Channeling their clinical, financial and operational knowledge into system leadership allows doctors to step into the spotlightHard-hit by restrictions of every aspect of medical practice, physicians are searching for a road map to help them take charge of the decisions that are upending their lives.
Proponents of a "take back the streets" approach have instituted a variety of physician-directed initiatives designed to retain physician autonomy and preserve the sacrosanct doctor-patient relationship. Some are pooling physicians and capital to create physician-owned health plans, risky ventures that require clinicians to become overnight actuaries, underwriters and marketers (see September, page 3). Others are assuming leadership or governance of delivery systems that provide integrated clinic and hospital care. Classic pioneers of the latter vision include the Kaiser Permanente health system and the Mayo Clinic.
Such physician-led integrated models put clinical, operational and financial decisions in the hands of physicians who seek to make the best choices within the framework of today's harsh financial realities. While a few such scattered models have existed for years, others are emerging in response to the vastly changed healthcare landscape of the 1990s. They are a direct result of physicians' desire to shape healthcare delivery instead of falling victim to it.
In 1998, an estimated 595 integrated delivery systems existed in the United States, according to data gathered by SMG Marketing Group, a Chicago-based research organization. Of these, 266 were comprised of an acute-care hospital, a physician organization and at least one other delivery component, and they administered at least one systemwide managed-care contract.
Although hospitals have been instrumental in starting most integrated systems, in 14.7% of the cases physicians have initiated integrated systems on their own or as part of a group of founders, according to the SMG data.
Still, getting physicians to assume leadership roles and actively participate in managerial or administrative decisions that will affect their patients' care isn't easy. Most physician executives say too few are stepping up to the plate, despite the growing restrictions on the autonomy of medical practitioners.
"The one thing physicians have to learn about the future is that the old world is dead and gone like Jane Austen's world," says Uwe Reinhardt, professor of economics at Princeton University who has published extensively on healthcare issues.
"Forget what you remember and all the great things that you did in 1981."
What you can dream of, Reinhardt says, is physicians working in groups in a collegial setting to manage healthcare.
A 'feel' thing
While managing healthcare never has been more complex, virtually every physician will agree that the best person for the job is a doctor.
"There's a 'feel' thing that we can present that's an added bonus," says Terry Housinger, M.D., chief of staff at Deaconess Billings Clinic in Billings, Mont., the only major multispecialty integrated health system in the northern Rocky Mountain region. "It's like having a baseball player becoming a sports announcer vs. somebody else who perhaps can call the plays, but not with the same feeling.
We know what our patients are telling us; we don't have to have a survey to find out. We know what our nurses are saying and don't have to rely on their bosses to tell us how they feel. When you're a physician, you hear everything and you have a better sense of things."
Like-minded physicians began the movement toward physician empowerment as a direct result of changes in the late '80s that challenged the total economic and clinical power of medical practitioners, says Reinhardt.
"Those two powers intertwined in the supply-side driven health system where whatever resources that were in place were used, whatever physicians wanted to do was done, pretty much whatever they wanted to charge was OK, and the rest of society paid the bills." But the golden years were painted black in the late '80s, he says, when insurance premiums rose 20% annually while inflation rose by 3%, and the Medicare budget grew by 11% every year although the number of elderly grew only by 1% every year.
Responding to the changes were occurring around them, Deaconess Billings was formed in 1993 through the merger of Deaconess Hospital and the Billings (Mont.) Clinic. The physician-led regional medical system serves primarily the 500,000 residents of central and eastern Montana, northern Wyoming and the western Dakotas, although its reach extends into Denver and Minneapolis. It includes 150 physicians, a 272-bed hospital, eight clinics, a research institute and a managed-care health plan. The system's net revenues for fiscal year 1999, which ended June 30, were reported at approximately $180 million, with a total margin of approximately 6.5% from operating and nonoperating income.
