The ties that bind: The role of high-performing physician networks

In the transition to a value-based reimbursement environment, a high-performing physician network can help hospitals and health systems remain relevant and achieve scale in an industry characterized by consolidation.

A group of healthcare executives discussed the need for and development of high-performing physician networks at a roundtable sponsored by athenahealth at the Becker's Hospital Review 7th Annual Meeting in Chicago.

"The thing that binds us and might be the thing that's most strategically relevant over the course of the next five to 10 years as healthcare transforms under our feet is this notion of the high-performing physician network," said Paul Merrild, senior vice president of enterprise solutions at athenahealth, at the roundtable. "The thing that brings us all together is this idea that I need to have better engagement with patients, better control of what goes on in the community, and whether with employed or affiliated [physicians], I need better help as it relates to structuring contracts in a way that's beneficial for my members, my providers and for my facilities."

Executives participated in real-time polls throughout the roundtable, One of the questions asked of executives was why a high-performing network matters most to their organizations. Asked to select one answer, the majority of executives (55 percent) said it was to prepare for the move to risk- or value-based reimbursements. Twenty-five percent said to lower costs and/or achieve better clinical quality, and 10 percent said such networks would help prepare for the shift from inpatient to outpatient services.

The COO of a health system-affiliated physician network in the northeast said there is tension between these forward-looking priorities and what healthcare needs to deliver today.

"Regardless of whether we get to a value-based model or risk sharing, lower cost and better quality are demanded by consumers," she said. "At the end of the day, our patients are saying, 'I can't afford to pay three times as much to come to your hospital for an MRI, and I expect quality and high service.' Although [value-based reimbursement] is an enabler of potential in the future, our patients are saying they want that now."

The exact definition of a high-performing physician network varies from organization to organization. Fifty-four percent of executives at the roundtable said they define their total provider network as also including the affiliated network. Twenty-one percent said they define it as their employed provider network, and another 21 percent said they define it as all providers in their community, including competitors.

A senior vice president at a 2,500-bed health system in the south said his organization is transitioning from defining its physician network as solely employed physicians to one that includes the affiliated network. He said the health system is undergoing network adequacy testing and identifying gaps in care coverage.

"If we're going to make ourselves attractive to payers and other folks and deliver elastic networks to cover service lines, we have got to engage with these independent physicians," the senior vice president said. "Quite frankly, they're comfortable being independent, but we need them in our clinically integrated networks."

Fellow executives appeared to agree with his sentiment, as 58 percent said the rate at which they employ physicians will likely increase, while 17 percent said it would decrease. (The rest said the rate would either stay the same or that they don't employ physicians.)

Among those who said his organization plans to reduce the rate at which it employs physicians was a vice president and CIO of an indepedent community hospital in Virginia. As an independent community hospital, the CIO said employing physicians is a last resort, partly because employment is a financial drain on the hospital. Instead, the hospital tries to provide support mechanisms to physicians while enabling them to maintain their independence.

Perhaps what matters less is the specifics about the organization and contracts with physician networks and what matters more is that hospitals are forging these partnerships at all.

"The manner in which we partner with physicians in the future is less relevant," said the senior vice president from the southern health system. The health system offers physicians other forms of partnerships, like clinically integrated networks and value-based purchasing. "We can't afford to employ every physician. There are adjacent markets where physicians and their patients are very important to us, but the ROI and care cost of practice and incremental market share you might pick up just doesn't work anymore. We've got to have different models to partner and affiliate with physicians and let the physicians choose which ones make the most sense for them."

Similarly, a Midwestern health system with 13 hospitals and nearly 2,000 beds utilizes different types of partnerships, which have so far been successful in supporting physicians' independence while simultaneously fostering integration. A vice president here said the health system employs physicians, participates in a clinically integrated network that uses data access and exchange to drive quality improvements, and holds contracts for physician staffing arrangements. "We think that quality and focus on cost will allow us to be successful in fee-for-service today and transition over," he said.

Despite these challenges in trying to navigate a constantly evolving environment, healthcare executives are optimistic about their ability to assess the success of developing a high-performing physician network, and most of them (63 percent) said the most important measure that indicates a high-performing physician network is a growth in market share.

When asked to assess how strongly they agree that their organization has well-defined metrics and benchmarks for determining the success of their physician network, 65 percent of executives said they moderately agree, and 19 percent said they strongly agree, which Mr. Merrild said is a significant first obstacle to overcome. These executives are up to the challenge.

"This is a bullish group," Mr. Merrild said in response to the results. "Knowing what success looks like and actually knowing whether that's good or bad, I find it to be one of the more complicated parts of medicine. We're a $3 trillion industry that's made up of 10,000 different subscale industries, and knowing success within that is a fascinating thing."

More articles on physician networks:

The new healthcare landscape: Integration, standardization and patient engagement 
7 steps for building a clinically integrated network 
5 ways to improve physician engagement 

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