The independent physician office is becoming a rarity as small practices consolidate or join health systems. More than half of all physicians are now employed by a health system or hospital, and between one-third and two-thirds of independent practices are expected to consolidate within the next three years, according to Deloitte's 2016 Survey of US Physicians. Shrinking revenues, challenging regulatory requirements, and the emergence of complex value-based contracts are driving much of this trend.
To gain insight into how health systems and medical groups work with their physicians, the Deloitte Center for Health Solutions interviewed 28 executives from health systems and large physician groups. Our respondents agreed that to succeed in a value-based environment, health systems and physicians should align their strategies for delivering superior outcomes, reducing costs, and helping ensure positive patient experiences.
The following six strategies can serve as the framework for a successful health system playbook:
- Know your partners: To ensure that mutual goals can be achieved, it is important that physicians and health systems evaluate each other before entering into any sort of business arrangement. Due diligence should go beyond background and credentialing checks on physicians. Figuring out whether a potential partner will be a cultural fit—through interviews with physicians and their staff—is another step to consider. Health system executives should also recognize how work preferences can vary by age and gender. Older physicians, for example, might want their own office, while younger ones are more willing to share space. The health system also should outline its expectations so that both sides understand what is expected and what can be gained through the relationship.
- Put the physicians in charge: Health system executives warn that it can be a mistake to treat physicians as employees or contractors. They should feel that they are equal partners in the relationship with a voice and the ability to make decisions. Open communication and engagement between the health system and its physicians is critical. Some health systems use town-hall and department meetings to help engage physicians. The president of a health system-affiliated provider network told us, “If you don't have the foresight to bring in these docs and give them a voice, and anticipate that they will see things differently, then you're missing part of the puzzle.”
- Support data-driven decisions: While most health systems are migrating to a value-based delivery system, medical groups and physicians might not have access to essential information. Arming physicians with data can help them develop a strategy to improve care quality and cost. Health systems also should emphasize the importance of clinical documentation. Our study respondents agree that physicians tend to be receptive to training and coaching on clinical documentation—particularly if the potential impact on patient care and payment are emphasized.
- Make it worth their while: Just about every executive we interviewed said that incentives are critical for getting physicians to support value-based initiatives. Aligning incentives is important regardless of specialty and whether the physician is directly employed or affiliated with the health system. As the health care industry transitions away from a fee-for-service reimbursement model, compensation models and bonus structures should change, too. Establishing agreed-upon metrics that define success can be essential for new bonus structures to work.
- Be transparent: Data can be a powerful tool when trying to influence physician behavior. Peer-to-peer comparisons, for example, can push physicians to improve by playing to their natural desire to excel. Performance metrics should appeal to a physician's intellect and pride by spelling out financial and/or operational impacts on the organization or department in terms of revenue, cost savings, denied claims, or performance on quality measures.
- Provide the tools for success: Health system leaders should work with their physicians to design new workflows that keep pace with population health and evolving care models. Some health systems offer practice management services to help their partner physician practices operate their businesses more efficiently. A health system might also support partner physicians by giving them access to additional staff or technology resources. Some executives told us they help independent physicians meet government reporting requirements.
Learn more in Six physician alignment strategies for health systems.
