Greater future role seen for physicians, physician executives.

There are too many rocks in the whitewaters of change ahead for physicians to simply float with the current," contends health care futurist, Russell C. Coile Jr., MBA, president of the Health Forecasting Group, in his latest book, The New Medicine: Reshaping Medical Practice and Health Care Management. "An understanding of the changes medicine is undergoing is fundamental for the development of a new and symbiotic relationship between hospitals and physicians. That relationship will be the linchpin of all important strategic moves that U.S. hospitals plan for the decade ahead."

Hospital-physician relations must be restructured, Coile says. "The 'three-legged stool' consisting of the board, the administration, and the medical staff is rapidly becoming obsolete," he states. Hospitals and physicians who do not respond to this trend may fail. Some hospitals and physicians will be unable or will be resistent to moving into new ways of relating to each other. Others recognize the trend but may not know how to do make the transition. The future is clear. "Hospitals and physicians will be locked together in an increasingly complex web of clinical and financial ties. In a word, they will be bonded together in mutual dependency, converging interests, and joint economic arrangements," predicts Coile.

No one knows for sure what form the joint economic arrangements will take, but one thing seems certain. "The shifting economics of medicine is altering hospital-physician relationships, basically by replacing individual physicians with medical groups in bargaining situations," asserts Coile. "As medical groups grow and develop market clout, hospitals can expect the most influential physician groups to seek preferred hospital treatment." The physician may be viewed as an economic unit, as an independent distributor of the hospitals product. In a group, a physician's ability for strategic deal making is amplified. Doctors still control 60 to 75 percent of admission decisions. "Hospitals and health plans will increasingly engage in physician channeling to influence physician choices," according to Coile.

Hospital utilization has been shrinking steadily since the early '80s. Hospitals need to control market share and doctor loyalty. In order to accomplish this, hospitals must make it easy for doctors to practice medicine. They must remove obstacles. "Hospital CEOs can expect that doctors will seek a high-level role in key committees or at the board level. Doctors want a voice in policy decisions regarding technology acquisition, staffing levels, and hospital diversification," Coile says. "Doctors want more say in quality-of-care decisions."

As doctors become more proficient in negotiating with hospitals, hospitals will also become more demanding. One panel of experts predicts that by the year 2000, many hospitals will choose a "first team of physicians." Coile expects that "some hospitals will demand 100 percent commitment for inpatient referrals from their key admitters. The physicians will be 'bonded' to their hospitals through a variety of incentives, joint ventures, and networking strategies." Coile believes that "the days of the voluntary medical staff may be numbered." What will take its place? "New business relationships between hospitals and medical groups," Coile says.

Doctors are becoming more selective of hospitals with which to affiliate. "They have become more conscious of the strategic importance of the right hospital relationship," claims Coile. Doctors are interested in high-quality diagnostic, treatment, and surgical capabilities. Admission and discharge features are important too. But intangibles, such as image, appearance, and convenience, rank high on doctors' lists of items of importance. Communication with the medical staff is critical. Accessibility of hospital administration is the uppermost attribute that attracts physicians. "The secret to building a successful hospital is to build a successful medical staff. Staff member's loyalty and referrals will drive the hospital's future," Coile contends. "Hospital executives cannot assume that their own medical staff members are well informed of all services or new technology or facilities the hospital currently offers, or of the scope of consultation expertise available from other staff members." A constant effort might be made by the hospital to communicate effectively with its physicians.

"Physicians are health care's number one 'consumer' when it comes to hospital services," says Coile. In the '90s, hospitals will increasingly recognize the importance of this notion. Marketing plans specifically aimed at the practicing physician will be developed by more hospitals. Hospitals already pursuing this trend find that the most popular areas are physician referral services, practice building programs, physician recruitment, and physician office staff training. A physician development plan with an expressed purpose of supporting medical staff members and their practices should be researched and put into place. "A physician liaison needs to be put in charge of meeting the needs of physicians on an ongoing basis. The liaison should be a problem solver who can cut through hospital bureaucracy and take care of a doctor's difficulties in 24 to 48 hours," advises Coile.

What role will physician executives play? "Placing physicians in key management positions signals the return of an old trend," maintains Coile. "Fifty years ago, before the rise of professional training in hospital management, many hospitals were headed by physician administrators. Now the trend has returned, driven by the need to strengthen physicians' loyalty and provide a medical perspective in hospital management."

The physician is a strategically important executive for two reasons. Hospitals that will enjoy vigorous growth in the future will know that the "core business" is clinical medicine. Hospitals can no longer manage "by the numbers" or by marketing. They need to know how to take care of patients. Physician executives, who know the core business, are essential to full understanding of cost-effective management of available resources.

"Entrepreneurship will be the basis of tomorrow's hospital-physician relationships," Coile says. "Physicians are specializing in market-oriented niches, dispensing drugs in their offices, diversifying into laboratory and imaging centers, and building multisite practice networks through mergers and acquisitions. This is the new era of medical practice," he adds.

Two watchwords will be competition and cooperation. "The future of the health care industry will be shaped in the marketplace, not in Washington, D.C., or in state capitals," argues Coile. "Competition in health care is still in its adolescence. Many providers still know very little about their competitors, but they are learning." There is no doubt that direct competition will take place between hospitals and physicians. "Old boundaries are breaking down," Coile says.

