Every healthcare administrator in the country has on their agenda some issue, task or action related to physicians and hospitals coming together to create some form of integrated provider network.
Many are approaching integration as a defensive measure, with hopes that they'll be able to compete with health plans in a managed-care environment. Others are approaching integration proactively as a step toward the creation of an accountable health plan.
Most attention and effort currently is being focused on forming relationships with primary-care physicians, and competition for linking with primary-care physician groups is quite intense, with hospitals, specialty medical groups and insurers vying for their affection.
Hospitals must realize that physicians have more options available to them than simply integrating with a hospital. In fact, many physician groups indicate they would prefer integration with other physicians or even insurers.
To gain an advantage, hospitals must look at the creation of integrated provider networks through the eyes of physicians, especially to see whether a proposed network will fit the needs that physicians perceive that they have.
Toward this end, there are three primary sets of issues emerging in these early stages of physician-hospital integration.
Strategy.Physicians are particularly interested in the strategy that the hospital organization plans to use in their efforts to remain or become a winner in a managed-care environment.
Physicians aren't willing to integrate with hospitals merely because of previous relationships. They're keenly aware that managed-care payers will narrow their provider networks considerably, meaning there will be winners and losers. Understandably, physicians are quite interested in aligning their interests only with those networks that will be winners.
Many hospitals' strategies aren't explicit enough in detailing how they'll increase their effectiveness in a managed-care environment-they're too global and don't address issues of utilization, control, outcomes measurement, cost reductions or issues of integration involving physicians.
Another strategy that's not developed enough to suit physicians is how hospitals will develop a broader physician network. Of great interest to physicians are answers to questions about how many primary-care physicians and how many and what types of specialists will be included in the network.
Structure.Also of enormous interest to physicians is how physicians and hospitals will be linked together in a network. Physicians' role in the governance, management and the finances of the network are significant factors as they consider whether or not they want to integrate with hospitals.
In the early and transitional stages of integration, physicians' practices and hospitals aren't merged. As a result, issues of structure only involve determining managed-care contract decisions, pricing of services and the relationship with physicians who are outside the organization.
In models involving tighter integration, issues of a separate physicians' organization within the IPN are of critical importance to physicians. The relationship of the physicians' organization to the overall IPN is important. The governance and management of the physician organization and the physicians' representation in overall governance and management of the system are also issues that physicians deem to be important.
Although most hospitals are willing to make the decisions regarding structure in the early integration stages, many aren't prepared to deal with the issues related to structure in a sustainable model of physician-hospital integration.
Physician compensation.With increasing pressure being placed on physicians' revenues and incomes by government and managed-care plans, physicians aren't willing to enter permanent integration models with a hospital until there's a well-thought-out compensation and benefits plan for physicians.
Few hospitals have much experience or knowledge of the marketplace to compensate physicians. Further, most physicians aren't willing to have hospital management personnel design or carry out a physician compensation plan.
For primary-care physicians, the issues of compensation and long-term security are closely linked. Employment agreements, base compensation guarantees, incentive compensation formulas and tax-sheltered benefits plans are elements of a compensation plan that needs careful design, significant involvement from physicians and clear communication in order for physicians to be interested in an integration plan.
Although survey data on physician compensation and benefits are increasingly available, such information may not be accurate enough in describing a community or region for physicians to feel confident that it reflects their situations. Careful market research, individual interviews with each physician and the ability to demonstrate how a compensation plan can evolve as patterns of payment change are important factors in gaining physician acceptance of a compensation plan.
Benefits planning for physicians is equally complex. Market research currently is showing that the three most highly desired benefits in a new plan are retirement benefits, long-term professional disability benefits and survivor benefits for the physician's family.
The ability to provide these benefits through a tax-sheltered design will go a long way toward determining physicians' interest in an integration plan.