Hold or fold? (You're Fired!).

IT IS ONE THING WHEN A physician loses his or her job. It is another thing when the very institution we work for goes under and disappears.

I was president and CEO of an Independent Practice Association (IPA) with about 200 members in Washington State for six years. We were self-funded, chose a model of half primary care and half specialist, and decided to get into the risk business of health care. We developed regional coverage with 55 separate offices and grew rapidly to a peak of 38,000 covered lives. We planned to build our organization as we went along and obtain more financing after we had made some headway.

At the time we started in 1994-5 we had a clear vision of our environment and a business plan appropriate to our market. We wanted to be the leader in our area in defining how health care could best be delivered and paid for. We thought that we had another essential ingredient--the capacity to change and adapt, along with good, representative physician leadership. Still, we failed.

We declared insolvency and ceased operations early in 2000. We could not get accurate data to manage our business and pay our physicians promptly according to our capitation formula. We took health plans up on their offer to work with our group, but the support never materialized. We did not have the resources to create our own encounter data and, ultimately, were weakened by the payment inaccuracies that depleted our medical budget. Having data down to the encounter level is not enough to offset health plan complexity in dealing with eligibility, duplicate payments, and related problems.

We accepted on faith that local hospitals would be glad, even relieved, to have physicians organize and regulate themselves. We anticipated they would accept our offer to form alliances to provide better care. We did not appreciate for a long time that they saw us as competing for the same health care dollar. It was too late before we realized that our hospitals really didn't understand physician culture, and could not relate to it without controlling it.

These problems were relatively unimportant compared to our failure to have physicians in our own organization bond sufficiently, and for a sustained period, to carry out business operations. Our IPA needed to do more than simply declare itself a group. An IPA cannot be just a collection of constituencies. As Jerry B. Harvey, PhD, observed, a group is more of a shared mental state than a physical presence.' We not only needed to keep building after we were in business, we needed to refine the architecture of what we were creating to sustain us. We had come up with a vision and a mission statement. But we needed to do a better job of taking individuals into the IPA and working as a team.

If this plan seems simplistic, it was. If we sound naive or even foolish, probably we were. Still, I am persuaded that is where most physicians are right now. We have paid too little attention to business, the consequences of innovation, and marketplace adaptation. A colleague observed that we are still like children, or at least teenagers, in the business world. Bridging across to a new kind of success in medicine will take a lot of work and we aren't sure if we are up to the task.

Know when to hold 'em, know when to fold 'em

What might others learn from this group's experience? As I was thinking about this article, I happened to hear the song "The Gambler" (popularized by Kenny Rogers some years ago) on the radio. You probably recall the tale. A man, down on his luck, encounters a gambler on a late night train ride. For the valuable consideration of the last swallow in a bottle of whiskey and a cigarette, the aging gambler offers some advice before drifting off into his final slumber. The refrain begins:

"You got to know when to hold 'em, and know when to fold 'em Know when to walk away, know when to run..."

Some of us may benefit from a similar analysis. What are the signals that might help you decide to hold the cards you have or to "fold 'em," or to know when to run? And, besides looking out for yourself, what might you contribute to your organization? How might you explain what you are seeing to others?

Where are you?

Are you in an organization that you believe is bulletproof or in one teetering on dissolution? Are you flying to form a new entity or perhaps looking at a new job? Here are some ideas to consider. Any group must have:

1. A clearly articulated vision of what success will look like, one that is accepted by is members. If not, how will the group know when it reaches its goal? Do you agree with that vision? Too many physicians fail to look beyond the reimbursement level or the salary package (and maybe the view from your new office window) before accepting a job. Is that really all you need to be happy? Does the group's mission statement spell out how to achieve that goal? These things need to be practical.

Our group said we wanted to do specific things for the community and refine how our member physicians provided care, We decided to take economic risk in order to get that freedom and put up a sizeable amount of our own money. We thought local hospitals would support us, but they did not. A hospital Board member denounced us in the community as money-grubbing doctors when we questioned the hospital's rate structure. The market changed and our financial condition would not let us keep up with it.

