Webinar Provides Guidance for Hospitals Integrating Independent Physicians

On September 20, Chuck Peck, MD, FACP, president and CEO of Health Inventures, and Marshall Maran, senior vice president of Health Inventures, presented the webinar "Critical Guidance for Hospital Integration of Independent Physicians."

Mr. Maran said there are three main factors driving the integration of independent physicians in hospitals: demographics, including the increasing and aging U.S. population; healthcare reform, including both regulatory and technology mandates; and economic and financial circumstances, including the cost pressures of running a medical practice and decreasing reimbursements. The predominant method of integration is employment.  However, that is not the only option.

He discussed three of several alternatives to employing physicians for hospitals to integrate with physicians that wish to remain independent. "Each is viable," Mr. Maran said. "The key is making sure you can appropriately integrate each one of the options together to achieve the common goals of the organization."

1. Joint-venture management services organization. In this arrangement, the hospital would provide administrative back office functions to the physician practices through a third party. The third party would serve as a "relationship buffer" to ease relations between the hospital and practice, according to Mr. Maran. The benefits of this model are that it meets the immediate need independent physicians have to stabilize their practice and acts as a precursor to multispecialty relationships through a common platform.

2. Captive professional corporation. In a captive professional corporation, the hospital provides a commercial loan to fund a new, independent medical group that would in turn offer the hospital one or a combination of the following: a seat on the board, practice management through an MSO or technology services management. The new group would repay the hospital over time. This model allows physicians to retain their autonomy and independence and the hospital to implement an electronic health record or MSO strategy.

3. Joint-venture services organization.
This option involves a more comprehensive relationship for outpatient and inpatient hospital-based physician practice services. The joint venture would include both clinical and administration management. The hospital and physicians could arrange a co-management agreement for clinical services and could bring in a third party to act as an MSO for administrative services. This arrangement is beneficial because it addresses both clinical and financial needs of the organizations and forms a building block of an accountable care organization.

Dr. Peck then offered 10 key elements of a successful integration that applies to any alignment model.

1. Know what you want and why. Dr. Peck says partnering with independent physicians as a defensive move is a strategy that will lead to failed integration. Instead, an offensive, clearly defined strategy is needed.

2. Communication. Regular communication with physicians is critical for the physicians and hospitals to understand each other and achieve common goals.

3. Pee wee rules: Everyone plays. Dr. Peck suggests involving physicians in all aspects of decision-making, such as by appointing physicians in leadership positions, to ensure physicians have a voice in strategic plans.

4. Adhere to the five musts. Physician services must be operationally competent, honest, transparent, factual and deliver results, according to Dr. Peck. "Accomplish these musts and you will earn the trust of the physicians with whom you're collaborating," he says.

5. Maintain aligned incentives. Hospital leaders need to understand physicians' motivations in the relationship, in particular that their needs go beyond compensation. For example, factors such as the accessibility of patients and the office staff's relationship with patients are also important, Dr. Peck says.

6. Get the basics right. Physician practices cannot be treated as another hospital department, Dr. Peck says. The hospital must go beyond focusing on productivity and look at patient experience, for example, when managing the practice.

7. Standardization matters. Certain processes, such as information systems, staff compensation and financial and performance reporting need to be standardized to ensure efficiency.

8. Understand the price of equity. Physicians typically have more experience with collegial relationships than collaborative ones, Dr. Peck says. Whereas collegiality suggests a relationship based on professional background, collaboration requires a common vision, mission and business purpose.

9. Culture trumps strategy every time. Physicians need to understand how managers think and vice versa, Dr. Peck says. "The tendency is to get focused on the deal rather than on the relationships between the parties," he says. "But at the end of the day, the behavioral and cultural issues of why you want to do this will make this a success or failure," he says. He suggests sponsoring physicians in managerial courses or meetings to help them understand the reason behind managers' business decisions.

10. Don't make a "mess." While every integration model requires organizational, constituent and business model alignment, the hospital and physician practice must always keep the patient at the center of every decision, Dr. Peck says.

Download the webinar presentation by clicking here (pdf).

View the webinar by clicking here (wmv). We suggest you download the video to your computer before viewing to ensure better quality. If you have problems viewing the video, which is in Windows Media Video format, you can use a program like VLC media player, free for download here.

Note: View archived webinars by clicking here.

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