6 Essential Strategies for Physician Integration

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Integrated physician arrangements, aligning clinical and financial interests, will be critical to the success of hospitals and health systems in the future as payment methodologies change, says Mark Grube, managing director at Kaufman Hall in Skokie, Ill. Here he outlines six essential strategies for physician integration.

1. Develop a physician-hospital alignment plan. Such a plan should support the hospital's strategic goals. The hospital needs to prepare for a new era driven by changes in reimbursements. "Reimbursements are moving from volume to value, where value is high quality and cost effectiveness," Mr. Grube says. "To do this, you need the active participation of physicians."

2. Ensure sufficient capital for physician initiatives.
Buying physicians practices can be a very expensive strategy, even though hospitals are no longer buying the goodwill of a practice. In addition to buying the practice, hospitals are also assuming leases of the physicians' offices. Employment agreements tend to last three years, meaning the hospital will continue losing money if the physician is not efficient. "The hospital needs to ensure there are sufficient resources to meet the needs of the community," Mr. Grube says.

3. Use a disciplined approach to practice acquisitions. Since hospitals now typically recruit for employment, rather than trying to place an independent physician in the community, they need to make sure they won't lose money. "Do your due diligence when buying an existing practice," Mr. Grube says. The hospital should undertake a detailed study of the practice, looking at revenue trends, how it is managed, the quality of the staff and the IT systems it uses. "You need to understand how these factors ill impact your organization," he says.

4. Structure effective physician compensation programs. Hospitals are moving away from salary-based compensation. The next step is providing bonus arrangements for compliance with defined protocols and working on quality, cost reduction and "good citizen" points.

5. Create effective clinical integration programs. In such programs, both the hospital and a group of physicians jointly contract with a health plan and agree to incentives that involve achieving high quality and reducing costs. "These agreements can be a stepping stone to becoming an ACO," Mr. Grube says. The physicians can be employed or in independent practices aligned with the hospital through a physician-hospital organization.   

6. Manage employed physicians to achieve goals.
"Just bringing physicians into the employment model won't accomplish anything," Mr. Grube says. The practices can be brought together under one structure or kept separate, but the hospital needs to implement strategies for efficiency, such as using one answering service or one IT system and creating a common set of goals.  

Learn more about Kaufman Hall.

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