Physicians, Hospital Executives Get Collaborative

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."

Who's in control?
Many conversations with healthcare senior leaders begin or end with some version of the statement, "If only we could get our physicians to ..." This thinking is not suited to the types of seismic changes facing healthcare today that require not only the physician's cooperation, but also his or her financial commitment. It also suggests a paternalistic view of the relationships between hospitals and physicians.

The biggest change that has to occur is finding new ways for hospital and health system leaders to cooperate with physicians. A second and no less important driver is simple economics. Physicians who in the past have seen themselves as being in competition with the hospital are now finding that reimbursement rule changes are making it more difficult to remain independent, says Wasserman.

In fact, he predicts that at some point in the next two years, about 50% of primary care physicians will be employed by hospitals, and "specialists will follow behind in a couple of years."

One might think that hospitals and health systems will be able to leverage physicians into following the protocols necessary for achieving performance targets in the hospitals' commercial contracts, not to mention avoiding penalties and sharing in incentives offered by CMS under healthcare reform. But employment does not ensure that doctors will be willing partners in improving care. An important hurdle is encouraging and requiring physicians to agree to hold themselves to certain standards.

"If you don't develop a genuine way to make physicians feel just as important as the hospital, it's hard to make the progress that needs to occur," Wasserman says.

That means giving leadership roles to physicians, who are expected to set their own standards by which the hospital will hold them accountable. But both sides have to give up some control, says Trinity's Murphy.

"We believe strongly that only collaboration will be successful in the future, so we all have to give up a certain amount of control."

Governance for good relationships
Many hospitals and health systems have found a degree of success in improving quality and safety through new governance structures that set standards for every physician in the group.

The traditional medical staff structure, for example, is not one that works to facilitate coordination of care, says Wasserman. It's too big and unwieldy. He encourages his clients to develop smaller work groups that are designed to address a particular challenge "instead of having one system where every doc has his head under a single tent," he says.

Though hospitals are required by the Joint Commission and other accrediting and certification bodies to have a formal medical staff organization, Wasserman suggests limiting its official duties to those required by law: credentialing and review of inpatient quality measures.

And don't make the mistake of assigning your "high-revenue" physicians or the heads of very large practices to lead these efforts, he says. Leaders of quality and safety committees should have an economic stake, but if you really want a meaningful leader, "you have to find someone who has that understanding of the patient process and factors that drive quality care," he says.

Wasserman suggests looking for key physician leaders on the primary care side who care about their patient loads and understand the interrelationships.

"The degrees don't matter as much as their willingness to get engaged in some really definitive activity," he says. "It's not easy, but they're out there. Sometimes, young physicians are the best."

He cautions hospitals that giving up some authority is difficult, but that physicians will generally hold themselves to higher standards anyway, if given enough leeway.

"Often it's the hospital that won't give up authority," he says. "Sometimes giving up a little authority is the best way to get movement, and they'll see right through it if it isn't genuine."

Trinity's Murphy sees a lot of advantages of focusing on chronic disease because such patients need high levels of care, and because poor coordination of their care is one major reason healthcare can sometimes be expensive, and it relates to the quality of care received. As more evidence comes out regarding how the patchwork care coordination such patient populations receive increases the cost of care and hurts quality, Murphy says clinicians feel a professional responsibility, outside of economic incentives, to improve.

"Providers have really started examining the fact that we are incredibly expensive, and they know we can get better outcomes," he says. "They can do that by agreeing as clinicians on guidelines for clinical care."

Not only that, says Murphy, but the technological solutions to guiding patients through the care process are getting better and better.

"In some ways, technology is driving this," he says. "Now you have help in managing patients in a proactive way, with disease registry programs, by knowing what populations are at higher risk, where they are, and how to approach them. We didn't really have those clusters of attribution in the past. We didn't have the data to manage them better before."

Redefining physicians' leadership role
A few hospitals and health systems have historically been led by physicians, but more often, doctors have had less than ideal representation on the leadership team. Organizations where physicians have been in charge and that employ all their physicians have often been held up as exemplars of the type of coordinated, safe, and high-quality care that others should emulate. But many hospitals and health systems still have a long way to go in incorporating doctors into their senior leadership team.

In fact, in the most recent HealthLeaders Media Industry Survey, 36% of hospital and health system CEOs reported that they have zero physicians on their senior leadership team, which includes titles from senior vice president and up. Meanwhile, 45% did report that between 1% and 20% of their senior leadership team is made up of physicians. Many experts were not surprised at the high number of organizations where physicians are not in senior leadership, but were quick to add that the statistic is changing very rapidly.

Senior physician leadership "is a piece of our success," says Murphy. "Our clinical integrated network strategy has been developed by our Unified Clinical Organization, which is led by P. Terrence O'Rourke [MD], who is our chief clinical officer at the home office."

Within Trinity are several other physician leaders, including Paul Harkaway, MD, vice president for clinical integration and accountable care, who is working in tandem with Murphy and O'Rourke in launching the system's ACO strategy and its clinical integrated network strategy.

The three work to set the agenda for the organization's physician councils in different markets, not only to engage physicians who are leaders in the employed network, but also those independents who belong to physician-hospital organizations and independent physician associations with Trinity.

These small work groups "collaborate and share knowledge on how to move to value-based purchasing," he says. "We needed to engage with the primary care community, and you can't do that one-on-one. We do it through the IPAs and the PHOs."

Smaller hospitals have a tougher time integrating physicians into senior leadership, but that doesn't mean they don't create opportunities, says Mark Adams, chief executive officer at Ogden (UT) Regional Medical Center, a 160-staffed-bed hospital owned by Nashville-based HCA Healthcare.

