Hospital and health system senior executives are continually searching for ways to engage their physician staff. Some are doing it through an employment strategy. Some are creating a variety of economic incentives for physicians to help them achieve the goal of fewer readmissions, meet quality targets, and agree on treatment protocols that fit evidence on cost and quality. They're working to educate physicians on the downstream effects of their decisions on the entire organization.

Those are all valid and important initiatives to attempt in an industry hungry for transparency, cost control, and better quality. But to hear many CEOs speak, it's a tricky business to encourage physician engagement, and they search for the right combination of incentives to get the job done. They fail at their career peril.

I have found that most execs have trouble defining what exactly physician engagement or alignment really looks like.

Here's an idea: try to make it simple. By that I mean look for ways to empower physicians to change their own work patterns to make them more efficient both in time and cost. If you can engender that kind of work environment, the rest has a way of sorting itself out. The majority of successful physician engagement initiatives I've seen seem to share one quality: the absence of micromanagement. The executives are there to articulate goals, get the physicians the tools they say they need to accomplish those goals, and get out of the way.

One good example I recently discovered was through a conversation with Greg Tipsword, the healthcare provider practice lead for West Monroe Partners in Chicago. I interviewed Greg for a story in an upcoming issue of HealthLeaders magazine about identifying—and using—the right data to help make life- and cash-saving interventions. He tipped me off to the work of two physician engineers (my term, not theirs) at Mayo Clinic in Rochester, Minn.

Executives are looking to increase the value of healthcare delivery, Tipsword says, meaning delivering a good outcome at a sustainable cost.

And you can't figure out costs and cut down on unnecessary work without efficient flow and tracking of patient data across the various enterprises that make up the agglomeration of healthcare services in a modern health system.

"There's data everywhere, and people everywhere are trying to make sense of it, but they're doing so in their own little world," he says. "They're not working toward a common enterprise goal."

Those fragmented data fiefdoms, as any executive knows, have an insidious role in high costs, unnecessary care, and poor quality. I use the word insidious because their influence is not immediately apparent because of outcome lag. Perhaps the problem seems so big, ingrained, and unmanageable that most executives don't know where to start to address it.

At Mayo, the best place to try to build the information stream was the emergency room.

Vernon Smith, MD, with some help from Tipsword and the Mayo Clinic's Center for Innovation, developed a system of sharing data that is powerful in its simplicity. Smith, who has self-described passion for computing and medicine, is one of the chief architects behind the system of 21-inch TV monitors at St. Mary's Hospital, a 1,265-bed hospital that is part of the Mayo system. The monitors aggregate a huge amount of data on patients currently in the hospital. Though developed in the ED, the system is now used throughout St. Mary's units and is being introduced at Mayo facilities elsewhere.

Called the "YES Board" (see the attached image) it contains a mind-boggling amount of information. Colorful icons tell a variety of caregivers the current state of individual patients. The best part: most of the data has been requested directly by physicians and nurses so that they know what has gone on with their patient since arrival, and they know it at a glance.

"There must be hundreds of data sources to pull data from any one point in time," Smith says. "The way we're handling that is by pulling all the data into one spot, and packaging it in such a way that the providers can see the information immediately."

It was not an overnight solution, by any stretch.

Around 2007, when Mayo first deployed the software that powers the monitors, all it monitored was the number of patients in the waiting area and which patients were in each room, says Andy Boggust, MD, who worked in partnership with Smith to expand the system's capabilities.

Neither was particularly enthusiastic about the new system to begin with. "We didn't have all the other clinical data," Boggust says. Smith adds a parallel about technology: "As I look back on all the times I've been told we're going to upgrade our EMR, I have never looked forward to it. It usually meant more work on my part not just as an IT person but as a clinician. The feeling was that it would make my life more difficult."

But a funny thing happened with the YES Board: Physicians started asking for more information.

"We were finding each person knew what they were waiting for [to move a patient to the next step in treatment], but nobody else did," says Smith. "We would come back around and find the patient still there and find that some step got missed. Now we make that very obvious to everyone."

The YES Board, with all its icons reminiscent of cave drawings, makes patient information transparent, and effectively allows team members in the ER, and now elsewhere in the hospital, to back-check each other.

