For years, while physician networks were in rapid-growth mode, the measure of management success was the ability to recruit the exceptional doctors – in many cases, highly-paid specialists critical to the hospital’s signature service lines. The physician network’s financial viability took a backseat to protecting the hospital’s market share for heart care, cancer care, women’s health, chronic pain, joint replacement and rehabilitation. “We’ll worry about the financials later,” was the mantra.
Later has arrived. With the implementation of Medicare Access and CHIP Reauthorization Act (MACRA) this year, if your system totally ignores Merit-Based Payment Incentive System (MIPS), your network faces an across-the-board, four-percent drop in Medicare reimbursement in 2019. The cuts will only get deeper with each passing year. Most networks are already losing money and cannot afford to take an additional hit?
The skill sets physician network executives need today
In many cases, physician network administrators are former hospital administrators that had specific responsibilities for various departments before they were placed in charge of the network. They may have been, or continue to be, responsible for IT or Human Resources, the Business Office, Risk Management, Quality or Ambulatory Care.
They understand hospital economics and are on board with the health system’s strategic plan. They may know how to work with the Board and can effectively argue for or against a physician practice that approaches the hospital seeking employment or if bricks and mortar are required to bring physician services to a medically-underserved area. Some of these administrators may even know how to relate to physicians and guide them toward common goals.
But, the skills they lack are born of the actual experience in profitably running physician practices — scheduling patients, collecting co-pays, billing for services, closing the day – the nitty-gritty details that spell profit or loss in what is, essentially, a conglomeration of small business units. They don’t have the knowledge to standardize best practices across the network, because they don’t know what best practices are. And because they lack that expertise, they can’t teach or coach up a $10 per hour clerk at the front desk.
This is one of the big reasons so many hospital-owned physician networks are facing mounting per provider losses. Other symptoms that your physician network executive suite may be in over their heads include:
• Lack of standardized, weekly and monthly dashboard reports on network performance and operations that identify opportunities for improvement;
• A primary care physician base that’s too small to support the specialists;
• Physicians who run to the C-suite with issues that should have been handled by network management in the first place;
• Lack of a strategic plan for the network; and
• A growing number of referrals to physicians outside of your network.
Focusing on these symptoms means addressing the root cause of shortfalls in management infrastructure and the individuals responsible.
How MACRA ups the ante
MACRA is a game-changer for physician network management. Gone are the days when physician practices earned bonuses (or avoided penalties) just for reporting quality measures. Actual performance now matters to the bottom line. Quality, cost, and EHR utilization performance will be compared to national benchmarks, and, just as they have on the hospital side, those comparative benchmarks will continually rise. With this level of scrutiny and transparency, performance improvement capabilities now become a requisite, programmatic element and leadership skill.
Under MACRA, IT utilization in your physician offices is a bigger issue than ever. MIPS reporting will require placing all your physicians on the same IT platform – and having everyone capturing data in the same way. In a perfect world, that means a system that allows you to move to a single patient chart that everyone can see and use the same way.
MACRA’s impact on independent physician practices and small physician groups that lack the requisite IT muscle will be profound. CMS reports that although 87 percent of all physicians participated in PQRS and expect to avoid penalties for 2019, only 58 percent of solo and small practices participated. That’s why many hospitals now have a second wave of physicians knocking at their doors for employment or other means of support. Ultimately, MACRA is driving physicians into the arms of hospital networks.
Few hospitals can afford to employ every physician who asks. Your network executive (and system) needs the skills and expertise to develop alternatives to employment that foster loyalty to your organization and address small practice needs under MACRA. These may include:
• Direct EHR support;
• Participation in a Health Information Exchange (HIE); or
• Developing MSO capabilities focused on helping practices meet MACRA challenges.
Recruiting the right network leadership
Hospital-owned, multi-specialty physician networks are a relatively new phenomenon in healthcare. Many of the best leadership candidates have developed their skills working in physician practices during this rapidly changing healthcare environment. This is one of the reasons why 95 percent of the physician network executives that HSG places at growing healthcare systems are in their 30s and 40s. These young leaders understand current challenges, know the ins and outs of day-to-day operations, understand billing and collections and closing the day, and have the necessary experience to develop standardized best practices across the network.
It’s also important to identify your network’s specific prerequisites before the recruiting process begins. That way, you are recruiting the experience your network needs to take you where you want to go tomorrow, rather than where you are today.
While experience is the first measure of a candidate’s suitability, it’s not the only skillset that should be prioritized. Over the past eight years, the U.S. healthcare delivery system has undergone tremendous change. That trend is likely to continue into the foreseeable future. Physician network leaders need entrepreneurial skills to adjust to new regulations and make the most of opportunities as they arise.
Predictive assessment tools can help determine if a candidate has the capacity to thrive in an era of fast-paced change. Some of the characteristics you will find in appropriate candidates include:
• Big picture focus
• Staying abreast of new developments in the field
• Willing to take action on problems or opportunities without prompting
• Hands-on control of all key functions that contribute to the bottom line
• Avoiding layers of management between them and the key actions or decisions that need to be made so bureaucracy and red tape don’t slow decision making
• Ability to motivate their team one-on-one
The last major consideration in the hiring process is cultural fit. How does a candidate’s personality and style mesh with the organization’s culture as well as the personalities and values of the network’s key players? Finding the right cultural fit is an excellent predictor of a positive hiring decision.
Phasing into new leadership: consider an interim executive
Recruiting a new physician network leader typically takes between three to five months. You can either divide responsibilities among the network during your search or you can jumpstart positive change through an interim executive.
An interim executive can smooth the way for your new hire by:
• Identifying and prioritizing the network’s key issues;
• Providing solid recommendations for improvement;
• Developing a roadmap for the incoming new hire;
• Beginning the development of dashboard reports to monitor progress and results; and
• Insulating both the hospital and the new hire from the blow-back that can accompany change.
Today’s physician networks require experienced leadership at the executive level. If your current leadership doesn’t line up with the required skill set, don’t delay making a change. Your network’s growth and development is at stake.
M. Davis Creech
Senior Manager
HSG
dcreech@hsgadvisors.com
(502) 814-1183 = Direct
(502) 550-6911 = Mobile
M. Davis Creech has over fourteen years of experience in physician network management, hospital/physician relations, and consulting. He is knowledgeable and skilled in strategy-focused manpower planning; physician recruitment and retention strategies; physician employment, education and development; performance improvement; and marketing strategies for physician practices.
He holds Master’s Degrees in both Hospital and Health Services Administration and Business Administration from Xavier University, Cincinnati, Ohio, and a Bachelor’s of Arts Degree in Economics and Management from Centre College, Danville, Ky.
