Physicians Prep for Bundled, Performance-based Payments

At Mount Auburn Hospital in Cambridge, MA, President Jeanette Clough and her team are taking another tack. Affiliated with Harvard Medical School, the 205-bed hospital concentrates its employment, opting to employ 95% of the obstetric, gynecology, and midwife staff; all of the emergency department physicians; and about 35% of the primary care physicians on staff.

“Primary care and the ER are the two most common access points for patients in our system, so they are very important places to be employing physicians—in terms of starting on the right foot with the patient,” says Clough. “The second way we integrate [physicians with the hospital] is to put a lot of expectations on our physician leader.”

For nearly 22 years the hospital has used a capitated approach combined with managed care to compensate physicians—although some areas have changed since the system first took hold. Incentives are now paid based on patient satisfaction ratings. The employed physician contracts all include pay for performance and quality metrics to help guide physicians toward the hospital’s strategic goals.

When it comes to physician-hospital alignment, Eric Crowell, president and CEO of Iowa Health-Des Moines and senior vice president of the Iowa Health System, looked beyond compensation models and incentives. The system already employs 290 primary care physicians using two different structures. So when it opened a new 83-staffed-bed, general acute care facility with a focus on orthopedics, the system took the opportunity to consider a new approach with its physicians. A 27-member orthopedic group had been working with the system for nearly 50 years, so when the group approached with a new business model, leadership listened.

“What we developed was an LLC. It acts as a management company, and we have shared ownership of the facility with the group,” explains Crowell. “We wrote the contracts with the comanagement company, and the arrangements establish quality, production, and financial metrics for them to achieve, and so far the physicians have blown all of these measures out of the ballpark.”