4 Post-Reform Challenges to Building a Great Physician Group Practice

Many hospital and health systems are creating their own physician group practices in order to better move forward with coordinated, accountable care under healthcare reform. However, building and running a successful physician group practice post-reform presents its own unique challenges.

Huron Consulting Group recently released a briefing, written by Timothy Ogonoski and Victor Arnold, managing directors of Huron Healthcare's Physician Solutions practice. In the briefing, Mr. Ogonoski and Mr. Arnold identify four pressing challenges to building physician group practices today.

1. Increasing operating costs. Many physician groups are seeing their operating costs rise more quickly than their revenue. To keep operating costs at a reasonable level and increase revenue, Mr. Ogonoski recommends that groups look back at their operations efficiency, capacity management, financial stability and clinical effectiveness. "While these may seem like basic blocking and tackling capabilities, we are finding major opportunities — between 10-20 percent improvement — by helping medical groups standardize and streamline in these areas," he says in the briefing.

Focusing on those four fundamentals will help physician group practices keep operating costs under control while raising revenue.

2. Adjusting physician compensation. Due to healthcare reform, physician compensation in the group should be adjusted to incentivize improving clinical quality and lowering cost. "The fact is a sustainable partnership between hospitals and physicians has to work for both sides," says Mr. Ogonoski. He recommends balancing physician compensation between productivity and performance.

3. Taking on financial risk. Increasingly, physician groups are being held financially responsible for their patients' quality of care and outcomes. "Part of taking on more risk is getting a better understanding of the patient experience throughout the entire continuum of care," says Mr. Arnold. To ensure smooth transitions of care, physician groups need to utilize better communication channels such as technologically enabled patient registries. Groups also need to track and monitor patients with complex chronic diseases.

4. Aligning to move from volume to value. Hospitals and/or health systems need to properly align with their physician group practice as they move forward under reform. "Physicians are going to be a huge part of health systems' ability to transition from volume to value," says Mr. Ogonoski.

The briefing notes that many hospitals and health systems still have payment models that are incentivizing volume, not value. To move forward and have a successful physician practice, that needs to change. "One of the most important questions…integrated delivery system leaders need to ask themselves is, 'What are the goals I have for our practice and does my current complement of physicians and support systems enable me to reach those goals?'" Mr. Ogonoski says.

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