CEOs Share Strategies to Employ, Align Physicians

At the Becker's Hospital Review Annual Meeting in Chicago on May 9, a panel of healthcare executives and a valuation expert shared their observations about physician alignment and engagement strategies.

The panel, moderated by Becker's Editor in Chief Lindsey Dunn, included Randy Oostra, president and CEO of ProMedica Health System based in Toledo, Ohio; Sally Nelson, CEO of Huntsville (Texas) Memorial Hospital; Todd Mello, partner and founder of valuation firm HealthCare Appraisers; and Brian Silverstein, MD, president of HC Wisdom.

Recruitment and employment

Ms. Nelson said her rural community hospital located outside of Houston draws from a pool of talented physicians trained at the prestigious Baylor and University of Texas medical schools, and has doubled its number of employed physicians in recent years despite seemingly lower medical school enrollment.

However, that slow flow of new physicians is likely to require hospitals to use more advanced practitioners, she said. "Boy there's just a huge pushback in our area, especially pushing up nurse practitioners, but I think that's going to have to happen because clinics are putting them in their own offices now," she said.

Panelists agreed primary physicians were priority number one in their employment strategy. ProMedica began its physician hiring in 1993, leading off its first 100 or so employed physicians from primary care and adding specialists until later, said Mr. Oostra. It has since grown its ranks of employed physicians to 400 out of its roughly 2,000 affiliated physicians.  

Compensation structures

Dr. Silverstein said earlier compensation structures that would share cost savings with physicians didn't tend to trickle down to primary care physicians, where the bulk of the cost-saving potential lies.  Shared savings incentives should be used to encourage changed practices, making sure to emphasize primary physicians. "Your compensation plan is your culture," he said. "How are you paying me? That's what I'm going to do at the end of the day."

RVU-based compensation models remain the most popular, but Mr. Oostra said ProMedica has supplemented its compensation agreements with quality incentive bonuses.

Mr. Mello says he has seen "synthetic employment" agreements with physician groups, which act as a "toe-in-the-water" approach toward traditional employment without the long-term commitment. In such arrangements, payments from the hospital to the physician group may go into a pool that the group's managers can distribute among the physicians as they see fit. That allows the group to retain autonomy and internal pay structures while they explore the potential benefits of aligning with a hospital.


Ms. Nelson and Mr. Oostra both said they've found sharing administrative responsibilities with physician staff has been a strong motivator in alignment and retention. ProMedica includes seven physicians on its board that help govern the system with adequate input from physicians.

"The doctors are the ones who decide where the patients go and how much they cost," Mr. Oostra said. "Putting them in those operational roles, that does more for leveraging them than just employing them. Give them a voice at the table, they want to have a say."

More Articles on Physician Alignment:

6 Biggest Reasons Hospital Strategy Will Fail
From Aggregation to Assimilation: How to Improve Employed Physician Group Performance
Best Practices for Designing ACO Financial Systems

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