2 Physician Alignment Strategies and How Hospitals Can Adopt Them

Aligning with physicians is traditionally a difficult process for hospitals and health systems, thanks to a history of strained relations between the two groups. However, physician alignment and integration is absolutely essential for hospitals to master in today's healthcare environment.

"Historically, hospital reimbursement wasn't dependent on physician participation," says Mike Williams, CEO of Community Hospital Corp., a hospital management and consulting firm. "It certainly is now. Without [physician] partnership, there will be many hospitals that won't continue to exist."

Therefore, it is extremely important for hospitals of all sizes to create and implement a physician alignment strategy as soon as possible if they have not already.

Here, Mr. Williams shares two models he sees becoming prevalent in today's healthcare environment. Each fits different physician alignment needs for hospitals.

Employment
The employment model has become increasingly popular with both hospitals and new physicians. "Physicians who are going into practice for the first time are entering into employment relationships," Mr. Williams explains. Younger physicians are attracted to a guaranteed salary and the promise of work-life balance, both of which normally come with an employment model. Therefore, for small or rural hospitals looking to attract more physicians, employment may be an effective alignment strategy to pursue.

Before deciding on an employment model, hospitals should evaluate how local physicians feel about hospital employment. According to the 2013 Physician Practice Preference and Relocation Survey by The Medicus Firm, 28.1 percent of physicians in practice, and 22 percent of practicing physicians prefer a hospital employed model of practice setting.

Additionally, the board should be informed every step of the way. "Board engagement, understanding and approval are very important," he says. "Unless a board member really understands the rationale and reason involved in the decision, [he or she] can be caught off guard," by independent physicians in the community who may challenge the hospital's decision to employ physicians at all.

Hospitals looking to employ physicians should pay close attention to state laws that may limit or prohibit direct employment. For hospitals pursuing an employment model for the first time, Mr. Williams recommends they gain access to healthcare legal counsel or an experienced consultant to help them remain legally compliant through the process.

Clinical Co-Management
Another physician alignment model Mr. Williams sees gaining popularity is the clinical co-management model, in which a hospital asks a group of physicians to head a service line, like cardiology or orthopedics, and improve outcomes while lowering costs. "It's an opportunity for hospitals to pay physicians for affecting outcomes and lowering costs," he explains, because hospitals can pay the physicians an hourly rate for their involvement in the hospital program. Some money can also be shared with those physicians who were directly involved in quality improvements and cost savings.

To have a successful clinical co-management agreement, hospitals must be able to dedicate enough resources to make it work. "If it is going to be successful, hospitals have to spend the energy and money necessary for daily focus versus something they get to when they have time," Mr. Williams warns.

Hospitals will also need to educate board and medical staff members on why the organization is pursuing a clinical co-management model. This is particularly important since clinical co-management models are not hospital-wide, but vary between service lines. This could potentially disrupt physician morale if not properly communicated. For example, if a hospital starts an initiative with cardiologists but not neurosurgeons, members of the board and medical staff members need to be able to explain the reasoning behind the new agreement to the neurosurgeons and maintain positive relations with the group.

Clinical co-management agreements may be better suited for midsized hospitals compared to smaller critical access hospitals, according to Mr. Williams.  

No matter how a hospital achieves it, physician alignment is crucial to a hospital's ability to survive in the new healthcare landscape, where hospital-physician partnership is more important than ever.

More Articles on Physician Alignment:
Keys to Success as an ACO: Model Physician Relations Maintaining Entrepreneurial Incentive and Self-Direction
Co-Management Verses Bundled Payment — Are These Alignment Strategies Mutually Exclusive?

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