the suits. Those hospitals probably had a lot in common with many of the large physician practices of today, where they offer so many services and procedures that docs practicing there rarely venture into the local hospital.

Carilion Health should be an interesting test case on whether this sort of full-scale transformation is not only possible, but whether it will make the health system less vulnerable to perhaps the biggest threat to the hospital business other than government budget cuts-the outmigration of procedures and services to doctor-owned surgery and imaging centers, among other business entities. Equally important will be whether the model provides better patient outcomes.

Now I've got nothing against the suits. In fact, I even like many of the ones I've met. It takes a special person to forego the big bucks many of these talented individuals give up to work in leadership at a nonprofit healthcare entity. They're in large part serious about their work and their determination to keep the hospital viable in the face of these threats. They've tried gainsharing, joint venturing and a host of other strategies to combat this challenge from their physicians. "There's value in those," says Murphy, "but it's not the unifying theory of physics (like the clinic model is)."

More administrators, physician or not, should look at large scale transformation on the order of what Carilion's attempting.

Murphy happens to be a physician, a pediatrician to be precise, but there's nothing that says physicians are necessarily better administrators of hospitals than nonphysicians. In fact, in many cases, they're much worse. Non-physician administrators still run most of the hospitals and hospital systems across the country, and most of them do a good job. But they face a confounding set of circumstances and problems that the medical staff model can't efficiently deal with, like declining reimbursement for doctors, physicians who don't view the hospital as critical to their practice, and an abundance of venture capital and debt willing to help physicians take profitable services and procedures outside the hospital's walls.

I can't wait for the next Carilion to emerge on the scene. Maybe we'll be lucky enough to see a nonphysician lead it.


Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.

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