We had vision and a mission and still didn't survive, but these statements are needed nevertheless. They must be readily available as a reference when the going gets rough and members forget what they set out to do in the first place. Not everyone agrees how detailed a business plan should be, especially if a consultant is charging by the page to create it, but it will be the commonly accepted expression of what your organization is about.

A significant number of individuals were allowed to join our WA without actually agreeing with our mission. A few primary care physicians saw this new organization as a group to retaliate against specialists who had dominated earlier iterations. Some specialists saw the IPA as just insurance that they would be included in the evolving referral patterns. Other specialists wanted to filibuster to perpetuate their historic income. Once in, these minorities were in conflict with actions taken and caused others to become reactive in their thinking.

2. Effective leadership. Physicians must be in a position to make patient care decisions and provide strategic direction. Leaders need to create a culture that supports buy-in. Medical directors employed by health plans appear to be separated by at least three layers of bureaucracy from financial decisions--and are less effective because of it. Physicians must be involved in how people are rewarded (paid) for their activities. Physicians who work for hospitals rarely get assignments beyond selling some new administrative plan or being the passthrough for physician opinion. In pure physician organizations, any sort of leadership or administrative duty may be viewed cynically or suspiciously as a sellout of values held by the fulltime practitioners. In broader, more complex community supported organizations and PHOs, can physicians actually influence decisions? This work is never pretty, it is never over, and many physicians shy away from such unpleasantness. For our IPA it was a constant struggle.

Commitment to leadership, especially by other physicians, is a hard thing for us to accept. But I believe more CEOs in health care organizations should be physicians. If physician leadership is going to be relegated to the Board level only, look to see if those representatives have been chosen to govern for the good of the entire organization, not just one specialty or other subgroup. If the entity is relatively small, and almost every physician is on the "Board," there is a trust problem. This arrangement is more indicative of an attempt at democracy, not a true functioning Board. Harmony and consensus voting are not prerequisites for effectiveness, but focusing on the good of the entire organization and its customers is.

3. Clear evidence of adaptability and flexibility. In this changing world, steadfastness and consistency should only be sought in terms of ethical behavior. As the traditions of medicine are being eroded, some evidence of adaptability to e-commerce may be the easiest thing to look for.

When I installed a cellular phone in my car in 1985, it was of limited usefulness and cost 50 cents per minute for airtime. Now I'm paying 9 cents per minute and can call anywhere in the country. I am being tempted with offers of 4 cents per minute and people are talking of the time when we will blow through 2 cents per minute and sign up with companies where air time is free. Comparable things are happening to Internet-related activities and wireless devices.

We agree grudgingly that we need to use the computer. We ask for more technology, but the desktop computer will soon be too limiting. Information wants to be free. What is it physicians have always said we provide to our patients? Information? We had better branch out, or rather, get back to things even more basic, for we never will control information again.

4. Financial stability. This is the true oxymoron in medicine today. Our IPA floundered over this very issue. Financial viability is an expectation of any organization, but we have to move beyond the paralysis of staying with old systems. Unfortunately, a history of stability may not be much of an indicator. Groups of all types, including some with many years of tradition and experience, are failing partly because they cannot figure out how to collect what they are owed. When I go into Nordstrom and pay $50 for a shirt, the store expects either cash or my credit card. Not only does the company not plan to wait months for payment, it would not be in business if it relied upon some capricious system that decided at a later time to discount the charge or refused to pay it.

Physicians think they are being paid below the cost of delivery of services. We have trouble collecting at all from an unnecessarily complex payment system. Most HMOs could care less about the economic health of our group. They did not support the very capitation scheme they had instigated. When enrollment began to drop, they were quick to abandon their plan and us.

