Physicians remain the biggest obstacle to building an integrated delivery system, but system management doesn't help much either.
In the third annual survey of integrated delivery systems, conducted for MODERN HEALTHCARE, 57% of healthcare system executives said aligning physicians is still the most trying part of putting together a system.
The bad news is that 26% of executives also said that getting a system's own management team on board is the second-biggest problem, and the situation only seems to be getting worse. Last year, only 17% of executives said reorienting management incentives was an issue.
"I think that managers have responsibility for running their own hospital (or) their own home health agency, and (they) are not compensated based on system performance," said Stephen Hatch, a partner at Arista Associates, the Northbrook, Ill.-based healthcare consulting firm that conducted the survey.
Hatch said tying executive compensation to system performance is one way to change this mentality.
Aligning physician economic interests with a system also helps improve integration.
The survey was sent to 300 chief executives of multihospital systems and asked about governance, levels of integration and market identity.
Sixty-one responses were received, giving the survey a 20% response rate.
Of the respondents, 7% were from national systems, 41% from regional multistate systems and 52% from single-state regional systems.
A majority of the systems-59%-were secular not-for-profit, while the remainder consisted of 28% Roman Catholic systems, 8% other religious, 2% for-profit, and 3% federal or municipal government.
The survey, though, comes with some caveats.
Making direct comparisons to last year's results is tricky, because the number of respondents differed (Sept. 1, 1997, p. 66). The total number of respondents last year was 72. Also, the number of respondents this year sometimes differs per question.
Like last year, the vast majority of executives-77%-strongly agree that physician integration is central to system success.
Wheaton (Ill.) Franciscan Services, one of the respondents willing to be identified, summed up the integration experience this way: "a long and tortuous journey that is worth the toil and difficulty."
Wheaton Franciscan Services, a $1.2 billion company, is the parent of more than 100 health, shelter and service organizations in Colorado, Illinois, Iowa and Wisconsin. It's sponsored by the Wheaton Franciscan Sisters. The system owns or is affiliated with 16 hospitals; four nursing homes; four home health agencies and 3,000 assisted- or low-income housing apartments.
Overwhelmingly, leverage in managed-care contracting was the top benefit of integrated delivery systems, according to the survey.
But getting physician integration in those systems isn't always easy. Physician stubbornness in resisting change and distrust remain major stumbling blocks to integration.
Physician inertia, or stubborn resistance to change, was cited by 71% of executives this year and 67% last year.
This year, 52% of executives said physician distrust is a problem, compared with 64% in 1997.
The physician integration models most in use are:
Management services organizations (84%)
Direct physician employment (72%)
Open physician-hospital organizations (67%)
While 29% of executives said direct physician employment is the most effective form of integration, 57% also pointed out it's the least profitable.
On the other hand, executives most frequently cited open PHOs as the most profitable form of integration, but 27% said they are the least effective.
Only 2% of executives said closed PHOs are the most effective way to go.
"PHOs were promoted as the Viagra of physician-hospital integration," said Gary Davis, healthcare attorney with Steel Hector & Davis in Miami. "But what it may have turned out to be is more like Halcyon."
The problem, Davis said, is that many PHOs have not been able to separate themselves from their hospitals, because they rely on either hospital financing or personnel.
Arista said the latest trend is toward integration models that emphasize physicians as partners, such as MSOs and jointly owned managed-care companies.
About 14% of executives said MSOs are the most effective model, and 15% said they are the most profitable.
The tabulations for the survey were done by Fairfax, Va.-based Decision Support, a research and consulting firm.