Physician leadership was a non-negotiable clause of the Deaconess and Billings merger agreement, which established a not-for-profit medical foundation model in which a multispecialty physician group practice set clinical priorities in the facilities. Organizational leadership is created through a partnering of physicians and business managers to create a physician-led, professionally managed organization. But whereas a similar model evolved at the Mayo Clinic over years, the transition for Deaconess Billings was on a 12-month timetable.
Creating physician-led structures required a fusion of hospital culture with group practice culture-not an automatic transition, says Doug Carr, M.D., a general internist and staff physician who served on the Deaconess Billings Operating Council from 1994 to 1996. Those were the years following the merger when the system began to weigh how best to create operational structures that would ensure collaboration between physicians and administrators.
"The [Deaconess Billings] board was distrustful of physicians taking an active role in making decisions they felt were more administrative, and there was some distress on both sides. But over time, we found we really had the same vision of improved patient treatment and service to the community," Carr says.
Gradually trust started developing on all levels, from the clerical and nursing staffs on up to the Board of Directors, he says. "Everyone accepts that we (doctors) need to be at the table, and more than that, to take a leadership role."
Today, physicians are well represented throughout the system: the 10-member Board of Directors includes two physicians, and the system's 10-member Operating Council consists of five physicians who are elected by physician peers every two years. The Operating Council meets weekly with the senior administrative team and has the final word on virtually all decisions.
A tag-team approach
At first blush, the tag-team approach pairing physicians with administrators would appear to combine the best of two skill sets-clinical expertise and business acumen. "It ensures that you have the broadest base of knowledge brought to bear on any problem or area," says Steven Pierdon, M.D., department chief at the north-central region of the Penn State Geisinger Health System, which uses a similar team model.
The system, which serves central and northeastern Pennsylvania, consists of a multispecialty group practice with approximately 1,000 employed physicians, a managed-care company with more than 251,000 enrollees, more than 1,300 licensed hospital and rehabilitation beds, and 92 clinics. PSGHS was formed from the 1997 merger of Penn State's Milton S. Hershey Medical Center and the Geisinger Health System.
Unlike most of today's healthcare systems that grew up with a hospital focus, Geisinger's history and tradition were that of a physician-led organization centered around a multispecialty group practice. The merger created the PSGHS Foundation, which serves as the corporate parent and establishes the system's policies, directs strategic initiatives, oversees operations and financial matters, and raises funds for charitable activities.
Throughout the system, administrators partner with a physician to create a two-person team responsible for making decisions. These administrator-doctor teams manage the health system at virtually every level-at the senior executive level, department level and even within the larger clinics themselves. Decisions are made jointly, and one partner must be capable of speaking for the other.
This collaboration requires excellent communication between the two, and a working relationship closer than most. But like any marriage, that of physician and administrator must overcome egos, mistrust, resentment and territoriality.
"The [team] model requires a great deal of personal and professional comfort," says Bruce Hamory, M.D., chief medical officer at Penn State Geisinger. What's more, in his system as in all other physician-led healthcare delivery efforts, physicians are continuously called upon to make difficult decisions about such things as scheduling routines, practice patterns, and information systems--and then to stand by those choices.
Hammering it out
Doing so may be easier in a group practice physician-led model than in models where physicians are not interdependent on a daily basis, such as in independent practice associations. "The essence of group practice is to rely on one another and support one another," Hamory says. He contends this is one reason Penn State Geisinger has succeeded as a physician-led system when others have failed.
The system posted net revenue of $1.09 billion for the fiscal year ending 1998 and surplus of $12.5 million. Its HMO has approximately 258,000 enrollees.
When a group of independent practitioners comes together to create a health system in response to an outside force, Hamory says it is much more difficult to build consensus among participants who are used to being autonomous and competitive. The laborious process can prevent physician-led health systems from taking advantage of windows of opportunity because agreement is so hard to come by.
