Involving medical staff in strategic decisions is key to success: health system strives for physician input in critical business functions. (Hospitals).

AMONG THE UNIQUE characteristics of the health care industry is the relationship between physicians and hospitals.

A hospital depends on physicians for delivery of its services and, as a result, for its financial performance. In most businesses, individuals with a physician's influence on company performance would be employees who, while valued and well compensated, also would be imbued with the organization's culture and values and have their compensation and incentives aligned with those of the business.

This is far from the case in health care.

High among the many challenges facing health care organizations is the need to involve physicians in the growth and evolution of the business enterprise to an extent commensurate with their influence on the performance of the business.

Involvement must be genuine and sustained, yet it must conform to the many government restrictions against inurement and kickbacks, precluding genuine shared business interest.

The challenge for health care organizations is to create structures, systems and a culture that physicians can enthusiastically embrace.

The Virtua story

Virtua Heath is a community health care system consisting of four hospitals, two ambulatory surgery centers, two long- term care facilities, a home health agency and a fitness center that deliberately set Out to design a framework to share strategic power and influence with physicians.

The approach was formulated to address the unique nature of the hospital-physician relationship in order to achieve long-term success of the system and the physicians.

Formed in 1998, Virtua Health arose from two health care organizations with a long history of local competition: The West Jersey Health System and Memorial Hospital of Burlington County, both located in southwestern New Jersey, just across the Delaware River from Philadelphia.

The medical staffs of the two systems consist of 700 independent, private physicians in all specialties. Although the health system is fully integrated, the medical staffs remain separate. This is due to geographic separation and licensing requirements.

While initial discussions were motivated by defensive priorities, the chief executive officers and the boards of trustees soon began to see opportunities for a stronger, more successful, locally controlled health care system as a result of the merger.

Early on, they identified strategies for improving infrastructure and business performance, for expanding the range of services and driving clinical excellence.

The chief executive officers and board members of West Jersey and Memorial shared a vision of a lean, agile board for the new system, well equipped to respond to the rapid changes in health care.

They recognized the need for the planning and governance structure to include significant, authentic and aligned physician involvement, As a result, the board consists of 12 community leaders, including four physicians. This guarantees involvement of physicians at the highest level of decision making in the organization.

Seeking input from a physician council

The two CEOs and the Virtua Board of Trustees wanted to broaden physician input into governance, especially in the areas of strategy and quality. The principle vehicle for physician participation is a physician council, a committee of the board of trustees. The council is currently composed of:

* Two lay board members

* Four physician board members

* Four voting ex-officio medical staff officers

* 16 at-large physician members chosen equally from each medical staff

* The CEO 

* The EVP 

* One hospital COO 

(The latter two are physicians.)

The council will transition to a self-populating body over the next few years. The group meets monthly and is led by the physician council chairman. The four physician board members represent the physician council at board meetings.

The group's most important charges are to advise the board on how Virtua delivers quality care to the community, what influence pending actions will have on quality and what steps physicians feel Virtua needs to take to improve the quality of health care services it delivers to the community.

Interactions of the group and the board go far beyond quality issues. The physician council is the common pathway for nearly all important strategic initiatives. The group addresses issues of Virtua strategy and offers the board a uniquely formalized avenue for obtaining organized physician perspective on pending strategic issues.

The Virtua board has solicited opinions from the council very early in discussions with potential merger partners, sought critiques of pending facility acquisitions and presented all affiliations with third parties to the council.

Creating the council

Creating the physician council was a long, convoluted process.

As the two hospital systems merged, leadership included the medical staff officers of both systems discussing governance issues, voting, structures, representation and physician involvement for the new entity.

Additional physicians from both organizations were brought together to discuss issues that primarily involved physicians. A consultant was hired who met with the physician group to help organize ideas into an executable structure.