"These [care] processes are becoming so complex, with so many people involved, it's really important that you make sure all the players are aware of what's going on as quick as you can," says Boggust. "If someone's waiting for someone else to complete a step and we make the patient spend an extra hour in the department, it doesn't affect the care, but it does affect the bottom line because that's an hour of bed time."

That's the out-of-the-silo thinking that most executives are trying to encourage among their clinical staff.

Ok, so the YES Board is beautiful in its simplicity, allows multiple caregivers to access data that was once trapped in silos, and makes for more efficient patient care—but many systems can do that in theory. What works in practice is that suggestions for addition of data are acted upon by Smith, and they're acted upon quickly. Physicians, nurses, and other care team members tread a path to his office when they discover another piece of data that might be helpful to see on the monitors.

"Far be it from me to tell them they don't need it or ask why they want it. My job is to figure out how to get it on there," says Smith. "They actually see the product of what they asked for. What so often happens with many of these systems is that whatever change you want to make was unlikely to be done, but even if it was, it would be on a glacially paced timeframe."

Slowness breeds apathy, or worse, workarounds.

"What happens to end-users is they stop asking for things because it's pointless. It's not going to change. Their whole attitude changes from 'How can I make it better' to 'How can I work around it,'" Smith says. "Systems bypassed can turn into really bad outcomes later."

The fastest he's acted on information requests is 10 minutes, although Smith acknowledges that it took several months to get the right combination of real-time data to indicate whether a patient is in danger of sepsis.

"One thing we're taking advantage of is that since we are computer engineers, we know what it takes to pull that data. Others don't. To them it's some sort of black magic," Smith says. "Meanwhile, what really helps is when you walk in and can show them, 'Here it is. I did this last night.'"

As different as the YES Board is from five years ago, says Smith, "it won't look this way next week," because the data physicians request is constantly being tweaked to make it better, more intuitive, and more quickly processed.

"As much data as you see on here," says Smith, "I've never seen a request to remove data."

And I've never heard a better argument for asking your physicians what they need to achieve the organization's goals, making sure they have the tools and expertise to get it, and then getting out of the way.

Whether or not you're contemplating a merger or acquisition of your hospital or health system, at some point, you probably will. Forces at work in healthcare that require big expenditures on technology, labor and acquisitions of allied health providers mean many hospitals and their leaders will go begging for the capital to complete these changes unless they can find a partner.

Let's be honest. Those needs might just put your organization at a disadvantage, perhaps ultimately a fatal one. The need to do something—anything—to immediately increase your scale seems imperative. A merger or acquisition with a deep-pocketed partner might get you out of that hole you're in.

Then again, it might help you unwittingly dig that hole a little deeper. A couple of recent decisions by the Federal Trade Commission to challenge hospital mergers in Ohio and Illinois sank those deals, and all the cash that went along with doing due diligence.  In the case of Promedica Health System and St. Luke's Hospital in Toledo, FTC actions ultimately torpedoed a merger that had already been completed.

Think of the costs. Think of the disruption, think of the opportunities to improve organically. All forever lost. With apologies to Will Rogers, when you find yourself in that hole, maybe it's better to stop digging.

Mergers can be enticing. Many are successful, and have given the parent systems the size, scale, and financial wherewithal to become leaders in taking on risk and transforming clinical care. The good news: Hospital mergers are still rarely challenged, and even more rarely are they overturned.

"Only a small fraction of consolidations are actually challenged," says Cory Capps, PhD, an economist at Bates White Economic Consulting in Washington, DC. "Remember, they're letting 90% of deals go through unchallenged."

That said, the FTC has had some high-profile victories in recent years. The warning from these recent cases: Just be sure you're doing it for the right reasons—which can be almost any—with the exception of dominating your local market.

Capps, an expert on hospital consolidation, was called to testify in the case in which the U.S. District Court for the Northern District of Illinois subsequently enjoined the merger between Rockford Memorial Hospital and St. Anthony Medical Center. He testified that a merger between the two would result in a combined entity that would control 59% of patient admissions in the area for general acute care, and 64% of patient hospital days.

Not good, because that level of control is essentially a monopoly, as no insurer in the area could possibly afford to neglect allowing the combined entity into its network, at almost any price. If the leaders of these two hospitals had thoroughly examined these issues in a weekend retreat, they could have nixed the merger in time for lunch on the first day.

That's another way of saying these mistakes are eminently avoidable.

