3 challenges for hospitals integrating physician groups

Most hospitals and health systems understand fully integrated physician groups can help achieve results in terms of efficiency and quality of care. However, a recent survey suggests hospital integration may affect physician practice losses.

In a survey of physicians and administrative executives from more than 20 hospitals in and near Kentucky, 58 percent reported incurred losses of at least $100,000 or more per hospital-employed physician this year, according to accounting and business consulting firm Dean Dorton Allen Ford. This is up from 41 percent in 2013, according to the report.

"Effective integration of physician group operations remains a top challenge and strategic imperative for hospitals and health systems today," Gary Ermers, associate director of healthcare consulting at Dean Dorton, said in a statement. "Notwithstanding the current losses, there is strong commitment to building integrated networks as part of the transformation of the healthcare delivery system."

Here are three challenges hospitals face in integrating physician groups, according to Dean Dorton:

1. Incorporating new metrics into compensation models. Most respondents (67 percent) use an RVU productivity method to determine compensation. Of these respondents, 63 percent reported losses between $101,000 and $200,000 per physician per year, according to the report. Hospitals and health systems may look to alternative models to help reduce losses that are more compatible with integrated systems. Models like professional service agreements, co-management agreements and joint operating agreements may be more effective than direct employment models in reducing incurred costs in the future, according to the report. Bundling compensation with physician-based quality metrics have not yet shown results in physician practice losses, but 64 percent of respondents said their organizations are beginning to implement these strategies as well.

2. Establishing a bar for performance. It is critical to determine and help physician practices understand what level of performance that is expected, especially with changing metrics and shifting care models. This includes addressing underperformance directly and consistently, which appears difficult, the study suggests. A variety of different actions were reported in response to underperformance, including termination, reduced pay, changing the compensation model and audit documentation. However, none of the organizations took physician practice losses into account in deciding what action to take for underperformance. This issue must be addressed to achieve integration, according to the report.  

3. Providing opportunities for physician leadership in the hospital or health system. Most hospitals and health systems are working to add physician leadership (80 percent). Those hospitals without physician leadership seem to incur much higher losses per physician per year, based on survey responses. Half reported losses exceeding $200,000 per physician per year and the other half reported losses between $101,000 and $200,000. Half of the 80 percent with physician leadership also reported losses between $101,000 and $200,000, but the remaining half reported lower losses. "The healthcare organization of the future will need to coordinate care across the full continuum; the most important key to success may very well be the effective integration and leadership of physician groups," Mr. Ermers said.

 

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