Key thoughts:
• Open-shop medical centers rely on both employed and private physicians to drive clinical volume
• Challenges to this model arise when hospitals build larger physician groups, which threatens the livelihood of private practices
• Ultimately, a cohesive and connected physician community is more important than who pays them when it comes to patient outcomes and the financial bottom line
A delicate balance exists in the relationships between employed physician groups, private practices, and the medical center. Hospitals need adequate clinical volume to support sub-specialty services that deliver best practice, which helps differentiate them in the increasingly complex healthcare market. The relatively recent creation of large hospital-employed physician groups, outside of academics, Kaiser and some others, is a form of vertical integration. One advantage for the hospital is that there is a consistent volume not subject to private practices that could chose to bring their patients elsewhere. Brand recognition, controlling or coordinating patient care, and offering integrated insurance products are others. But these groups fuel competition with those private physicians, and threaten their livelihood.
The following points begin to illustrate why and how these relationships in the open-shop environment are important to patient outcomes and profitability:
• Most employed physician groups are revenue neutral or require investment from hospitals, since physicians need to be compensated competitively through their professional service collections. Otherwise, disparity in pay would lead to a migration to the private side.
• Real revenue comes from ancillary services, referrals to other physicians building brand identity and loyalty, efficient hospitalizations, and enhancing the reputation of the medical center.
• Physician relationships are far less stressed when the large employed group has a different mission than the private physicians. For example, private practices may offer more routine care while academic physicians would be responsible for more tertiary high-risk disease. Or they may offer insurance or HMO products.
• Engaging private practice physicians allows for a more secure referral line to the hospital, and facilitates connectivity so that patients can have more integrated and inter-professional care.
• Steps towards building unity among physicians working side-by-side from different groups include 1) an emphasis on disease-specific outcomes, in addition to the usual hospital-based metrics, 2) adequate private practice representation on hospital committees, 3) meaningful joint service-line meetings to include best practice standards, 4) interdisciplinary case conferences like tumor boards to enhance inter-professional communication and care, 5) a shared electronic health record for seamless access to objective testing and specialty treatment plans, 6) common space in a medical office building to break down the private/employed silos, and 7) exploring common platforms for a webstie, appointments, billing, collections, and human resources products that do not violate Stark laws.
Aligning goals and incentives is critical to a successful triad between hospitals, employed physicians, and private practices. When the question of trust is at stake, health centers need to use “progressive engagement” at embracing their broader physician communities that will also build brand loyalty from physicians themselves. Securing a cohesive and connected physician community shifts the focus from competition to our shared goal of improved patient care and outcomes.
This column is part of a series devoted to clarifying and enhancing the physician-health system relationship. Dr. Ken Altman is Chief of Otolaryngology at Baylor St. Luke’s Medical Center in Houston, TX. He is also Secretary/Treasurer of the American Academy of Otolaryngology – HNS, and past-President of the American Laryngological Association.