With the evolution from volume-based to value-based care, healthcare organizations have been viewing the service experience through a new lens—one that puts the patient at the center of the universe and calls for a more coordinated, integrated approach to care. As a result, many hospitals and health systems are taking a closer look at physician integration strategies that can help them grow market share while providing high-quality services at lower cost across the healthcare continuum.
Navigating physician-hospital integration in this new landscape comes with inherent complexities, prompting health system leaders to ask tough questions about the future. Some of these include:
- How many primary care providers will we need to grow and secure our market share? What is the appropriate mix of employed and independent physicians?
- Do we have a clear network development plan that outlines needs in various specialties, and is our recruiting process streamlined?
- How can we work with independent physicians to meet our objectives? Why would they want to collaborate?
- What are the risks of partnership in lieu of employment? Can we collaborate with independent specialists rather than employ them? If not, will they choose to partner with other organizations instead?
- In markets where physicians remain independent, how do we balance the priorities of our employed physicians while catering to loyal independent providers?
While the answers to these questions will vary for each healthcare organization and will depend on market-specific parameters, it may help to pause for a moment and take a broader look at physician-hospital integration in the current healthcare climate.
Expanding the Physician Network
Historically, a key integration strategy has been for health systems to employ physicians and other providers as part of a system-owned medical group. Since ownership of primary care practices helps to secure market share, it’s unlikely that health systems will ever completely abandon an employment strategy. But as unsustainable losses mount, particularly with employed specialists, many systems must consider alternative partnership options to help them thrive under value-based care and payment models.
One of these options is to expand the health system’s physician network to include loyal independent physicians who will collaborate with the health system on value payment strategies through vehicles such as Accountable Care Organizations (ACOs) or Clinically Integrated Networks (CINs). Partnering with independent physicians can be beneficial for all parties involved, but such a move also comes with intrinsic challenges, particularly with regard to physician alignment and relationships.
As many health system leaders have discovered, physician-hospital alignment can be a significant challenge at the best of times. However, with a mix of employed and independent providers, the process of aligning vision and creating common goals becomes even more complex.
To gain the loyalty and trust of independent physicians, health systems must work closely with them to align objectives and incentives and to establish effective avenues for communication. Otherwise, these physicians may feel inclined to seek a partnership elsewhere. At the same time, if employed physicians perceive that the independent physicians are given preferential treatment, they may become disenchanted or distrustful and resist clinical integration efforts.
In an expanded network, system leaders must put great care into relationship management so that both independent and employed physicians feel valued and are invested in the organization’s vision for integrated care.
Given the complexity in the healthcare environment, hospitals and health systems can consider developing a number of strategies in partnership with employed and independent physicians to establish a solid foundation for integrated care and to foster physician engagement:
- Adopt a spirit and desire for true collaboration with physicians, which goes beyond simply inviting them to the table in an advisory capacity.
- Create “win-win” opportunities to entice independent physicians to come to the table. For example, how will independent physician participation in an ACO benefit them? Will co-branding with the health system be of value to them?
- Set up governance structures with enough authority to engage physicians as partners, but with protections to preserve ultimate executive and board authority.
- Hold employed physicians and management jointly accountable to improve operations and financial performance through an effective operating governance structure.
- Understand unique market dynamics to guide decisions on whether to employ physicians or partner with independent physicians. Revisit this discussion regularly as network development and physician acquisition strategies are updated.
- Balance the relationships carefully between employed physicians and loyal independent physicians. Create common goals to avoid a spirit of competition.
- Develop a sound method for tracking and monitoring referrals between employed and independent physicians in your system; understand the implications and adjust strategy accordingly. Educate physicians on which providers are in network.
- Establish mechanisms to ensure that in-network physicians (employed or independent) are providers of choice. Loyalty to refer within network is much easier when there are excellent, well-respected choices available.
- Develop effective clinical integration strategies that help to move organizations along the value-based care and payment continuum through participation in vehicles such as ACOs and CINs.
- Engage your physician network in the community through partnerships. To achieve progress toward improving the health of populations, physicians and health systems will need to understand and influence the diverse socioeconomic factors that impact population health.
Looking to the future, health systems and hospitals must engage enough high-quality physicians to provide high-quality care at the lowest cost. For those who can achieve financial stability, employing physicians as a key strategy will remain a viable option. However, as the evolution continues from volume- to value-based care, and as population health initiatives increase in sophistication, most physician networks will include both employed and independent physicians. Successful health systems will effectively collaborate with physicians and key community resources to provide value-based care for the patient populations they serve.
Ready to take a closer look at the health of your physician practices? Start with this 30-question Health System Medical Group Self-Evaluation.