When something means different things for different people, goals and milestones get muddled. Are today's physician alignment mechanisms about quality and lowering costs, or are they more about bunkering in for financial survival in turbulent times?
If you ask CEOs about their top five worries, most of them will put physician alignment somewhere on that list.—For many , it is the top concern, because without it, an organization can't grow, can't evolve to meet quality or cost targets, and might not be able to survive.
But knowing what CEOs are worried about doesn't tell us much. Let's look into why physician alignment is so strategically important.
Like most terminology meant to simplify difficult concepts into shorthand, the meaning of physician alignment has been garbled, lost, folded, bent, mutilated, and spindled such that what one CEO means by it could be completely different from another's view. And you can be sure physicians see it differently than do executive leaders.
What I think most hospital executive leaders mean by physician alignment, is that, broadly, their physicians' goals are similar to the organization's, or, at least, don't work in direct opposition to the goals of the health system. But if value-based reimbursement is the future, such a definition falls well short of what alignment should be geared to achieve.
What's clear from HealthLeaders Media's most recent survey and analysis of physician alignment is that for most respondents, physician alignment means financial alignment. Of the top three business staffing or organizational objectives or motivations behind organizations' physician alignment strategies, two are pointedly about the money.
Some 63% of respondents ranked "improve system margin," as among their top three, while 50% picked "ensure coverage for strategic service lines" and "maximize system revenue." Nothing wrong with that in theory, but let's dispense with the idea that physician alignment is mostly about improving care coordination or reducing the cost of care.
It's not that physician alignment can't help improve on some of these things, but for executive leaders, that's not the overall goal. The goal is to improve the margin and to improve revenue. I might also add that physician alignment is secondarily about gaining market share, servicing debt, and covering the uninsured, among other concerns.
No Margin, No Mission
Without margin, there's no mission, as the saying goes. Yet that's somewhat incongruous to the idea that physician alignment as a necessary condition for implementing population health strategies that will ultimately lower healthcare costs.
Executives shouldn't confuse physician alignment with the other, more esoteric goals of healthcare reform. And they shouldn't confuse physician alignment with the goals of population health, either. Plenty of execs talk about them as though they are one and the same.
Physician alignment is necessary for population health, but by itself, it's certainly not sufficient. The goals of the physician and the organization must be aligned to make that sort of system work, but you can have physician alignment without reducing the cost of care and even without improving the quality of that care.
When physicians are incented to actions that are detrimental to the goals of lower-cost care, better care management, reduction of overutilization, and patient safety and quality, they may be, perversely, aligned with the current environment that remains heavily fee-for-service-based.
Only if compensation, for both hospitals and physicians, is put at risk for meeting the goals of lower cost, better quality and health improvement for populations, will we have a chance at lowering the cost of care.
Some organizations—voluntarily or not—are beginning to experiment with risk-based compensation. But that type of compensation is difficult to implement. According to our survey, 32% of organizations have some compensation at risk for all of their employed physicians while 21% have no compensation at risk for any of their employed physicians.
Pushing Ahead, Taking Risk
Some 48% of organizations have compensation at risk for at least some of their employed physicians. Those numbers have to get better for anything more ambitious, like population health.
But how many health systems themselves are truly incented to deliver lower-cost care, better care management, et al? If my experience as the moderator of several sessions at HealthLeaders' annual CEO Exchange can be instructive, many are—but only at the margins.
Most healthcare organizations still derive the majority of their reimbursement from fee-for-service medicine, which is not ideally suited to tying the financial fates of both hospitals and physicians together. The brave ones are pushing ahead with taking risk. The majority are still watchfully waiting. I don't know which is the smarter move.
Yet many organizations still see a benefit to trying, and they're leveraging their minimal experience with value-based reimbursement to try to make the connections between institution and physician that will serve both well as healthcare reform matures and reimbursement theoretically becomes more risk-based.
More than 77% of respondents are already heavily into physician employment, 67% are undertaking clinical integration, and 54% have created a patient centered medical home. But only 31% are under any form of shared savings contract, and only 29% are currently engaged in bundled payments.
None of this means healthcare as an industry can't cut costs and improve quality. There are hundreds of good stories about this around the country. But those stories appear to be the outliers.
If physician alignment is a bridge to better value, consumers, payers, and those healthcare organizations that have invested in it will benefit. But if all physician alignment improves is hospital and health system margins, then they're the only ones who will be better off. And that would be a shame.
Philip Betbeze is the senior leadership editor at HealthLeaders.