A new complication for medical practices is a subtle but dramatic shift towards complementary medicine. People have grown accustomed to paying for these services out of pocket, all the while expecting allopathic care and hospital expenses to be covered completely by the more rigid health insurance system. Our IPA anticipated and tried to adapt to complementary medicine but found the insurers would not credential the practitioners we chose to use. All this cacophony increases the background noise and frustration in running a practice. Still, it is critical not to let financial considerations break us from our ethical moorings or keep us from moving forward. (2)

5. Good data available to physicians. Having a plan to bring data processing and warehousing into an organization is not enough. We had the vision and the talent, but lacked the financial backing and third party cooperation to actually make it happen. It is not true throughout the country, but in Seattle the major health plans resist letting physician groups pay claims and generate their data. The concern they expressed about our capabilities then became a self-fulfilling prophecy.

Be wary of any health plan, hospital, or other entity that offers to take care of producing data for you. The foundation of dealing with physician behavior is accurate information-your group will not survive without it. There is an exhilarating buzz about wireless connectivity, electronic medical records, and voice recognition, but the hardware is not in place. Believe in it, it will transform us, but there are practical realities to be reckoned with. Neither health plans nor hospitals are likely to give physicians unedited data unless we insist upon it.

Signs of trouble

There can be other evidence of trouble you need to watch for. In some areas, hospitals and health plans are hostile to physician initiatives. In 1993 the Washington legislature mandated a migration to managed care, and then reversed most of its decisions the next session. Don't rely on politically motivated decisions-they are too easily changed.

Another competitive force is the attitude in the business community. Several years ago the Boeing Company offered inducements to its employees to move into managed care products. There was no competition between plans; every insurer who wanted to be in the game had to agree to a set of benefits and virtually the same price. Earlier this year when Boeing tried to shift some cost of medical care onto employees, the union objected and the company caved in. The company couldn't stay in production if the union went on strike. Unemployment in the region is low. There are too many other places offering generous benefits where skilled workers can go.

Another peculiar thing happened to us when Microsoft decided to change the way its employees receive health care and to create a new paradigm of care delivery. We were told in hushed and reverential conversations that Bill Gates and Mr. Huber, the CEO of Aetna, had a handshake deal to transform American medicine. One of our local hospital CEOs intoned to his doctors that they better get ready to fly in formation or get left in the old paradigm. He had had a telephone call with Huber, it was said. All was well. There would probably be dinner at Bill's to solidify the deal. Then Judge Thomas Penfield Jackson fired buckshot through everyone's Microsoft stock all the way from Boston. Aetna's financial problems became public knowledge. Huber lost his job. Aetna restructured and lost a court battle in Texas.

The lesson for me is that we are in a changing world full of ambiguity and uncertainty. We are playing a game we don't understand very well and are not using our strengths against some very shrewd people. Compassion, openness, a willingness to stick by our patients when they need us must be combined with our fund of clinical knowledge if we are to reestablish our position of value.

As the poet David Whyte recently told us, (3) it is not only our patients who suffer displacement and loss. Physicians are not immune. If we lose the conversation we are having with our patients and our work, we will lose the relationship with that work. Like a passenger riding a speeding train, if we keep increasing the velocity of our work, we will lose the ability to see clearly anything outside the train other than another object moving at that same speed. And at that speed, our family, leisure activities, and friends are just a blur as we hurtle ahead.

What to do?

If you are at a point of choice, carry out a private analysis with the goal of deciding whether to stay with (or join) the organization or to leave. Decide whether to hold the cards the group has dealt you, fold and wait for another hand, or walk away. If you decide to fold your hand, if you decide to pull out or don't accept the new position being offered, do so without ascribing blame. Exiting with grace is one sure sign of character we can all demonstrate.

Be aware of a tendency to solve any problem with a consultant. Be wary of our inclination to play the very next hand (solution) we are dealt. It's our anxiety, our desire for security, our lack of ever having had to get out and hustle for a new job that makes us want to eagerly accept whatever comes along next.