What about managed care? "In a managed care environment, the distinction between a physician's office and hospital practices are rapidly disappearing. So are the differences between health insurance, financing, and services delivery," says Coile. As more and more patients are covered by integrated health plans, a case management approach will tend to merge clinical and financial decisions. "The continuum of health care is becoming a marketplace reality," says Coile. "This trend has considerable power to reshape health care for the 21st Century." Although some physicians are unhappy with the managed care concept, Coile states, "Physicians who saw the managed care handwriting on the wall have formed their own managed care organizations." The health care market of the '90s will be governed by managed care. "It cannot be put more simply," Coile says.

If the watchwords are competition and cooperation, where is cooperation going to come into play? "The most powerful force supporting hospital-physician relationships is economic risk sharing for managed care contracts. By the early 1990s, more than 75 percent of patients in most hospitals will be covered by fixed-price contracts," according to Coile.

As both physicians and hospitals feel outside pressures, they will become increasingly interdependent. However, Coile expects that the interdependence will be "negotiated on a business basis." Hospitals and physicians need to consider what new organizational structure may be suited for their needs. What leadership skills and training are essential? How can financial interests and effective entrepreneurship be successfully blended? Coile states that, "More than ever, hospitals and physicians need to find common ground, that is, shared medical enterprises that advance their mutual interests and bring benefits to the community in the form of new programs and services."

Coile uses the double helix as an image of how he sees hospital-physician interdependence evolving. "Their intertwining interests will resemble the double helix of molecular life, as all parties become mutually interdependent in order to survive." But, he warns, "Hospitals and their medical staffs have a choice today. In other words, they can manage their own market or wait to have competitors and outside forces manage them."

What can physician groups already in business do? "In a group practice, one partner should be designated and supported as the business developer on behalf of the group. Diversification and development are too important to be left to chance. Every group should have a long-range development plan for the growth of diversified practice revenues. In support of its strategic development plan, each group should set aside a venture capital fund to capitalize diversification activities," advises Coile.

What does Coile expect to transpire in the area of regionalization in the '90s? "The first generation of multihospital systems was built on a strategy of horizontal integration. Horizontal strategies are most successful when the system is growing by adding new units. With declining profitability, horizontal chains have been hard-pressed. What hospitals need for the 1990s is to pursue vertical integration," says Coile.

With both vertical and horizontal integration, it would seem that hospitals medical staffs would play a crucial role in the success of the system. How will regionalization of health care affect the hospitals' medical staff? "The medical staff as it exists today is obsolete," Coile states. In its place will be an "organized medical group." It is likely that the 1990s will bring regionalization of medical staffs, according to Coile. It will probably occur along departmental lines. There will be shared peer review organizations. Networks will be formed and designed around clinical relationships. Some may be voluntary. Others may require some form of ownership. Physicians need to be aware of and understand the larger picture. Physicians need to ask, "What is the societal hospital environment?" We are still in the evolutionary phase where people are still figuring out what to do, according to Coile. We need to put together a new conceptual framework.

How will it be different? The notion of rational change holds that through a succession of trends and events one way of thinking (acting) is replaced by another. "Hopefully we can anticipate what may happen and change before an established trend engulfs us," says Coile. But he admits that "rational change is an oxymoron." It may take a crisis to evoke the needed innovations.

Hospitals and physicians need a new paradigm to close out the 20th Century and provide a foundation for the 21st Century. That new model may be the "Integrated Health System (IHS)." "In the ideal integrated health system, at least 35-50 per cent of the medical staff would be located in IHS-owned facilities. All facilities are under common ownership," envisions Coile. "The medical staff would be a fully integrated medical organization." One example would be a hospital-based multispecialty group organized as a professional corporation. Another example is Mayo Clinic and Henry Ford, where the physician organization is contained within the larger corporation.

Providing managed care will be one of the initial motives for creating an integrated health system. "The goal of the IHS is to be the sole source or 'one-door option' for managed care buyers," says Coile.

The ideal integrated health system will have "interlocking governance." "Physicians will be major stakeholders," predicts Coile. "There will be significant physician participation in the design and governance of the system, and high-level MD managers in IHS Corporation. The unified IHS will operate under a systemwide credo with a shared commitment to a common culture and mission."

The ideal integrated health system will have five common systems that are linked by an integrated information system: finance, research and planning, marketing, quality assurance, and human resource development. According to Coile, hospitals and physicians that can successfully position themselves in the framework of an integrated health system will be poised for success as the century comes to an end.

Any parting advice for an average doctor? "Think of the future as a resource to be managed. Physicians, hospitals, and the health industry can shape their preferred future. They will need a shared vision and a commitment to collaboration in order to achieve it. Above all, they will need a sense of optimism about the future and the patience to work for their desired scenario over a long time. The 1990s will be a period of transition to yet another future for medicine," Coile says. "You manage the future or the future manages you.

Tony Joseph, MD, FACEP, is President, American Medical Consulting, Inc., Dublin, Ohio. He is also Chairman of the Emergency Department, Riverside Methodist Hospitals, Columbus, Ohio.