The group recognized that physician commitment would follow authentic participation and influence. They envisioned physician leaders providing advice to the board of trustees about issues such as:

* The scope and quality of clinical services

* Corporate business strategy

* Potential future alliances and partnerships

There was a strong need to work together to address the adverse impact that managed care was having on the hospitals with HMOs intruding into the practice of medicine by the physicians.

The group also saw a need for physician leaders to be involved in day-to-day organizational activity. There was a history at both partner institutions of skilled and talented individuals in the vice president of medical affairs position. These reminded the group of the advantages of having a physician executive with a hands-on role in a responsible and authoritative position.

Recognizing that practicing physicians were not able to provide the time needed for the level of physician leadership and participation, the group recommended hiring a physician director. This physician was to be a senior administrator in the organization, something that had not been contemplated previously.

The group worked for several months refining details of governance, reporting and representation. It was determined that the physician council should report directly to the board of trustees and that representation on the council would be apportioned evenly between the two medical staffs for three years, after which it would become self-populating.

Getting together

The physician council met for the first time in spring 1998. The group started out a bit tentatively, initially functioning as a passive recipient of reports and information. There was a sense of duplication and overlap among the physician council and the two medical staff executive committees.

A retreat of the physician council and the full board of trustees resulted in two very positive steps.

1. Great strides in relationship building were accomplished among the representatives of the two medical staffs and the board.

2. Eight work groups generated detailed, action-oriented reports outlining steps needed to make the physician council and the relationship between the medical staff members and Virtua more productive. Operational responsibility was assigned to the medical executive committees and the physician council was given unambiguous responsibility for addressing many Virtua strategic issues where physicians have an interest.

To date, the physician council has worked effectively. It has addressed issues ranging from creation and oversight of programs of excellence in key service lines to campus planning and establishing priorities for long-term system growth and capital allocation.

A physician executive was hired and became the executive vice president of the organization and second in command to the chief executive officer. The council has active and committed participation from a group of physicians who represent the spectrum of formal and informal leadership among the medical staff.

The council is viewed as genuinely empowered and effective in providing physicians with an avenue for sharing in shaping the direction Virtua takes.

Facing challenges

The group faces challenges, as well.

Communication is notoriously difficult in medical staff affairs. Numerous strategies are being used to communicate within council. Miscommunications and issues of trust are dealt with openly and forthrightly, increasing trust and investment in the council by its members.

At the request of council, medical staff officers, physician leaders and senior Virtua administrative leadership, including the CEO, established communication commitments that form the ground rules for interactions between the system and its physicians.

It's also been difficult to communicate the important and authentic role the physician council plays to the general membership of the medical staffs.

Some physicians continue to complain about a lack of representation. Efforts to improve communication include a Web-based communication tool connecting physician leaders to the membership at large.

The group also continues to struggle with keeping its sights on strategic issues. It has been very easy for the members to digress into operational detail in deliberations.

Recently, both medical staffs established operations committees to address routine issues affecting patient care at the local hospital level. These committees meet with members of administration to review performance and discuss opportunities for improving the experience of patients in the Virtua facilities.

This format helps keep the physician council focused on strategic issues while bringing coherent physician perspective and oversight to the operations level of the organization.

As the responsibilities of the physician council crystallized, so have the responsibilities of the individual members. It remains to be seen how the transition to a self-populating group will work. The high level of commitment and the selfless attitudes demonstrated by the physician members to date suggest that the council will avoid provincialism and self-interest in selecting its future members.

Looking back, nine important steps led to the successful evolution of the early vision of the CEOs for physician participation into the current physician council:

1. From the beginning of the merger discussions, both CEOs and the members of the two boards showed a deep commitment to authentically involving physicians in the process. The system acted unilaterally and unconditionally in inviting physicians into the process.

2. Physicians were involved in designing the structure.

3. Medical staff leaders were given broad latitude to define systems and structures that would genuinely channel organized physician opinion and perspective directly to the board.