At this point, you're probably confused, as I was. On one hand, the government seems to be encouraging consolidation through its many new regulatory burdens and its insistence on developing a better way to ensure continuity of care among patients.

All of that requires significant expenditure and retooling of the workforce and work patterns. After all, the legislation of the Affordable Care Act seems to penalize those health facilities that aren't integrated. So isn't consolidation in healthcare good for the continuum of care, and good for patients?

Not always.

"You're asking about a pet peeve of mine," Capps says. "There is a sense in the face of health reform that consolidation can be good, but they forget the fallacy of composition that goes like this: Some consolidation is good, this is consolidation, and therefore this is good. But the preponderance of coordinated care failures are failures of vertical relationships to coordinate effectively."

It's the horizontal mergers that don't require such retooling of work processes and responsibilities to be successful that attract unwanted FTC attention, while vertical consolidation failures can be related to operational performance, he says.

"For instance, primary care has incentives that don't reduce hospitalizations. Or hospitals have a hard time getting physicians to comply with evidence based medicine," he says. "In those cases, you're not talking about problems with competitors but problems with complements."

By contrast, "both hospitals in Rockford own physician groups, so they're really competitors," he says. "They're on the same point on the care continuum and they're a horizontal merger of substitutes because they're serving the same customers and their consolidation might have anticompetitive effects."

He says further that hospital advocates fail to recognize the difference between the two models, and that in reality, the FTC is not thwarting Congress and CMS in their drive to encourage some consolidation in the industry.

"Consolidation in health reform is focused on promoting vertical integration, not horizontal," Capps says. "When people say the FTC is thwarting CMS and Congress, they're ignoring this distinction. Four [FTC challenges] in four years is pretty small overall."

I asked him how hospitals can avoid this costly mistake by learning from the two most recent victories by the FTC.

"Think twice if your experience tells you that your merger partner is an entity that you monitor competitively," he says. "If your patient volume goes down and you think about what that other hospital is doing because you have to meet or beat them, that's probably a pretty close competitor and you're likely to get a second request if you attempt to merge with them. That doesn't mean it's doomed, but you will hoe a tougher row."

Capps encourages hospitals and boards to hire an experienced healthcare antitrust attorney at the beginning of any merger discussions to provide upfront advice as to what the process entails so that if the merger is likely to attract FTC scrutiny, how you'll successfully defend the move.

"Every step you go in this process, the money is sunk," he says. "You need to know what your chances are and what it will cost to succeed, and what it will cost you to fail. The benefits had better be intrinsic to the rationale and planning with the deal, and not what you come up with after the FTC issues you subpoenas."

In the case of these two recent examples, it seems that leaders counted on the fact that 90% of mergers go through without a regulatory hiccup. They hoped, despite the obvious fact that they were merging with a close competitor, that they would be included in that 90% number.

But as the losses that have undoubtedly accrued from the time effort and expense of dealing with the scrutiny have demonstrated by now, it's clearer than ever that in hospital consolidation, hope is not a strategy.

This article appears in the April 2012 issue of HealthLeaders magazine.

Physician relationships with executive leadership have always been important at hospitals and health systems, but there is a history of distrust on both sides, to put it mildly. Executives often view physicians as a huge impediment to many important initiatives within the hospital, from cost-cutting to process reengineering.

Meanwhile, physicians habitually distrust senior executives who are looking out for what's best for the hospital or health system—or maybe just the bottom line and the executives' own bonuses—but not the physicians and not even necessarily patients, in the worst case. But despite that historical backdrop, the optimist can see that economic incentives for hospitals and physicians are now aligning as never before.

For some healthcare leaders, physicians (especially those in high-revenue specialties) are to be coddled and complimented, but such relationships are often condescending on both sides and depend on finding a sometimes convoluted and inefficient way to meet the economic interests of both. Trouble is, those economic incentives rarely align, a fact that is not lost on either side; yet the playing out of those competing incentives often ends up poisoning relationships on both sides.

Positive physician relationships have never been more important, but perhaps it's now becoming easier to cultivate them as legislative and contractual changes are aligning hospital and physicians incentives and forcing the parties, especially independent physicians, to reconsider their relationships, move forward from past discord, and begin anew.

"Certainly economic changes and regulatory and legislative factors are creating the proximate reason, but the real reason is you cannot achieve high-quality care without a high level of integration between physicians and the facilities that deliver that care," says Darrell Kirch, MD, president and CEO of the Association of American Medical Colleges and a former medical school dean and health system CEO. "Ultimately, it should be driven by the quality of care issue."

