The national layoff tsunami is swamping even households with new infants, or babies en route. But it is entirely legal to lay off a pregnant woman or a woman on maternity leave, as long as the employer can make the case that she is being let go for a reason unrelated to her pregnancy. It is illegal to dismiss someone or refuse to hire her specifically because she is pregnant, according to Title VII of the Civil Rights Act of 1964. Aside from such blatant discrimination, pregnant women have no special protection under federal employment law, says Elizabeth Grossman, a lawyer for the New York district office of the Equal Employment Opportunity Commission.
There are many good reasons to pursue better physician-hospital alignment, such as ensuring an adequate physician supply, enhancing service quality, improving customer service, and improving relationships among providers. When it comes to their position in the marketplace, hospitals often look at physician-hospital alignment as a defensive strategy—as a way not to lose their current referral base and market share. However, not only is physician-hospital alignment an essential strategy to improving market position, it is an imperative in these trying economic times that are impacting hospitals and physician practices alike.
Four steps will make sure physician-hospital alignment strategies lead to growth:
Identify opportunities for improving market position
Rigorously assess these opportunities
Categorize and match real opportunities with the "right" physician-alignment strategy
Implement and then monitor and report ongoing performance
Identify opportunities
Identifying opportunities might seem obvious, but many healthcare organizations do not systematically explore and identify opportunities to work with physicians to enhance the market performance of both parties. Leading healthcare organizations identify opportunities by combining a top-down and bottom-up approach.
In the top-down approach, hospital leadership uses market research and intelligence to seek out service line and/or geographic targets of opportunity. The foundation for physician-alignment strategies for many healthcare organizations is medical staff development planning. A good medical staff development plan will identify opportunities to grow by recruiting additional physicians (whether already in the community or new) to address insufficient market supply, enhance access, and/or enhance clinical capabilities. This top-down plan should be supported with traditional market planning analyses; e.g., demographic forecasts, market share trends, environmental changes, etc.
In the bottom-up approach, hospital leadership uses many of its physician-alignment vehicles—physician advisory councils, board representation, one-to-one communication efforts, etc.—to bring to light opportunities from the physicians themselves. One of the reasons to nurture good physician-hospital relationships and communication is so that physicians will come to the hospital first with new venture or technology opportunities to pursue jointly rather than to go to competitors or third parties.
Culturally, some organizations tend to be aggressive in pursuing opportunities, while others are somewhat reluctant. Though no organization needs to be constantly "wheeling and dealing," combining a top-down and bottom-up approach will in all likelihood uncover a steady stream of opportunities.
Assess opportunities
Not all opportunities are, in fact, growth opportunities. Neither do they all have the same potential. The first screen an opportunity must pass is consistency with the overall strategic direction of the organization. In our experience, very few not-for-profit healthcare organizations will pursue any opportunity that is not aligned with its mission just for the sake of growth. The next step is to assess opportunities by developing high-level business plans with market share and financial projections.
The following two key points need to be made regarding these assessments.
First, the organization must not fall victim to "analysis paralysis," particularly if working with physicians. Nothing frustrates physicians more than having administrators/planners study a concept they think is "hot" for months without deciding anything. If you wait for perfect information to make a decision, you'll wait a very long time.
Second, conclusions drawn from the results of the analyses should enable the organization to identify whether an opportunity will, in fact, lead to growth. Healthcare organizations have limited capital and energy to invest today just to maintain current operations and "keep the lights on." Only a potion of this financial capability can they afford to invest specifically for future growth. And the funds they do invest must produce a return. For example, the decision to employ a loyal physician who comes to the organization and wants to be employed might be important to protect existing volumes, but this decision should not be construed as one that will lead to growth.
Categorize and match opportunities
Not all opportunities are alike, and this fact has important implications on the types of physician-alignment vehicles used to pursue them. Not every type of opportunity lends itself to every physician-alignment vehicle, and vice-versa.
Most opportunities will fall into one of four general "buckets:"
Opportunities to grow existing inpatient and outpatient services by re-positioning yourself vis-à-vis local hospital competitors in your existing markets and services
Opportunities to develop new services
Opportunities to expand into new geographic markets
Opportunities to capture volumes lost to third-parties and/or physician competitors
When trying to grow existing services in existing markets, particularly in more competitive markets, the focus is generally on winning over physician "splitters." In these cases, pursuing non-economic alignment vehicles can be very beneficial. Using communication and technology vehicles to address issues or obstacles and tighten linkages with physicians, enhancing ease of use to improve physician productivity, and developing centers of excellence that deliver superior quality of care can all be effective vehicles for increasing market share. Economic vehicles can also be very effective, with the caveat that organizations must be careful not to buy back what they already have.
When looking to develop new services, non-economic vehicles can be very effective in identifying services and communicating the "whys and hows" of service development. Existing non-economic vehicles, such as technology and centers of excellence, can often be leveraged to provide the platform/infrastructure to facilitate internal development of a new service. Economic vehicles can also be effective. To the extent a service/capability is truly new, incremental market position can be achieved through both joint ventures (even after "splitting the pie") and employment.