4. Rules were kept simple.

5. The objectives to be achieved by the designers were few and clear.

6. Adequate resources were made available.

7. When the need arose for a consultant to help organize the physicians' ideas, the system supported the need. When the need for formal physician leadership within the administrative structure was identified, the recommendation was considered, approved and executed.

8. Organization leaders consistently demonstrated sincerity in seeking powerful physician influence on the organization. The structure provides that the physician council reports directly to the board, potentially bypassing the CEO--a very unusual arrangement for administration to promote and one that reflects a great deal of confidence in the leadership.

9. The council's influence is real. Physician council recommendations are highly valued and regularly implemented. The system has been unwavering, truly "walking the talk" of physician involvement.

By letting go of some control and allowing physicians to genuinely participate in setting organizational priorities in areas the board and administration might more typically have reserved for themselves, Virtua is beginning to develop a genuine partnership with its physicians.

RELATED ARTICLE: VIRTUA HEALTH COMMUNICATION COMMITMENTS

Ground rules for interaction between the health system and physicians

Physician Involvement

Virtua is deeply committed to physician participation in all important system decisions and initiatives, especially those relating to clinical care, strategic relationships, quality and the physician work environment.

Decision Making

Physicians are important stakeholders whose opinions are valued and always considered. System decisions are the purview of Virtua management, which is accountable to the Virtua Board of Directors for its actions and decisions.

Physician Roles

When invited to participate in a Virtua initiative or committee, physician members will be clearly informed of the role they are filling (technical, political, individual, medical staff representative).

Authentic Criticism

Since physician input is always sought, authentic criticism is expected and is welcome. Apparent project momentum should not limit such participation. Physicians will be involved as early in the decision-making process as possible to allow useful, meaningful participation.

Commitment

Closure and commitment are important steps required for the medical staff to be a reliable partner with administration in critical Virtua decision-making processes. The product of medical staff participation in Virtua decision making is a commitment by the medical staff leadership on behalf of the medical staff to support or occasionally oppose Virtua decisions. Such commitments will be made explicitly at the appropriate point in the decision-making process. The medical staff leadership will take ownership for these commitments and work to ensure ongoing physician staff support for them.

Advocacy

The medical staff leadership and Virtua management are obligated to identify and promote positive achievements and trustworthy behaviors by the other party and to speak up to correct substantial inaccurate perceptions among their membership. Appropriate and constructive criticism will always be welcome.

Agreements

When the medical staff and Virtua management have agreed to an action or decision, they mutually commit to provide active support to the agreement.

Timeliness

All communications will be addressed and responded to in a timely manner. Every effort will be made to provide sufficient time for thoughtful participation by all involved parties.

Follow up

When medical staff (individual or collective) input has been solicited concerning an important Virtua decision, an explicit report of the outcome of the process and reasoning behind the decision will be provided to the medical staff leadership.

Competition/Collaboration

The health system recognizes the importance of physician support for important initiatives. Collaboration in business activities is desirable within existing regulatory and legal limits. Where system and physician interests do not coincide, competition is legitimate and expected.

Miscommunication 

In the face of miscommunication or misunderstanding, administration and the medical staff commit to engage, seeking clarification and constructive conflict resolution.

Conflicts of Interest

Conflicts of interest will be openly announced and addressed.

Mark Van Kooy, MD, is a Six Sigma Black Belt at Virtua Health, a four community hospital system in southern New Jersey. He served as program director of the family practice residency at Virtua Memorial Hospital for eight years prior to becoming a Black Belt. He can be reached by phone at 856/355-0075 or by e-mail at [e-mail].

Walter Hartley Ettinger Jr., MD, MBA, is executive vice president at Virtua Health, Inc. He joined the organization in 1998 as Virtua Health was created from the merger of Memorial Health Alliance and the West Jersey Health System. He can be reached by phone at 856/355-0008 or by e-mail at [e-mail].