Incentives are now strong
Favorable incentives for both sides are necessary in providing high-quality care. The relatively recent move by commercial plans and government payers toward risk-based contracting attempts to ensure that outcomes are rewarded, not volume of service.

So while quality of care is important, physicians are now seeing benefit with hospitals on quality and safety initiatives and cost-control programs because their financial fate is more closely aligned to hospitals' fiscal well-being, says Michael Murphy, the executive vice president of heath networks at Trinity Health in Novi, MI. Murphy works with physicians in senior leadership roles at Trinity to execute the health system's clinical integrated network strategy as well as its accountable care organization strategy, which work in tandem.

Trinity, which owns 35 hospitals and manages 12 others, also has a vast network of outpatient, long-term care, home health, and hospice programs in 10 states, which means the benefits of cooperation accrue directly to the health system in most cases. That's not always true in situations where the pieces of the care continuum are more disconnected.

Murphy says many times in the past, promising collaboratives have found it difficult to get coordinated care because the incentives have not been aligned. That meant cooperative efforts that may not have had positive results right away were prematurely abandoned, or that well-meaning attempts to improve care handoffs, for example, were entered into halfheartedly. As soon as a more pressing issue came up, they might have been tabled. No more.

"What's great is the payment system is catching up," says Murphy, whose organization has had a head start on some innovative collaborative efforts, such as coordinated treatment of patients with chronic disease. "That question has been debated forever," he adds. "Do you put the financial incentives first to drive behavior, or do you create a model that is more focused on quality, which attracts the payers?"

Now both can work at the same time because of the increasing emphasis employers and commercial insurers are putting on delivering measurable high-quality, safe, and coordinated care—and they are backing up that emphasis with better reimbursement. If the targets are met, the incentives are delivered. And all of the agreements are covered in a contract.

Still, "for these arrangements to work for the patient and the employer, there needs to be joint risk-sharing" between physicians and hospitals, says Jeff Wasserman, vice president of strategy and executive leadership services with Culbert Healthcare Solutions, a consultancy based in Woburn, MA. "It's hard to share risk if you can't work cooperatively."

Who's in control?
Many conversations with healthcare senior leaders begin or end with some version of the statement, "If only we could get our physicians to ..." This thinking is not suited to the types of seismic changes facing healthcare today that require not only the physician's cooperation, but also his or her financial commitment. It also suggests a paternalistic view of the relationships between hospitals and physicians.

The biggest change that has to occur is finding new ways for hospital and health system leaders to cooperate with physicians. A second and no less important driver is simple economics. Physicians who in the past have seen themselves as being in competition with the hospital are now finding that reimbursement rule changes are making it more difficult to remain independent, says Wasserman.

In fact, he predicts that at some point in the next two years, about 50% of primary care physicians will be employed by hospitals, and "specialists will follow behind in a couple of years."

One might think that hospitals and health systems will be able to leverage physicians into following the protocols necessary for achieving performance targets in the hospitals' commercial contracts, not to mention avoiding penalties and sharing in incentives offered by CMS under healthcare reform. But employment does not ensure that doctors will be willing partners in improving care. An important hurdle is encouraging and requiring physicians to agree to hold themselves to certain standards.

"If you don't develop a genuine way to make physicians feel just as important as the hospital, it's hard to make the progress that needs to occur," Wasserman says.

That means giving leadership roles to physicians, who are expected to set their own standards by which the hospital will hold them accountable. But both sides have to give up some control, says Trinity's Murphy.

"We believe strongly that only collaboration will be successful in the future, so we all have to give up a certain amount of control."

Governance for good relationships
Many hospitals and health systems have found a degree of success in improving quality and safety through new governance structures that set standards for every physician in the group.

The traditional medical staff structure, for example, is not one that works to facilitate coordination of care, says Wasserman. It's too big and unwieldy. He encourages his clients to develop smaller work groups that are designed to address a particular challenge "instead of having one system where every doc has his head under a single tent," he says.

Though hospitals are required by the Joint Commission and other accrediting and certification bodies to have a formal medical staff organization, Wasserman suggests limiting its official duties to those required by law: credentialing and review of inpatient quality measures.