When trying to develop new markets, non-economic models are more limited in effectiveness. With the exception of developing true centers of excellence that can pull patients into the hospital, non-economic models are often insufficient because distance will most often trump convenience for the physician and for the patient. Many economic models are also limited. In our experience, employment and placement of physicians in new markets yields mixed results, as there is often inadequate local infrastructure to support employed physicians (e.g., physicians see patients but use competing imaging centers because there is no local hospital presence). The classic strategy for growing in new markets is a joint venture. Healthcare organizations access new markets without cannibalizing existing volumes or threatening current relationships, and physicians gain access to the hospital's capital.
When trying to capture volumes and market share from non-hospital third-parties and/or physician competitors, economic alignment vehicles are much more likely to succeed. While it is true that focusing on communication and improving ease of use will help maintain relationships and may have some beneficial impact on referred volumes, they ultimately do not address the real issue, which is economics. It is the potential for needed revenue streams to augment real or perceived declines in their practice income that lies at the heart of physician competition with hospitals. Pursuing economic alignment vehicles, such as real estate investment, joint-venturing, and/or employment, is not only necessary, it is the only way to realistically capture these volumes.
Implement, monitor, and report on ongoing performance
The final step, once the appropriate growth opportunity/alignment vehicles are pursued, is to monitor ongoing performance. Most healthcare organizations do not adequately optimize their investment in growth by demanding tracking of these results and reporting them to the physicians involved. Healthcare organizations that achieve growth through physician alignment are much more likely to monitor and benchmark the performance of their joint ventures, even if they are not the majority owner or managing partner.
When it comes to growth and physician-hospital alignment strategies, one size generally does not fit all. Successful healthcare organizations match opportunities with the most appropriate vehicles. While some vehicles lend themselves better to some opportunities, and vice-versa, the most effective vehicles will always be the ones that the hospital and the physicians learn to mutually trust by recognizing the mutual benefits provided to both parties.
Dennis Kennedy is a senior principal with the Noblis Center for Healthcare Innovation in Falls Church, VA. He may be reached at dennis.kennedy@noblis.org.
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I write about a variety of subjects that I think are, or ought to be, important to those of you running finance at healthcare organizations. You're quick to let me know when I'm off target, and quick to praise when I'm on. I appreciate that. It keeps me from getting the "big head," as we say here in the South.
When I wrote about the "bundling" aspect of President Obama's budget a couple of weeks ago, a man I greatly respect took the time to respond. Francois de Brantes, chief executive officer of Bridges to Excellence, who has dedicated his career to improving the efficiency of healthcare, thinks the Obama budget proposal "needs some important refinements," but "it is on the right track."
In the column, I took the opportunity to warn about unintended consequences that may stem from the proposal, but I also think the president is on the right track. A hospital's or physician's responsibility to the patient shouldn't stop when they stop getting paid for the "stuff" they do. The bundling idea is an important attempt to change that equation. Before docs and hospitals get your dander up about not needing financial incentives to provide quality care, consider the story I told about my aunt, and de Brantes' response to it.
"If you think about it, your aunt got crappy care and it cost a lot of money. So the question is how could the hospital and the rehab facility have worked better together to avoid the pneumonia to begin with? Well, that's a completely avoidable complication that's caused by the proliferation of a controllable virus. Today, almost no one really cares about it because there's no financial risk associated to eliminating the care defect. Until providers are held accountable for those defects, nothing will change and patients will continue to suffer."
I agree, and so does the Institute of Medicine and a host of other groups that are working to improve quality. My aunt has recovered from her pneumonia, but Francois shared a story about a friend that illustrates how the outcome from shoddy care can be worse. Much worse.
"I also have a joint replacement story, but somewhat more tragic. A friend went in for a knee replacement three months ago and he's now paralyzed from the neck down and his condition will likely never improve. And he didn't get paralyzed by slipping on the floor of his house, he got it as a result of medical error."
Another response to that column came from a registered nurse who sees the fraud and abuse in Medicare and Medicaid as the key fixes to tackle before any other big-picture reforms are enacted, like the bundling idea.
"I agree our healthcare needs reform," says Leta Hanks, RN, who is quality/compliance manager at OSE Holy Family Medical Center in Monmouth, IL. "The same needs to be done with Medicaid. Until we rid the system of waste, fraud, and abuse, we really don't know what needs to be reformed. Instead of pouring more money into an already corrupt system, let's fix it right. Let's make everyone accountable for the services they receive. Medicare and Medicaid are not a right. They are a privilege to be earned."