Our IPA had doctors in its leadership that pushed us to do a superficial job of organizing, wanting to sellout to PhyCor. Though we ultimately lost our IPA and its management company, would we have been better off with a practice management company? We had other leaders who took the opportunity to sell to the local PHO. My impression is that selling the practice has not led to any great wave of happiness, especially as employed physicians begin to be pressured to produce more revenue-generating activity for the hospital. If I could instill one piece of understanding, it would be for physicians to see that the more they buy into generating revenue for the local hospital and supporting the expansion of its physical plant, the more their own revenue for patient care will dwindle.

If you decide to stay, consider whether this is your moment to exhibit a new level of leadership. Leadership is not the same as broadcasting your opinion at the next meeting of the membership. But there is more of a chance now than ever before for physicians to exhibit leadership, not just lose our selves in our daily tasks. One way to start is to write down what you personally want to accomplish. Then, wait for the image to appear of how you will do it or what the method will be. What you write next can then be a description of what you see and that's the beginning of your plan. The resources you need can be added as they occur to you.

The next step possibly is far more important to your task: assess who the leaders of the group are. The real test will be about the conversations you have. The bigger goal is to establish contact, to create an atmosphere of inclusiveness in the group. Physicians and hospital administrators both worry about how they can control doctors and what they do. The better attitude is to look to have influence, not control. Write down the names of leaders who have influence. A more difficult task is to create another list of the members of the group who are most objectionable to you. There is probably a message in the discomfort you feel. See if you can figure out what it is. For me, when I deal with someone I don't like usually it is because they remind me of something I am not pleased with in myself.

Talk about your beliefs to the people on your lists, singly or in small groups. There is a place for information sharing, for data, but mostly this is about your concerns for the group. Analyzing and debriefing sessions may seem easier to do and more appealing, but these methods look backwards and lead to faultfinding. Speak openly and from the heart, but be brief. Talking five minutes is enough, and one minute is better, before you ask for feedback. Physicians already are too crippled by believing that our opinions will be accepted uncritically. After you have spoken, listen for the response. What does your audience think? Your suppositions might be off base, but more likely the responses you solicit will lead to greater insight and begin to establish rapport. What you elicit often will prepare you to articulate ideas to a larger group at another time.

Conclusion

If you plan to be a leader and to contribute to your physician organization, focus on creating or revising the internal architecture of the group. Dealing with the external environment or objectives needs to wait. A leader must create or encourage a culture in the organization. Except in the smallest organizations, the chief executive cannot be both the administrator and also work closely with the members. There are many roles to be played. Plan for some division of labor.

This process often takes three years or longer. Some organizations may not move fast enough to keep pace with change and survive that long. We need to give up our personal anxiety about failure and being perfect. Losing is not reserved for stupidity and winning is not always evidence of brilliance. Surrendering to fate is not passivity. If you can generate some buy-in, some reaffirmation of purpose, some momentum, then you may be able to help your group gain enough time to respond to the movement in the marketplace. But, the internal work must come first.

Acknowledgement

I wish to thank Barbara Linney and Chris Marsh, Esq., for their advice and encouragement in the preparation of this article.

References

(1.) Harvey, Jerry B. Presentation at ACPE 2000 Spring Institute, May 15-20, 2000 San Antonio, Texas.

(2.) Schenke, Roger S., et al. Leading Beyond the Bottom Line," ACPE 2000 Spring Institute, May 15-20, 2000 San Antonio, Texas.

(3.) Whyte, David. Presentation at ACPE 2000 Spring Institute, May 15-20, 2000 San Antonio, Texas.

Claude V. DeShazo, MD, CPE, FACPE, from 1994 to 2000 served as president and CEO of cascade Healthcare Alliance and Cascade Management, Inc. He is currently growing apples in Monroe, Washington. He can be reached by calling 425/788-3666 or via email at [e-mail].