Under pay for performance, finance leaders could measure the financial success of a physician-hospital partnership in a relatively simple equation: how much was spent to onboard a physician, plus salary and benefits, plus overhead minus the amount of revenue per patient that the physician generated. Though it could take three to five years for newly employed physicians to generate revenue that exceeded the cost of hiring them, it was nonetheless measurable. Under health reform, with the focus on population health and the shift away from volume to quality outcomes, discerning the financial value of a new hire can be elusive. While many payers are not yet reimbursing for better-quality care, physicians are beginning to be tracked by quality and patient satisfaction metrics that are not yet tied to all payer contracts and can add to the challenge when calculating ROI.
"When it comes to ROI for physicians you have to decide what the successful partnership is going to mean for the organization. Is it the financial aspect of a practice? Is it clinically how well they are doing based on metrics? We look at patient satisfaction and physician satisfaction, and we also compare physicians against one another," says Manas. She adds, however, that a strong business case is an essential that is sometimes overlooked by hospitals where the marketplace is aflame with zeal to employ.
"There has to be a business case. You need to look at the financial metrics of employing versus partnering, and then you also need to clearly define what you will use to gauge the measure of success for this pairing," she says. "You also need to consider not only the dollar impact but the political one, too. If you're hiring a direct competitor for a practice that's been supporting your system in the past, you could alienate that practice. You need to be able to fully articulate the reasons why you are employing versus partnering or joint venturing, and how employment will better serve your community."
Establishing alignment plans
Collaboration, communication, and metrics: These three words need to be included in all discussions with potential employees and in employment agreements. Creating a strong hospital-physician alignment entails building upon shared objectives and goals, and knowing how these are being measured is a cornerstone to a mutually successful relationship, says Browne.
"Our organization has a spectrum of employment arrangements," says Browne. "Growth for us is happening in the specialist arena in terms of physicians seeking employment and where we're seeking physician to employ."
Browne took on the role of systemwide CMO in October 2012 with the assigned task of building relationships with doctors and providing leadership in the areas of quality, clinical effectiveness, system integration, informatics, and the development of service lines. He was chosen, in part for his background as a principal with healthcare consulting firm Pershing Yoakley & Associates, which would give him a broader perspective of employment agreements from both an administrative and clinical perspective.
"At the end of the day I'm a physician, and I come back to that. There are a lot of employment models out there … and there are different tactics you need to consider to further the alignment strategy," he says. "First, you have to look at the differences in physicians from different generations … and we know we have to create agreements that are based on performance standards, not just productivity."