And don't make the mistake of assigning your "high-revenue" physicians or the heads of very large practices to lead these efforts, he says. Leaders of quality and safety committees should have an economic stake, but if you really want a meaningful leader, "you have to find someone who has that understanding of the patient process and factors that drive quality care," he says.

Wasserman suggests looking for key physician leaders on the primary care side who care about their patient loads and understand the interrelationships.

"The degrees don't matter as much as their willingness to get engaged in some really definitive activity," he says. "It's not easy, but they're out there. Sometimes, young physicians are the best."

He cautions hospitals that giving up some authority is difficult, but that physicians will generally hold themselves to higher standards anyway, if given enough leeway.

"Often it's the hospital that won't give up authority," he says. "Sometimes giving up a little authority is the best way to get movement, and they'll see right through it if it isn't genuine."

Trinity's Murphy sees a lot of advantages of focusing on chronic disease because such patients need high levels of care, and because poor coordination of their care is one major reason healthcare can sometimes be expensive, and it relates to the quality of care received. As more evidence comes out regarding how the patchwork care coordination such patient populations receive increases the cost of care and hurts quality, Murphy says clinicians feel a professional responsibility, outside of economic incentives, to improve.

"Providers have really started examining the fact that we are incredibly expensive, and they know we can get better outcomes," he says. "They can do that by agreeing as clinicians on guidelines for clinical care."

Not only that, says Murphy, but the technological solutions to guiding patients through the care process are getting better and better.

"In some ways, technology is driving this," he says. "Now you have help in managing patients in a proactive way, with disease registry programs, by knowing what populations are at higher risk, where they are, and how to approach them. We didn't really have those clusters of attribution in the past. We didn't have the data to manage them better before."

Redefining physicians' leadership role
A few hospitals and health systems have historically been led by physicians, but more often, doctors have had less than ideal representation on the leadership team. Organizations where physicians have been in charge and that employ all their physicians have often been held up as exemplars of the type of coordinated, safe, and high-quality care that others should emulate. But many hospitals and health systems still have a long way to go in incorporating doctors into their senior leadership team.

In fact, in the most recent HealthLeaders Media Industry Survey, 36% of hospital and health system CEOs reported that they have zero physicians on their senior leadership team, which includes titles from senior vice president and up. Meanwhile, 45% did report that between 1% and 20% of their senior leadership team is made up of physicians. Many experts were not surprised at the high number of organizations where physicians are not in senior leadership, but were quick to add that the statistic is changing very rapidly.

Senior physician leadership "is a piece of our success," says Murphy. "Our clinical integrated network strategy has been developed by our Unified Clinical Organization, which is led by P. Terrence O'Rourke [MD], who is our chief clinical officer at the home office."

Within Trinity are several other physician leaders, including Paul Harkaway, MD, vice president for clinical integration and accountable care, who is working in tandem with Murphy and O'Rourke in launching the system's ACO strategy and its clinical integrated network strategy.

The three work to set the agenda for the organization's physician councils in different markets, not only to engage physicians who are leaders in the employed network, but also those independents who belong to physician-hospital organizations and independent physician associations with Trinity.

These small work groups "collaborate and share knowledge on how to move to value-based purchasing," he says. "We needed to engage with the primary care community, and you can't do that one-on-one. We do it through the IPAs and the PHOs."

Smaller hospitals have a tougher time integrating physicians into senior leadership, but that doesn't mean they don't create opportunities, says Mark Adams, chief executive officer at Ogden (UT) Regional Medical Center, a 160-staffed-bed hospital owned by Nashville-based HCA Healthcare.

The low level of physician leadership reported in the HealthLeaders Media Industry Survey "doesn't surprise me," he says. "But it's changing fairly quickly. We don't have full-time physician executive leadership at this hospital—we're fairly small—but we are engaging physicians in part-time formal relationships, such as part-time medical director."

Ogden also has physicians in part-time liaison roles for executive relationships and in a position for director of quality and process improvement. In service lines, such as cardiovascular, Ogden has deployed an employment-alignment model with shared governance where physicians who practice there participate in operational decision-making for their service line. Other physician service line leaders have been appointed for the hospitalist program, the ED, surgical, and the neonatal ICU.

"Those leaders meet regularly with other service line leaders in our network to discuss how we can work together as a healthcare system," Adams says.

Some healthcare organizations have worked to increase the influence of the chief medical officer on the executive leadership team. Count Trinity among those.

