The Do's and Don'ts of Hospital-Physician Integration

Javon Bea, president and CEO of Janesville, Wis.-based Mercy Health System, and two experts from Towers Watson shared their thoughts on successful hospital-physician partnerships at the Becker's Hospital Review Annual CEO Roundtable on Nov. 14 in Chicago.

Mr. Bea has been with Mercy since 1989, when it was a one-facility system with no employed physicians. Today, Mercy has 69 facilities, including three hospitals, and more than 400 "W2 physician partners," as Mr. Bea calls them.

Despite the system's expansion, Mr. Bea said clinical integration is not merely adding on more hospitals. "Horizontal hospital integration is not healthcare integration," he said. "You can have 12 big-box hospitals or 50 big-box hospitals. It doesn't matter. That's not what I call integration." Mr. Bea said size may only delay the inevitable. General Motors, for example, was what many people would consider a large organization, and it still faced some serious problems back in 2009 when it received a government bailout.

Mr. Bea said the Patient Protection and Affordable Care Act has been an absolute "game-changer" for clinical integration. Before 2010, many providers viewed clinical integration as voluntary. Now it's unavoidable, but he said some leaders are still resisting this even though the industry is well into reform.

"As I talk to my CEO colleagues, I see a lot of them in the mindset of, 'Maybe this will go away. Maybe I won't have to go through a fundamental conversion,'" said Mr. Bea. "That's their strategy. If they're close enough to where they think they can retire, they'll hold off."

Sixty percent of Mercy's physicians are specialists, whereas the other 40 percent are primary care physicians. Under the professional service agreements Mercy has with its physicians, the system bases 94 percent of physician compensation on volume and 6 percent on quality. "The PSA is the ultimate piece of what makes the model work," said Mr. Bea. "The docs feel in control, and the hospital is legally compliant."

The PSA arrangement also doesn't bar physicians in the same office or specialty from
pooling their incomes and compensating one another based on their own methodology.

Mr. Bea explained some of the functions at Mercy that have fostered physician engagement and satisfaction, such as the system's 24-hour-rule: Whenever a problem is raised, it is solved or addressed within a day.

Experts from Towers Watson — Nicole Melton, senior consultant, and Rick Sherwood, director — shared their insight on a healthy physician culture in a hospital, as well. "When we look back on what has made some physician integration successful or not, it's really about focusing on a cultural shift," said Mr. Sherwood.

Ms. Melton expanded on the cultural side of the arrangement at Mercy. She said there are four things hospital leaders should focus on to create and maintain a healthy physician-hospital relationship.

1. Expectations. This could also be described as "perceptions and misperceptions." Are physicians and hospital leaders coming at problems from the same understanding of how they define "success"? Have they clearly defined and identified what they expect from one another?

2. Themes. What are some of the themes that might affect integration efforts? These might include mistrust, varying definitions of "success," and a focus on business versus patient care.

3. Lexicon. How does the organization define subjective terms like "fast" when it comes to executing strategy? What does "priority" mean when used to describe a task? Defining these terms and ensuring they are used with the same understanding can prevent frustration, particularly in instances when physicians may feel as though tasks are not completed as quickly as they expected.

4. Timing. What do we need to do and by when? Leaders and physicians need to work together to create an expected pace of change.

More Articles on Physician Integration:

4 Phases of Successful Hospital-Physician Integration
3 Stages of Hospital and Physician Practice Integration
5 Steps to Successful Hospital-Physician Integration

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