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Hospitals and Physicians: Partners in Accountable Care

HealthLeaders magazine, September 13, 2010

Attebery: First, in our case, is to have some of our physician leaders actually take that message out to their colleagues in the other subspecialty groups. The message is, we are creating a template for integration. Essentially we talk about how we want to transform the hospital into a more physician-friendly environment. So in some respects, this is a way for the physicians to appropriately leverage their clout, strength, insight, and commitment within the health system. If they say, "We demand financial protection," that's not going to go over very well. But if they say, "We want to be a partner with the health system to address quality issues, cost issues, strategic development, and growth," that's where you have the maximum leverage. Even though there has to be one single specialty or focused service line that may be the first to transition, that also becomes a template for other specialties. Part of the process is to have those physician leaders engage the other specialties to explain what we're doing and why we are doing it. And to explain that we do not want to build this one at a time, on a different platform; we want there to be a common platform. That's where a lot of effort has to be made—not just the transactions. It is easy to become consumed in the transaction with evaluations, compensation models, and then legal aspects. Somebody has to slow that process down and say, "What kind of platform are we building?" We don't want to end up with a deal where we cannot continually work toward a total comprehensive approach. So we try to make sure that we've had an eye toward building a template. In our governance model, our financial and operational side, did we build the right kind of template so that for the next group that we engage we can pull that template out and follow the same pathway?

Harbeck: But is it impossible, in an era of declining reimbursement—even with improved quality—for everyone to win? Can we structure the industry so that everyone can win? You look at the share of wallet that the physician is usually looking for and the mission that the nonprofits are especially looking to deliver, and in any scenario there's 3% or 4% to deal with. I think the industry is trying to figure out how we can make this all work.

Attebery: It's a great question. I think if everybody around the country were being honest, they would have to tell their docs who are involved with these transactions that you cannot sustain and protect for the long term. It's impossible. If you tell them otherwise, then you're creating an expectation for something that you cannot deliver. We had this discussion with our cardiology group and said, "If the cardiology group does not complete a transaction, here's the downward direction income is going—and it's going there certainly and quickly. But if we complete a transaction on the right legal model and financial model, here's the improvement in income in the short term. In the long term, the same forces that bent the curve on the physicians' side down are going to bend the curve on the physician-hospital integrated side. However, inside that model you have more leverage in the marketplace to deliver better value. So you're going to take a hit, but you can delay it, and you have a chance, at least in this new model, to regroup and reformat your value proposition on the marketplace. It's your choice." Every cardiology group I know that's facing that choice says, "Give me the chance to work with my health system to try to restructure what I do so I can add the value." So to answer your question, Clayton, I do not think, financially, there's enough value-add and savings in the system that over the next 10 years we can protect everybody's income right where it is. I think that's an impossible dream.

HealthLeaders: We talked about this level of communication between hospital systems and physician groups, but there's a larger context that goes beyond communication. These are negotiations, and these physicians that you're trying to have an open dialogue with are likely having conversations with other hospitals and systems. You might be doing the right thing in trying to be honest with the medical staff, but you don't know what those executives at the competing hospital are saying when they are at the table with the physicians.

Attebery: You're right. We saw it happening in our marketplace, but we did not want to change our position. We wanted to keep the level of trust, so we were brutally honest about the situation. As physicians go out and test the market and find out that some other system is offering something better, then we have to engage the physicians to think about how that better offer is really sustainable. That other system is either being dishonest, which is very bad, or it's not very smart about forecasting. Either way, do you want to partner with an organization that's either dishonest or not very smart?

Civello: I agree. You've got to be brutally honest with them. It's a tight business with thin margins. To put something out there that's not truthful, it's just going to be detrimental to the relationship down the line. You do not want to overextend yourself on these deals. You have to show a lot of data to support your argument. A lot of it has to do with knowing your audience and where they are in their career. What's on the table for them? Is this a deal toward the end of a career that will help transition the care of their patients, or are they your partner for the next 15 to 20 years? Our position is that we can be that partner, who's going to be right there with them through it all.

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