CHAPTER 16CHAPTER 16

Physicians and Health Care Organizations: Physicians and Health Care Organizations: Achieving Aligned PerformanceAchieving Aligned Performance

Seminar 9Seminar 9

PhysiciansPhysiciansPhysiciansPhysicians

• Revenue generatorRevenue generator

• Outside normal employment relationshipOutside normal employment relationship

• Individual autonomyIndividual autonomy

• Independent decision makingIndependent decision making

• Difficult to integrate into cultureDifficult to integrate into culture

PhysiciansPhysiciansPhysiciansPhysicians

• Source of admissionsSource of admissions

• Initiators of ancillary servicesInitiators of ancillary services

• Sole source of revenue in a practiceSole source of revenue in a practice

• Compensate themselvesCompensate themselves

• Clinical and support staffClinical and support staff

• Operating expensesOperating expenses

• Critical to understand physician behaviorCritical to understand physician behavior

Traditional Roles of PhysiciansTraditional Roles of PhysiciansTraditional Roles of PhysiciansTraditional Roles of Physicians

• Office-based physiciansOffice-based physicians

• Practice ownersPractice owners

• Independent, autonomous professionalsIndependent, autonomous professionals

• ““Three-legged stool”Three-legged stool”

• Clinical autonomyClinical autonomy

New Role of PhysiciansNew Role of PhysiciansNew Role of PhysiciansNew Role of Physicians

• Shared responsibility for patient careShared responsibility for patient care

• Involvement in quality and efficiency Involvement in quality and efficiency improvementimprovement

• Physician accountabilityPhysician accountability

• Larger physician groupsLarger physician groups

• Reduced reimbursement ratesReduced reimbursement rates

Change in Practice ArrangementsChange in Practice ArrangementsChange in Practice ArrangementsChange in Practice Arrangements

• Medicare payment rates decliningMedicare payment rates declining

• Rising operating expensesRising operating expenses

• Increase in volumeIncrease in volume

• Ancillary servicesAncillary services

• Mid-level practitionersMid-level practitioners

• Movement away from hospitalsMovement away from hospitals

• HospitalistsHospitalists

Physician PopulationsPhysician PopulationsPhysician PopulationsPhysician Populations

• Three distinct physician populationsThree distinct physician populations1.1. ““Hospital-dependent” physiciansHospital-dependent” physicians

2.2. ““Hospital-independent” physiciansHospital-independent” physicians

3.3. ““Hospital-irrelevant” physiciansHospital-irrelevant” physicians

““Hospital-Dependent” PhysiciansHospital-Dependent” Physicians““Hospital-Dependent” PhysiciansHospital-Dependent” Physicians

• Pathology, radiology, anesthesiology, and Pathology, radiology, anesthesiology, and emergency medicine; hospitalists, emergency medicine; hospitalists, intensivists, and neonatologistsintensivists, and neonatologists

• Some employed by hospitalSome employed by hospital

• Strong interest in hospital’s economic Strong interest in hospital’s economic successsuccess

• Involved in hospital initiativesInvolved in hospital initiatives

““Hospital-Independent” PhysiciansHospital-Independent” Physicians““Hospital-Independent” PhysiciansHospital-Independent” Physicians

• Orthopedics, cardiology, otolaryngology, Orthopedics, cardiology, otolaryngology, gastroenterology, pulmonary medicine, gastroenterology, pulmonary medicine, OBGYNOBGYN

• Office and hospitalOffice and hospital

• Privileges at several hospitalsPrivileges at several hospitals

• Concerned with efficiencyConcerned with efficiency

• Don’t want to commit extra time to hospitalDon’t want to commit extra time to hospital

• Tenuous “loyalty”Tenuous “loyalty”

““Hospital-Irrelevant” PhysiciansHospital-Irrelevant” Physicians““Hospital-Irrelevant” PhysiciansHospital-Irrelevant” Physicians

• Internists, family physicians, pediatricians, Internists, family physicians, pediatricians, dermatology, psychiatry, allergydermatology, psychiatry, allergy