The low level of physician leadership reported in the HealthLeaders Media Industry Survey "doesn't surprise me," he says. "But it's changing fairly quickly. We don't have full-time physician executive leadership at this hospital—we're fairly small—but we are engaging physicians in part-time formal relationships, such as part-time medical director."

Ogden also has physicians in part-time liaison roles for executive relationships and in a position for director of quality and process improvement. In service lines, such as cardiovascular, Ogden has deployed an employment-alignment model with shared governance where physicians who practice there participate in operational decision-making for their service line. Other physician service line leaders have been appointed for the hospitalist program, the ED, surgical, and the neonatal ICU.

"Those leaders meet regularly with other service line leaders in our network to discuss how we can work together as a healthcare system," Adams says.

Some healthcare organizations have worked to increase the influence of the chief medical officer on the executive leadership team. Count Trinity among those.

"In most of our organizations, we have transitioned to having that CMO role more broadly defined," Murphy says. "They're far more focused on developing the value-based model of the future and how physicians will be integrated into that strategy."

The AAMC's Kirch is optimistic about the future of physicians in senior leadership. "Today's physicians are actively involved in redesign of clinical systems and clinical safety," he says, adding that there's a growing pool of more recently trained physicians who are eager to take on these tasks.

"You might continue to see a relative deficit of MDs occupying the CEO or COO position, but I'm very impressed by the strength of the cadre who are occupying the chief innovation, quality, or medical officer chairs at hospitals and health systems. A number of those will evolve into the higher leadership positions."

But Kirch adds that, generally, physicians are ultimately concerned with delivering excellent patient care, and, "in many ways, the CMO or CQO is able to have a much greater direct impact on patient care than the CEO."

Put physicians in charge
A saying that has been around for years in healthcare goes like this: There are the suits and the white coats, and the twain shall never meet.

That stalemate won't be broken until physicians are more liberally placed in top-level positions—and the doctors are prepared to face business challenges, says Kirch.

"Only relatively recently do we have the advantage of people trained to wear the white coat who are more able to assume those executive positions," he says. "In terms of the rapidity of change, a lot of it is being stimulated by economic forces. When you have docs moving this rapidly into employed status at the health system, you need leaders who can speak their language and understand their world."

Even at smaller hospitals like Ogden, independent physicians are taking ownership of challenges that in the past might have simmered for years as a source of discontent. A little more than a year ago, Ogden's senior leadership began to have serious concerns about limitations in the OR. Much of the increased demand was coming from growth in the region and community, but that led to serious capacity limitations. Although the facility performed nearly 6,500 procedures per year with seven operating rooms, the surgical schedule was blocked at 89%.

"We had a very highly blocked surgery schedule that did not allow for flexibility with open/elective cases," says Adams.

The hospital was losing referrals amid a ramp-up of a urology service line initiative, had opened a new orthopedic unit in the hospital, and faced a growing level of demand from the cardiovascular service line. 

"All those factors together put us in a position to do something different," he says. "Docs who already had block time were happy, but others were not."

Ogden has about 300 physicians on the staff, with about 15% employed, so independent physicians are an important constituency. Medical and staff leadership met to discuss the bottlenecks and possible solutions—without the option of adding physical space.

Together, they decided to undertake a process improvement plan with the help of GE Healthcare Performance Solutions, with the idea that changes in policy and practice could open up significant time in the existing configuration.

In a departure from standard procedure, physicians held eight of the 10 positions on the OR block committee that developed the plan, but Adams says many other surgeons were skeptical about what the exercise could accomplish, given that previous attempts at policy and practice changes had achieved very limited results.

"We then went a step farther and formed an OR governance committee, to whom the block committee directly reports," says Adams. "They make final decisions on OR policy and practice."

That committee is made up of 13 members, of which three are hospital management staff and 10 are surgeons. (Each service line has one representative.)

"Previously, we would see input through the committee structure, and management would filter those and make the decision," Adams says. "This new structure sent the message that we wanted to engage them, and they feel and act more accountable to the recommendations, which we give them the authority to make. There still has to be give and take, and management is represented, but those two committees are largely responsible for the change in culture."

The change in culture led to a gain in prime-time (7 a.m.–3:30 p.m.) utilization from 69% to 81%, and Ogden's OR went from 89% blocked to 70%. That gave Ogden significant flexibility to add elective cases that did not meet block-scheduling criteria. On-time starts have also increased from 33% to 81%.

"That has huge implications on efficiencies and operations throughout the day," he says. "We still have some more to do efficiency-wise, but our goal was to try to get two years' additional capacity before physical expansion, and we did that."

The recovery of operating time has led to a potential increase of $3.78 million to the hospital's bottom line, he says, although final results are not yet available. But Adams and the surgeons were so pleased with the effort that he's rapidly trying to replicate this collaborative effort in the emergency department.

Get organized
Wasserman says the No. 1 goal for his clients surrounds methods of helping the physicians get organized around patient care and care coordination and begin to get them—whether they are employed or independent—into a structure where they can work as colleagues.

"Then take that structure and link it to the system. The second big goal concerns the incredible rise of the employed physician group," he says. "That doesn't mean alignment," he says, but hospital leaders are realizing that such equal governance partnerships help get physicians focused on improved care and cost reduction rather than quarreling among themselves or, worse, blaming the hospital for such problems.

"Leaders have realized that employing is not enough," he says.

On either side of this important debate, playing the blame game does no one, least of all the patient, any good. If you're pointing at your physicians for being obstinate, there are four fingers pointed back at you.

This article appears in the April 2012 issue of HealthLeaders magazine.

Reprint HLR0412-2