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Integrating Acquired Physician Practices: Independence vs. Autonomy

HealthLeaders magazine, June 13, 2011

MOORE: We're moving significantly away from the productivity-only model. We're looking at more of citizenship participation, whether it's on the inpatient side and improving hospital efficiency and quality goals or participating in pay-for-performance opportunities as much as we possibly can. We're also starting to look at a dashboard for performance that's very little related to the productivity side.

HEALTHLEADERS: In terms of citizenship you're talking about serving on clinical boards?

MOORE: Yes, but it's also patient and nursing satisfaction scores. It's a number of other issues around participating in these committees. I have a contract with a medical director where it gets into specific citizenship participation, including quality improvement and efficiencies. We're hoping to concentrate some of this on the folks that probably give us our worst contribution margin because they're the more conservative docs.

WALLACE: I like the term citizenship. It is part of that cultural piece where you're trying to find the right fit because what you're looking for are people who want to behave as owners versus renters. It would be great if we could clone somebody that has the medical side and the business side.

HEALTHLEADERS: What about the complexity of financial modeling for practice acquisitions when the reimbursement system is about to undergo such change?

HARBECK: One of the obstacles to integration is that the financial modeling for practices prior to acquisition is generally incomplete. So you'll acquire a marginally profitable practice, and almost overnight it will start losing money because you're now applying hospital overheads to a private practice. And when a practice is losing money, the hospital's focus for the practice will revert back to physician productivity, not the citizenship necessary to benefit the health delivery network under future reimbursement models.

WALLACE: There's a real challenge with that. We as hospital executives are great at taking well-functioning profitable practices, stripping the ancillaries, and wondering why we're losing money. When you go to that provider-based reimbursement, you're taking away the patient focus. It becomes more inefficient for the patient. And so that's a challenge because right now it is pretty attractive on the provider-based reimbursement. Whether it's telemedicine or another solution, our physicians have to be a lot more accessible to the patients. Healthcare providers often make it for their convenience, and we must begin to change that mind-set by putting the patient in the center of care.

MURPHY: What we've found useful is to spend a lot of time talking about culture and integration by breaking down what will be the new authority matrix for physicians as they move into this new system. So we have a frank conversation with the physicians and discuss the things that they can act independently on and those that will be under a shared governance model. Questions like, "Are you still going to be able to manage your day and set your own schedules? How will you share leadership and governance in specific service lines?" These conversations get into those difficult areas about how we collaborate. We spend time on that up front. If you do that very well, integrating physicians afterward is a whole lot easier. Unfortunately, with this rush to employ and beat out the competition, some health systems may find a lot more challenge managing their new practices post-acquisition.

MOORE: In my experience, groups of physicians that we've brought on board throughout my career have never really had a facilitated discussion like that.

WALLACE: This part about the cultural shaping, the governance, is exactly right on. But we have to think about what physicians want, and I sometimes try to put myself in their shoes. What they're interested in is economic security, how their lifestyle is going to be impacted, does their opinion count, and probably more important, can I help shape the kind of the care system that I'm involved with and that I'm proud to be a part of. Physicians seem to be most interested in what got them into medicine in the first place—providing exceptional clinical quality care to patients—and helping shape that in this environment is a priority. I think if we hit those marks, that's going to be a magnet for other physicians who want to partner together.

HEALTHLEADERS: How much of that conversation revolves not just around clinical integration, but transformation of the way they practice medicine?

MOORE: At this point, not much. And it's predominantly because, except in a couple of markets, we are not very far along that transformational road.

HARBECK: You start by scoring physicians on disease management and outcomes, and by having patients and nurses score them. Then you'll have system-level clinical and financial scores. No physician wants to be at the bottom of the heap in either category, and that will spur them to change their behaviors in ways that benefit the system.

MURPHY: In our markets, we're transitioning at many different levels. The more progressive markets are moving toward clinical integration with the payers supporting this transition through new incentive payments. For our practices, this equates to building new physician alignment models through clinical integration. Other markets are still focused in the traditional fee-for-service model.

WALLACE: When you start with the physician group, whether it's cardiology or primary care physicians, if they're an enlightened group, they're working on their metrics and the way they deliver care. How do we begin to take some shared risk? You're kind of moving up this curve, but if you don't have the good raw materials there with that practice group, then you're not going to be successful when you do get to a fee-for-health strategy. If you start with good talent, then you're going to be well-positioned in the next few years.

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