This article appears in the April 2012 issue of HealthLeaders magazine.
Physician relationships with executive leadership have always been important at hospitals and health systems, but there is a history of distrust on both sides, to put it mildly. Executives often view physicians as a huge impediment to many important initiatives within the hospital, from cost-cutting to process reengineering.
Meanwhile, physicians habitually distrust senior executives who are looking out for what's best for the hospital or health system—or maybe just the bottom line and the executives' own bonuses—but not the physicians and not even necessarily patients, in the worst case. But despite that historical backdrop, the optimist can see that economic incentives for hospitals and physicians are now aligning as never before.
For some healthcare leaders, physicians (especially those in high-revenue specialties) are to be coddled and complimented, but such relationships are often condescending on both sides and depend on finding a sometimes convoluted and inefficient way to meet the economic interests of both. Trouble is, those economic incentives rarely align, a fact that is not lost on either side; yet the playing out of those competing incentives often ends up poisoning relationships on both sides.
Positive physician relationships have never been more important, but perhaps it's now becoming easier to cultivate them as legislative and contractual changes are aligning hospital and physicians incentives and forcing the parties, especially independent physicians, to reconsider their relationships, move forward from past discord, and begin anew.
"Certainly economic changes and regulatory and legislative factors are creating the proximate reason, but the real reason is you cannot achieve high-quality care without a high level of integration between physicians and the facilities that deliver that care," says Darrell Kirch, MD, president and CEO of the Association of American Medical Colleges and a former medical school dean and health system CEO. "Ultimately, it should be driven by the quality of care issue."
Incentives are now strong
Favorable incentives for both sides are necessary in providing high-quality care. The relatively recent move by commercial plans and government payers toward risk-based contracting attempts to ensure that outcomes are rewarded, not volume of service.
So while quality of care is important, physicians are now seeing benefit with hospitals on quality and safety initiatives and cost-control programs because their financial fate is more closely aligned to hospitals' fiscal well-being, says Michael Murphy, the executive vice president of heath networks at Trinity Health in Novi, MI. Murphy works with physicians in senior leadership roles at Trinity to execute the health system's clinical integrated network strategy as well as its accountable care organization strategy, which work in tandem.
Trinity, which owns 35 hospitals and manages 12 others, also has a vast network of outpatient, long-term care, home health, and hospice programs in 10 states, which means the benefits of cooperation accrue directly to the health system in most cases. That's not always true in situations where the pieces of the care continuum are more disconnected.
Murphy says many times in the past, promising collaboratives have found it difficult to get coordinated care because the incentives have not been aligned. That meant cooperative efforts that may not have had positive results right away were prematurely abandoned, or that well-meaning attempts to improve care handoffs, for example, were entered into halfheartedly. As soon as a more pressing issue came up, they might have been tabled. No more.
"What's great is the payment system is catching up," says Murphy, whose organization has had a head start on some innovative collaborative efforts, such as coordinated treatment of patients with chronic disease. "That question has been debated forever," he adds. "Do you put the financial incentives first to drive behavior, or do you create a model that is more focused on quality, which attracts the payers?"
Now both can work at the same time because of the increasing emphasis employers and commercial insurers are putting on delivering measurable high-quality, safe, and coordinated care—and they are backing up that emphasis with better reimbursement. If the targets are met, the incentives are delivered. And all of the agreements are covered in a contract.
Still, "for these arrangements to work for the patient and the employer, there needs to be joint risk-sharing" between physicians and hospitals, says Jeff Wasserman, vice president of strategy and executive leadership services with Culbert Healthcare Solutions, a consultancy based in Woburn, MA. "It's hard to share risk if you can't work cooperatively."