William F. Jessee Talks Physician-Hospital Alignment

Hospitals need to have a strategic objective first and foremost in acquiring physician practices. "If you can't answer that question, all the other stuff becomes kind of irrelevant," he says. CEOs may be excited about it, but there is no buy-in from hospital boards or physician leaders.

To hospital leaders, "The first questions I ask are, 'Why did you acquire this practice? What was your objective?'" Jessee says. Often, he hears that "the reason a hospital or health system enters into a practice acquisition is because the physician wants to sell or because if we don't buy it, our competitor will."

"Those are hardly what I would call good strategic reasons," he says.

2.Hospitals should establish strategic objectives in hiring physicians:

Jessee says the board, management team, and physician leaders must clearly support and gain buy-in for strategic objectives. That is an "essential prerequisite to a successful transition," he says.

Jessee tells the story of one hospital CEO who brought in a cardiology practice that failed to deliver business the hospital sought, yet gave the physicians guaranteed incomes.

The CEO hired an outside cardiologist to drive patient referrals. When that faltered, the CEO sought to hire one of the local cardiology practices. None were interested. So he went to another town 25 miles away and hired four cardiologists who hadn't used the hospital.

"I started thinking to myself, how many ways can you screw something up?" Jesse asked.

The scenario underscored the need to have board and physician buy-in to the plans. "How does your board and physician leadership feel about this?" Jessee asks. In the case he discussed, "the board was really angry because we were losing so much money over this and they weren't brought in to discuss it. And the physician leadership believed the hospital was bringing in outsiders to compete with them. They've been longtime supporters (of the CEO) and now they are out to get the CEO."