"In most of our organizations, we have transitioned to having that CMO role more broadly defined," Murphy says. "They're far more focused on developing the value-based model of the future and how physicians will be integrated into that strategy."

The AAMC's Kirch is optimistic about the future of physicians in senior leadership. "Today's physicians are actively involved in redesign of clinical systems and clinical safety," he says, adding that there's a growing pool of more recently trained physicians who are eager to take on these tasks.

"You might continue to see a relative deficit of MDs occupying the CEO or COO position, but I'm very impressed by the strength of the cadre who are occupying the chief innovation, quality, or medical officer chairs at hospitals and health systems. A number of those will evolve into the higher leadership positions."

But Kirch adds that, generally, physicians are ultimately concerned with delivering excellent patient care, and, "in many ways, the CMO or CQO is able to have a much greater direct impact on patient care than the CEO."

Put physicians in charge
A saying that has been around for years in healthcare goes like this: There are the suits and the white coats, and the twain shall never meet.

That stalemate won't be broken until physicians are more liberally placed in top-level positions—and the doctors are prepared to face business challenges, says Kirch.

"Only relatively recently do we have the advantage of people trained to wear the white coat who are more able to assume those executive positions," he says. "In terms of the rapidity of change, a lot of it is being stimulated by economic forces. When you have docs moving this rapidly into employed status at the health system, you need leaders who can speak their language and understand their world."

Even at smaller hospitals like Ogden, independent physicians are taking ownership of challenges that in the past might have simmered for years as a source of discontent. A little more than a year ago, Ogden's senior leadership began to have serious concerns about limitations in the OR. Much of the increased demand was coming from growth in the region and community, but that led to serious capacity limitations. Although the facility performed nearly 6,500 procedures per year with seven operating rooms, the surgical schedule was blocked at 89%.

"We had a very highly blocked surgery schedule that did not allow for flexibility with open/elective cases," says Adams.

The hospital was losing referrals amid a ramp-up of a urology service line initiative, had opened a new orthopedic unit in the hospital, and faced a growing level of demand from the cardiovascular service line. 

"All those factors together put us in a position to do something different," he says. "Docs who already had block time were happy, but others were not."

Ogden has about 300 physicians on the staff, with about 15% employed, so independent physicians are an important constituency. Medical and staff leadership met to discuss the bottlenecks and possible solutions—without the option of adding physical space.

Together, they decided to undertake a process improvement plan with the help of GE Healthcare Performance Solutions, with the idea that changes in policy and practice could open up significant time in the existing configuration.

In a departure from standard procedure, physicians held eight of the 10 positions on the OR block committee that developed the plan, but Adams says many other surgeons were skeptical about what the exercise could accomplish, given that previous attempts at policy and practice changes had achieved very limited results.

"We then went a step farther and formed an OR governance committee, to whom the block committee directly reports," says Adams. "They make final decisions on OR policy and practice."

That committee is made up of 13 members, of which three are hospital management staff and 10 are surgeons. (Each service line has one representative.)

"Previously, we would see input through the committee structure, and management would filter those and make the decision," Adams says. "This new structure sent the message that we wanted to engage them, and they feel and act more accountable to the recommendations, which we give them the authority to make. There still has to be give and take, and management is represented, but those two committees are largely responsible for the change in culture."

The change in culture led to a gain in prime-time (7 a.m.–3:30 p.m.) utilization from 69% to 81%, and Ogden's OR went from 89% blocked to 70%. That gave Ogden significant flexibility to add elective cases that did not meet block-scheduling criteria. On-time starts have also increased from 33% to 81%.

"That has huge implications on efficiencies and operations throughout the day," he says. "We still have some more to do efficiency-wise, but our goal was to try to get two years' additional capacity before physical expansion, and we did that."

The recovery of operating time has led to a potential increase of $3.78 million to the hospital's bottom line, he says, although final results are not yet available. But Adams and the surgeons were so pleased with the effort that he's rapidly trying to replicate this collaborative effort in the emergency department.

Get organized
Wasserman says the No. 1 goal for his clients surrounds methods of helping the physicians get organized around patient care and care coordination and begin to get them—whether they are employed or independent—into a structure where they can work as colleagues.