• Rarely provide care in hospitalsRarely provide care in hospitals

• Little involvementLittle involvement

• Big source of admissionsBig source of admissions

• Significant economic influenceSignificant economic influence

• Difficult to engageDifficult to engage

Rural HospitalsRural HospitalsRural HospitalsRural Hospitals

• Rarely more than one hospitalRarely more than one hospital

• Physicians dependent on hospital’s Physicians dependent on hospital’s economic healtheconomic health

• Different practice patternsDifferent practice patterns

• No option to move elsewhereNo option to move elsewhere

• Mutual dependencyMutual dependency

• Relationships and communication are keyRelationships and communication are key

Medical GroupsMedical GroupsMedical GroupsMedical Groups

• Growing sizeGrowing size

• Professional practice administratorsProfessional practice administrators

• Most are professional corporations (PCs)Most are professional corporations (PCs)

• Practice autonomouslyPractice autonomously

• Access to colleaguesAccess to colleagues

• Escalating economic pressuresEscalating economic pressures

• Productivity criticalProductivity critical

Medical GroupsMedical GroupsMedical GroupsMedical Groups

• Relative value units (RVUs)Relative value units (RVUs)

• Gross charges generatedGross charges generated

• Shared accountabilityShared accountability

• Expectations written in a “compact”Expectations written in a “compact”

• ““I’ll take care of my patients, and the group I’ll take care of my patients, and the group will run the business”will run the business”

• Changing demographics of physiciansChanging demographics of physicians

Future ConcernsFuture ConcernsFuture ConcernsFuture Concerns

• Emphasis on aligned incentivesEmphasis on aligned incentives

• Hospital acquisition of practicesHospital acquisition of practices

• Physician-hospital organization (PHO)Physician-hospital organization (PHO)

• ““Bundled” paymentsBundled” payments

Management GuidelinesManagement GuidelinesManagement GuidelinesManagement Guidelines

• Learn as much as possible about the Learn as much as possible about the economics of physician practiceseconomics of physician practices

• Understand that there may be significantly Understand that there may be significantly different economic motives among different different economic motives among different groups of physiciansgroups of physicians

• Look for opportunities to create initiatives Look for opportunities to create initiatives that are “win-win” for both physicians and that are “win-win” for both physicians and the health care organizationthe health care organization

Management GuidelinesManagement GuidelinesManagement GuidelinesManagement Guidelines

• When launching joint ventures with selected When launching joint ventures with selected physicians, anticipate and proactively physicians, anticipate and proactively manage opposition from physicians who are manage opposition from physicians who are not involved in that venturenot involved in that venture

• Communicate to excessCommunicate to excess

• Develop relationships with administrative Develop relationships with administrative leaders of physician groupsleaders of physician groups

Final Exam

Final ExamFinal Exam

This exam is comprised of 20 True/False questions; This exam is comprised of 20 True/False questions; 40 multiple-choice questions; and 9 essay questions. 40 multiple-choice questions; and 9 essay questions. The exam is timed at three hours, so please ensure The exam is timed at three hours, so please ensure that you have set aside an uninterrupted slot of that you have set aside an uninterrupted slot of time in which to complete this test, which covers the time in which to complete this test, which covers the nine units of our work in this class. nine units of our work in this class.

What is the best way to approach this exam? Make What is the best way to approach this exam? Make sure that you understand the key concepts from sure that you understand the key concepts from each of the nine units of study. each of the nine units of study. Also, take the time to carefully read each question. Also, take the time to carefully read each question. You have over 2-1/2 minutes to answer each question. You have over 2-1/2 minutes to answer each question. Generally speaking, if you carefully read a question Generally speaking, if you carefully read a question

and the supplied possible answers, you can eliminate and the supplied possible answers, you can eliminate some of the answers right away. some of the answers right away.

Final Exam (continued)Final Exam (continued)

Take your time. Don’t rush through the test. Take your time. Don’t rush through the test.

Essay questions. Spend some time Essay questions. Spend some time refreshing yourself on the following:refreshing yourself on the following: Boston Consulting Group Business GridBoston Consulting Group Business Grid Competency TrendsCompetency Trends Cultures and SubculturesCultures and Subcultures The meaning of “proactive management The meaning of “proactive management

program”program” Differences between rural and urban hospitalsDifferences between rural and urban hospitals

End