It's always fun to get an "attaboy" from media peers who think you've done a good job. I remember watching the "Nightly Business Report" with Paul Kangas with my dad when we were sharing the same roof, so it was a thrill to hear from one of NBR's top reporters regarding our stimulus and Obama budget coverage. Said Jeff Yastine, who often anchors the show for Kangas when he's out:
"Phil: I enjoyed reading your column and its insights into the Obama stimulus plan. For a reporter like myself, a few minutes reading HealthLeaders Media and its various components cuts through a lot of the healthcare rigamarole. It's like reading an intelligence report on the latest battlefront in healthcare. Anyway, nice work."
I just had to put that in there. Thanks for indulging me. I wrote a short piece about the Maryland charity care bill last month, a bill that aims to rein in abusive practices by hospitals in their attempts to collect patient bills. Andrew Mercer, finance director at MedStar Health's Good Samaritan Hospital in Baltimore, took me to task a little bit for telling hospital leaders they should have regulated themselves on these practices to avoid having a legislative solution forced upon them.
"Your intro to the article on the Maryland charity care bill was way off the mark," says Mercer. "Legislation to protect our patients is not necessarily a bad thing, especially in Maryland, where hospitals have been regulated since the '70s. I'm sure you agree that the basis for the recent publicity over hospital collection practices was increased readership. I'm sure you also agree that standards in healthcare are a good thing. As for the industry addressing this issue itself, we've done that. You won't like the answer, but it's through regulation! Maryland has the most effective method of allocating funds for uncompensated care; a method developed in collaboration with state, hospital, and payor representatives."
I think we're talking past each other a little bit, Andrew. Don't know if I agree that the recent publicity about hospital collection practices was about increased readership. That's kind of like saying the recession is only a big deal because news outlets won't shut up about it. I think it's the other way around, but call me biased if you want.
However, I will admit, Andrew, that perhaps I misunderstood the situation there, which is always possible when commenting on news that you didn't actually cover yourself. My impression was that the new legislation was deemed necessary because some hospitals were behaving badly in this regard. Call me crazy, but I always think that if an industry is able to police itself (admittedly, this happens rarely), regulators won't need to impose a solution on them.
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Recent movement on Capitol Hill and by major healthcare players suggests that consensus is growing for action this year, but deep rifts remain over how to pay for expanded coverage and whether a new government-sponsored program should be offered to people who have trouble buying private insurance. A coalition of hospitals, insurers, employers, physicians, drug makers, and consumers have released a report endorsing a set of policy changes that could cut in half the number of uninsured Americans.
Faced with mounting budget deficits and the enormous cost of overhauling the nation's healthcare system, Democrats and Republicans on Capitol Hill are expressing increasing openness to an idea that once seemed unthinkable: putting taxes on some healthcare benefits. The idea of taxing medical insurance benefits has long worried many lawmakers, who are concerned that new taxes could jeopardize the employer-based health system most Americans rely on.
After years as a top state and federal healthcare official, Nancy-Ann DeParle turned her attention to the business of medicine, overseeing more than a dozen companies as a board member or private equity portfolio manager over the past eight years. In 2006 and 2007 alone, DeParle collected at least $3.5 million from fees and the sale and awards of stock from healthcare firms, according to regulatory filings. Now DeParle is the White House czar for healthcare reform, helping lead an overhaul of the nation's system of medical care, a process almost certain to impact the fortunes of the industry she recently served.
Union canvassers in Boston are pursuing two urgent missions: organizing the city's big teaching hospitals and trying to rally support for federal legislation that could enhance the strength of unions nationwide. The two goals are intertwined, because passage of the bill before Congress would make success more likely for the Service Employees International Union's Massachusetts chapter, which is two years into the hospital organizing effort that is focusing first on Beth Israel Deaconess Medical Center.
Prince William Health System plans to merge with North Carolina-based Novant Health, which has pledged more than $200 million to help the Manassas, VA, hospital meet the demands of a fast-growing county. The deal comes less than a year after Inova Health System abandoned plans to merge with the Manassas hospital. After that deal fell apart, Prince William Health System studied 20 potential partners and settled on Novant. The two systems will complete the partnership structure, as well as necessary regulatory approvals, over the next several months. The merger is expected to be done this fall.
With Charity Hospital shuttered and the old University Hospital retooled after Hurricane Katrina, does the legal entity comprising the two facilities and linking several local universities still exist? Or is the Louisiana State University System, by itself, now running a new, temporary entity in the former University Hospital building? Competing answers have led to a deadlock over whether and how LSU should share authority of the hospital with other stakeholders whose faculty and students work in the facility.
Plagued by a lack of funding and lengthy bankruptcy proceedings, Brownsville (PA) Tri-County Hospital has closed twice in the past five years. Most recently, it stopped operations on Feb. 12, after its board of directors recognized it would fall $200,000 short on payroll. Six days later, it filed a Chapter 11 petition as well, listing more than $12 million in debts to several hundred creditors, including employees who weren't paid. But now hospital representatives have sent a letter to President Barack Obama asking for federal stimulus money. They say their project perfectly meets the criteria for such funding, such as providing medical care for a rural, impoverished area.
