Focus on Employed Physicians, Not Hospitals, to Succeed
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April 28, 2020 12:16 PM

Focus on Employed Physicians, Not Hospitals, to Succeed

David W. Miller, Founding Partner at HSG
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    Driven by changing demands of the market, the core focus of healthcare leaders must evolve. Managing episodic patient care delivery, with a focus on hospital operations, will decline in importance. Your team’s ability to work with a tightly aligned employed physician network, to manage and rationalize care across the continuum, will grow in importance.  

    Two trends are driving this reality: the growth in value-based payments and the growth in hospital employment of physicians, particularly in primary care. The percentage of payments tied to value-based incentives grew from 23% in 2015 to 34% in 2017. CMS has a goal to hit 50% by 2020. Healthcare executives clearly recognize this trend, with a 2018 survey by Lumeris documenting that 72% of executives consider planning for the transition to risk-based contracting to be a high priority.  

    At the same time, hospital employment of physicians continues to grow, approaching 50% of the physician market nationwide. The intersection of these two trends compels health systems to develop a strong employed physician network that can focus on delivering predictable outcomes across the continuum, whether cost, quality, or experience related.  

    While clinically integrated networks can be useful, and provide a forum for engaging private practitioners, they represent a higher risk due to misalignment of goals. Employed physician networks offer a unique opportunity for alignment of vision, values and incentives. You need only look to the US News top hospitals to infer the advantage created when physicians are tightly integrated as employees.    

    There are multiple reasons this focus will correlate with success. First, a high-performing group will help you tap into physician insights on care management, increasing your likelihood of success under risk contracts. Second, a provider group with a set of shared values and incentives will help you build common practices around evidence-based medicine. By setting expectations around prevention and reducing inappropriate variation in care, the ability of your organization to produce predictable results will be enhanced.  

    Third, a strong employed physician network will build its own momentum in terms of attracting the right providers — which will be a key competency as provider shortages grow. High-quality physicians are actively seeking out organizations that have a culture that supports physician engagement and accountability, has a strategy to deal with a turbulent market, and provides a central role for physicians in shaping the market strategy.  

    Fourth, a provider network with a constant focus on outcomes is your best bet to deal with the tyranny of the insurers. Insurers are attracted to a health system that provides more reliable care.  Even better, your ability to produce predictable results will allow you to work directly with employers, further neutering insurance company interference.

    Finally, the political climate will not undercut this strategic focus.  Your ability to deliver reliable care will be of value under any political scenario.  

    Institutionalizing this refocus is a challenge. Many health systems still treat their burgeoning employed provider networks as an appendage, with limited management resources and casual oversight by executive leadership. In most health systems, key performance indicators do not relate to the employed physician network or the network’s ability to manage care. Metrics on network integrity, consistency in preventive care, and performance under risk will need to be front and center in dashboards and board discussions.     

    The future will belong to health systems that constantly drive toward a delivery model that is evidence-based and outcome-focused. It will be hard to make that happen if your focus is on managing facilities or wrangling with independent physicians. At its core, the industry is changing, and the focus of health systems must change to keep up. Organizations die as more insightful competitors attack the market from a different direction. By refocusing your leadership team on your employed physician network, your organization can potentially avoid that pitfall.
     

    About the Author:


    David W. Miller is a Founding Partner at HSG and former healthcare executive. He focuses on strategy development for hospitals & health systems, employed physician groups, physician alignment and primary care strategies, as well as service line planning. He also provides board and medical staff education and facilitation.
     

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    HSG partners with health systems to assess current performance and build plans to navigate the natural evolution of employed physician networks and guide future performance. Core competencies include: Physician Strategy, Physician Leadership, Performance Improvement, Network Integrity, and Physician Compensation. Call HSG at 502-814-1182 or visit www.hsgadvisors.com.

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