Physician Integration Failures Are Avoidable

Integrating physicians under one management umbrella can be a huge challenge. It's not the acquiring that's hard. It's the integrating. Lack of a cohesive practice strategy is often the culprit.

As hospitals and health systems seek to broaden their offerings and the cohesiveness of their care pathways, acquiring and employing physicians and physician practices has accelerated. The strategy is in part a reflection of the incentives being placed on healthcare to develop a cohesive continuum of care, and in part a reflection of physicians and practices being squeezed for revenue and desiring employment.

Regardless, integrating physicians under one management umbrella can be a huge challenge. It's not the acquiring that's hard. It's the integrating.

Or so says Steve Corso, managing director of physician engagement at Medsynergies. But why is there so much challenge in engaging them? Part of it stems from the reasons a practice might be acquired.

"All parties are smart people, so everyone's working hard and has the smarts, but one of the key factors is that what's causing physician enterprises to grow is so dynamic," he says. "A lot of times you have an acquisition that's simply filling a hole. An acquisition like that is completely different in its expectation than an enterprise that's growing to cover a population. And those are just two variations. There are hundreds."

Corso says that chaos can result from a basic disconnect between the expectations of the system and that of the physicians they are acquiring. 

Medsynergies is perhaps best-known for taking away practice headaches from hospitals and health systems by managing and providing them directly. For instance, it will staff and be accountable to service and revenue goals to a hospital or health systems, effectively removing them from the pain of managing a hospitalist, anesthesia, or emergency physician group. Outsourcing, in other words. 

But Corso is leader of a new business offshoot that seeks a very different customer: hospitals and health systems that want to integrate previously independent physicians and their practices into the whole.  

Rapid consolidation is partly the result of incentives for organizations to better coordinate care—the idea being that it's better to own all the pieces. This is a way to maintain control over processes that are known to keep patients out of high-cost areas of care, and to manage the health of populations versus the previous best business practice of maximizing procedures.

That's a gross oversimplification of the integration challenges hospital and health system leaders face, but regardless of the reasons for acquiring practices, the road to achieving the efficiencies they can provide is fraught with landmines.

"It would be one thing if you could just begin with a clean sheet and competition could be quiet, and you'd present a great value proposition, but I have not seen a place like that," says Corso.

Instead, most acquired practices are facility-specific—that is, they refer and do their work at one facility.

"The reality of what systems are challenged with is changing an array of different practices into a true physician enterprise that shares unity of purpose."

If you can achieve that, Corso says, you'll reap the benefit of less drama; the enterprise will be less costly to run; and you can more effectively comply with best practices and gain efficiencies, thus lowering costs.

"That platform works best for when we get to changing clinical patterns," says Corso, echoing dozens of healthcare cost experts who claim the real waste in healthcare lies not in the supply chain or in revenue cycle enhancement, but in getting doctors to change the way they practice medicine into a standards-based and team-based alignment. 

"The challenge is that you're starting from chaos. And to see your way through that is difficult because some of these relationships already have tension built into them from past misunderstandings," he says.

Despite the myriad forces driving hospitals and health systems and their physicians closer together, physician practices continue to be largely facility-specific, and old relationship patterns that continue post-acquisition can undermine the success of the combination going forward.

"We try to establish where there's a gap between physicians' expectations of employment and the difference between what the system expects to get from that employment," Corso says. "You find gaps not so much in contractual terms but in the implied conditions of employment."

One such gap—the implication that despite their employment status, physicians have been promised autonomy. But autonomy means different things to different people.

"If, as a physician, you expect that, and the system wants to centralize, that's not autonomy," he says. "You had an implied expectation of autonomy that's now being moved. But it's to everyone's advantage for that compact to change, to be interdependent."

The problem is effectively conveying that message to a powerful group of people who think they were promised something else.

If not autonomy, engagement and participatory governance is now their expectation, he says.

"The physician is looking for ways to align. That means allowing for changes to take place and means leading through influence instead of dictating. We try very hard to open a dialogue where everyone can share and provide input on what needs to be changed with the hospital-physician relationship," says Corso.

Rather than integrating one culture to another, those who are aggressively acquiring physician practices face integrating several, sometimes dozens of practices, into a cohesive unit based on the of the health system—not the individual hospitals or practices that make it up, and which may have come into the fold at different times and under different conditions.

This is most true for systems with several hospitals, but can also be a problem for standalone hospitals that are integrating cultures through many practice acquisitions, including those of different specialties.

Corso says organizations should begin to think of physicians as a whole enterprise—an entity unto itself. It's greatly impacted by the physicians they choose to participate in it, he says, adding that the physician enterprise is a political entity as well.

"We're suggesting that if it's solely tied to a facility-centric model, you might find yourself not optimizing it in the end," he says.
Establishing a physician enterprise is harder to do than say. Also, until now, most organizations have been fairly successful with facility-centric physician enterprise, he says.

"It's very expensive, and it's not optimal, but for most part it has been profitable in the past," says Corso. "We think there's a better way, but you're not induced to that better way today."

Yet move away from fee-for-service reimbursement is changing that dynamic, if slowly. Not to mention that generally, physicians seize on the system-wide approach to managing their colleagues. They have an active role (or at least as active as they want to be, says Corso). That gives them a way to impact a practice.

"It's a big thing and they're still involved with the character of it. That environment will suit a system best," he says.

Still, transformation takes a long time.

"It involves a massive number of conversations, person to person, but it's worth the effort," he says. "If you have participatory governance, that's a better platform to work on as you build your physician engagement."