"One of the criticisms of a model like this is that consensus-making can take time, and in an industry that is changing very rapidly, can you be nimble and flexible and make decisions quickly?" asks Deaconess Billings CEO Nicholas Wolter. "We are constantly trying to balance that, but having a commitment from the critical mass of physicians makes all the difference in the world in your ability to execute."
Thomas Lee, M.D., medical director for Partners Community HealthCare in Boston, says the key to his organization is that the people making decisions have clinical expertise. "A routine thing to happen at an executive committee meeting is for someone to say, 'What will this do for patient care, is it going to make it better? If not, give me a reason why we should do it,' " a focus that comes straight from the top of the organization, Lee says.
The Partners network consists of 950 primary-care physicians and 3,000 specialists who signed on to do risk contracting through Partners HealthCare System, a rapidly developing, not-for-profit integrated healthcare delivery system in the Boston area.
The system, led by Sam Thier, M.D., includes Brigham and Women's Hospital, Massachusetts General Hospital, North Shore Medical Center, four additional regional hospitals and the Dana-Farber Cancer Institute.
At the senior management level, the Partners HealthCare System Executive Committee has 30 members, one-third of whom are physicians. Every board throughout the system has a mandate to maintain at least two physician members, although many have more.
Working hard at consensus-building has paid off in Partners' ability to respond
to payers with a single voice--although it took a little while for unity to take form, Lee says.
That voice packed quite a wallop in September when the Partners network refused to participate in Blue Cross and Blue Shield of Massachusetts' newest product, Access Blue, offering members the ability to self-refer to specialists within the network. The Partners decision clearly caught the Blues by surprise, as Access Blue ads reportedly had suggested subscribers could get care from Partners physicians.
While neither Partners nor Blue Cross executives would comment on the nature of the dispute, building consensus among the network's primary-care physicians and specialists to take a united stand on the issue likely was difficult. Lee would say only that physicians had a chance to have their voice heard.
The issue to be resolved is to give physicians a voice but also expose them to the concerns and perspectives to the overall challenges of the healthcare marketplace, says Bill Winkenwerder, M.D., executive vice president of Blue Cross and Blue Shield of Massachusetts. "In order to be very successful in leading an organization, one has to be concerned about both the financial issues
and doctor-patient issues."
Getting physicians involved in organizational decisions should give them a keener understanding of the industry's challenges, but even in a physician-led system many do not want to involve themselves in the administrative work, says Bruce Feldman, M.D., a Partners medical director.
"Some physicians find it (administrative work) interesting and intriguing, but most of them find it to be an annoyance. I personally feel . . . if you want to do it right you should do it yourself."
Doing it "right" requires a significant amount of skill-building, suggests Deaconess Billings' Terry Housinger. "We have made a strong effort to advance our business skills. As everything has gotten harder, we have decided to work harder at it."
At Deaconess, physicians are offered courses on-site on business leadership, Housinger says; as many as 50 physicians attend each daylong course.
Specialized groups exist for training physicians in business skills. For example, the American College of Physician Executives has seen its membership swell to 13,000 members today from 1,747 in 1985. ACPE offers courses covering a wide range of issues, such as Managing Change and Innovation in Medical Organizations, Health Care Finance and Managerial Accounting, and Ethical Challenges for Physician Executives.
Although ACPE's membership has made a great leap in the past 15 years, at 13,000 that number is only a fraction of the estimated 650,000 physicians practicing within healthcare systems. Those physicians who choose not to train in business strategies or assume leadership roles may be already overburdened with clinical responsibilities. Some decry the lack of financial compensation for time spent on administrative tasks. Yet their reticence comes at a high cost both to themselves and to their patients, suggests Raymond Nungesser, M.D., a family physician within the Penn State Geisinger Health System.
"There's an art and a science to practicing clinical medicine but also an art and science to managing medicine," Nungesser says. "You can learn how to manage medicine, but there's still an art that the MBAs will never get."
Partners' Lee agrees: "It's important for physicians at every level to show leadership and not just be pawns in the game."