"Then take that structure and link it to the system. The second big goal concerns the incredible rise of the employed physician group," he says. "That doesn't mean alignment," he says, but hospital leaders are realizing that such equal governance partnerships help get physicians focused on improved care and cost reduction rather than quarreling among themselves or, worse, blaming the hospital for such problems.

"Leaders have realized that employing is not enough," he says.

On either side of this important debate, playing the blame game does no one, least of all the patient, any good. If you're pointing at your physicians for being obstinate, there are four fingers pointed back at you.

This article appears in the April 2012 issue of HealthLeaders magazine.

Reprint HLR0412-2

Financial incentives are finally forcing hospitals and physicians to work more closely than ever. In many cases, that means the hospital or health system buys the practice. But that doesn't equal alignment, as we've written many times here and elsewhere.

In fact, physician autonomy and alignment are far from mutually exclusive. Physician practice autonomy is still possible. It just requires a different kind of ownership.

This month, I wrote the cover story in HealthLeaders magazine, in which we took a look at the rapidly changing dynamic in physician and executive relationships.  Those relationships have always been important, but in the past have been driven by a culture of suspicion and distrust.

As one of my key sources for the story put it to me, the cultures historically could be described thusly: One has corporate, bureaucratic, top-down governance, and the other a professional, collegial, familial culture that is very informal.

"Those two structures are at opposite ends of the business spectrum. As a consequence, even the sheer decision-making process between the orgs is misunderstood and often portrayed as being untrustworthy," says Ed Brown, chief executive officer of The Iowa Clinic, one of the few remaining independent physician group practices in the state.

"Iowa is probably the most integrated state in the country, as it relates to physician practices," he says.

But one of the key points from my story is that integration doesn't always equal alignment. The reverse is also true: Alignment doesn't have to be achieved through hospital or health system ownership of physician practices.

Brown and his board, as well as, presumably, Iowa Clinic's 140 providers in 37 specialties, are staunchly independent simply because they place a high value on autonomy, and don't see any reason they can't remain financially viable far into the future. But the independent streak at Iowa Clinic only runs so far—its relationship with the health system to which it refers the majority of their inpatients, Iowa Health System, is extremely collaborative.

A few years ago with IHS, "we were very open and candid with one another about the future we faced," Brown says, which was a future that meant even though Iowa Clinic would remain independent, it would have to develop an interest in Iowa Health System's long-term survival and success. The reverse was also true.

"We looked at it from a perspective that we needed a strong health system to have a strong clinic," he says. "It was as much in our interest to help reduce costs as it was theirs."

Over the past 10 years, the two organizations have developed a foundation to work together in care coordination and cost reduction strategies, first in cardiovascular services, and then in oncology and outpatient services.

"Both of those have been the foundation to help us work together," Brown says.

Also facilitating that close relationship have been joint ventures and strategic business alliances.

"Over the course of the past 10 years, we have developed joint outpatient services, including an outpatient surgery center, a sleep center, and they even have a durable medical equipment company housed in our clinic," he says. "The other thing we do very well together is working strategically on physician resource needs, particularly in specialty services."

He's careful to stress that these haven't been defensive joint ventures from either side. Rather, one of their key purposes was to develop that attitude that what is good for one organization is often good for the other. In other words, their interests are aligned. Certainly, they've had help through changes already under way in the payment system that reward quality outcomes and align as closely as possible reimbursement to those outcomes.

So much has the relationship paid dividends, that Brown caught himself when he spoke about Iowa Health System as "our health system."

"Our health system, that is, IHS, has a doc who serves as COO, and who I interface with primarily, and the past chair of our clinic serves on the board of directors at the health system and on their executive committee," he says. "Our current chair is involved with managed care strategies, and they have engaged a number of our physicians in various strategic initiatives. We've embraced that to do what we can."

Key to the successful collaboration, it appears, is that The Iowa Clinic was able to enter into partnership strategies with its dominant health system from a position of strength.

In the recent past, Brown concedes, the clinic has been able to thrive based on its reputation and its commitment to embracing innovation. It was the first clinic in the state to implement an electronic medical records system, and was the first to develop a physician leadership institute, self-funded, that now helps health systems develop physician leaders. It was also the first, as far as Brown knows, to implement a clinic-wide customer service initiative.

"All those things identify a certain ownership of culture that has allowed us to be successful," he says.

Ownership can mean many things. In this case, its cultural ownership helped Iowa Clinic keep from becoming owned by someone else.