Value-based care is the future of healthcare delivery, and many hospitals and health systems have begun to shift their strategy toward this end. However, their success in this endeavor will rest significantly on how successfully they align physicians toward this goal, as physicians are the ones who ultimately control the delivery of healthcare services.
A new book released earlier this year — "The New Hospital-Physician Enterprise: Meeting the Challenges of Value-Based Care" (Health Administration Press, 2013) written by ECG Management Consultants and edited by David Wofford, senior manager, and Stephen Messigner, managing partner, at ECG — explores how compensation, communication and other tools can be used to successfully align physicians for the new era of healthcare ahead.
Here, Mr. Messigner discusses the book and best practices for hospital-physician alignment with Becker's Hospital Review. 
Q: What was the impetus for the book? Why now?
Stephen Messinger: First, hospitals and health systems are investing huge amounts into building and maintaining employed medical groups, and many have significant opportunities to improve both the financial and the operating performance to create a better ROI profile. Second, and perhaps more important in the long run, organizations need to understand how they can more effectively work with their physicians to create market leverage that will serve them in a value-based world. The book addresses both these issues. The impetus of the book is that hospitals must act today so they have time to position for the impacts of reform in the coming years.
Q: A key component of success for a hospital-physician enterprise is compensating physicians appropriately, or in a way that encourages physicians to provide value-based care. Your book devotes a chapter to this issue. What are some of the key components of success in this area?
SM: There are a few key points addressed in the book with regard to physician compensation. First, many hospitals have arrangements that do not include performance incentives, or the incentive is structured inappropriately and thus not effective. Physicians, like most of us, respond to incentives, so having a rational and incentive-driven compensation plan is essential.
Second, the incentive structures need to be designed to support the organization's objectives. If population health management is an initiative, then incentives for physicians need to be focused on care coordination and resource use.
Third, the shift from volume to value (or risk) will require changes in the way physicians are paid over time, so a compensation plan needs to be flexible as well.
This year at ECG, we have designed compensation plans for more than 20 organizations and no two are alike. Compensation is not cookie cutter. It needs to be highly specific to the physician group and informed by market factors and organizational objectives.
Q: The book also addresses alternative models to physician employment to similarly achieve alignment. What are some of the most common of these alternatives, and what are their key benefits and/or drawbacks?
SM: There is a common misconception that employment equates to alignment. While there are several models that allow for an economic relationship between physicians and hospitals, such as professional services arrangements (PSAs), the real challenge is engaging with physicians to make the relationships effective. If one employs or establishes a contract with a physician and thinks they have created an aligned relationship, they have missed the boat. Physicians are knowledge workers and need to be engaged and regarded as partners with give and take. Elevating the physicians’ voice in organizational direction setting and management decisions will do much more for alignment than simply having them sign an employment agreement.
Q: IT also plays a critical role in alignment. Based on your experience, what are some ways organizations can best use HIT without creating undue work or challenges for physicians?
SM: Implementing and leveraging technology across a hospital or health system is a particularly tough challenge given the general level of physician dissatisfaction with all of the HIT systems. However, some organizations are doing a great job of giving physicians a voice in the governance and management of HIT, which gives them ownership of the problems and the solutions. One very practical way to mitigate undue work is to provide physicians with scribes to help with the EMR interface. When we look at other industries, we see consumers demand a relatively high degree of efficiency and sophistication. We are hearing from patients that they are now expecting the physician to have access to all of their records and to be using an EMR at the bedside or in the exam room. Patients are equating EMR use with better healthcare and better service. Our objective is to help physicians see the big picture in how their use of HIT in the clinical setting adds value to outcomes, costs and quality.
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