The underlying reason a PO succeeds: an offense, not defense.

THE LIFE SPAN OF A PHYSICIAN ORGANIZATION (PO) is predictable. The longevity is based largely on the raison d'etre of the organization. Does the PO exist as a defensive or offensive move in the marketplace?

If a PO was born as a defensive measure to try to stall managed care, the PO will likely experience an early death. On the other hand, if the PO was organized to give the market a superior delivery system that attracts payers, employers, and patients like magnets, the PO is likely to stand the test of time.

In other words, physician leaders in successful PO's do not dwell on old health care war wounds. They put their energy into building a delivery system that drives in quality cost effectively. Though physicians may wear black eyes from school yard skirmishes with payers and hospitals, they know they must concentrate on delivering outcomes that make their organization the preferred health care network from among a laundry list of provider networks, i.e. PHO's, first generation IPA's, second generation IPA's, PSN's (provider service networks), and IFDS's (integrated financial delivery systems).

In the midst of building a PO in Kansas City, we paused several times to re-examine the raison d'etre for the Community Health Partners. Was it a defensive or offensive move? Were we simply tired of getting the black eyes and ready to fight back, or was this group of physicians compelled by a vision for a physician directed health care delivery system that could drive in quality and drive in efficiencies like no other?

The answer of Community Health Partners' board was a resounding "yes;" the physicians were committed to a vision, an offensive strategy, not a myopic act in defiance of hospitals and payers. The board believes in the power of physicians and allied providers to provide managed care that wins accolades from patients and their employers, the constituencies most cherished by providers and payers.

What are the specific offensive strategies CHP has implemented to bring about our vision? In Part I of this series, we discussed five reasons for CHP's progress: (1) A working, knowledgeable board of respected physicians, (2) A board that moves ahead on simultaneous tracks, (3) a willingness to affiliate with any hospital or payer that really knows how to partner with physicians, (4) developing quick wins and communicating the progress, and (5) educating physicians about the new ground rules for capitation.

We offer six additional reasons our physician organization has been able to move the ball down the field toward the goal of a preferred network in our community.

Reasons for success

1. The board is willing to make tough decisions about which specialists participate with the PO in professional and global contracting.

One of the first decisions a PO must make when capturing professional capitation contracts is identifying the specialists to include on the panel. While nearly all the literature recommends making this tough decision based on (1) specific ratios between primary care physicians and specialists, (2) geographic location of practices, and (3) size of the entire group for a given population, the prospect of having to decide among peers is less than collegial at best.

When it comes to making this call there are at least two different approaches to narrowing the panel of specialists. The first approach allows specialists to select themselves based on whether they accept the offer made by the PO. In the second approach, the board itself narrows the panel and notifies the specialists of its selection. In either instance, there will be backlash coming from specialists because this is not a come one, come all offer.

The approach used by CHP called for creating a list of specialists who CHP's primary care physicians referred to more than 50 percent of the time. Specialists on this list received a letter from CHP offering them membership in the organization and one unit of ownership for a $2,000 fee. CHP also held a meeting with the invited specialists to answer their questions, and held another meeting to present a new clinical outcomes research system that will assist us in deciding which physicians are ultimately credentialed into CHP. The fee will be refunded to those specialists who are not credentialed into CHP.

Though most specialists seemed interested in joining a physician organization, some balked at sharing in the risk through a withhold with upside and also wanted equal governance with the primary care physicians. The board decided not to accede to those demands, primarily because members did not want to become less attractive to payers by attracting specialist who were not savvy about the managed care environment and the value of contracts that gave access to savings in professional and global risk pools. Additionally, the board did not want to lose the interest that has been growing among potential capital partners in investing in a primary care driven organization.

Today, CHP has 58 specialist members. Though nonvoting, specialists play a vital role on the medical management committee, making up the majority of members and largely determining how we use our outcomes-based research to modify clinical behavior, if appropriate. The specialist committee members will also help us figure out how to use the tool of outcomes data to support the physician credentialing process. Furthermore, specialists serve on the contracting committee.

2. Outcomes based data is used to help physicians adjust performance, protecting against under utilization as well as over utilization

Few would dispute that physicians are more likely to adjust their clinical behavior in a peer review setting than in a top down command-and-control setting. Moreover, a physician-owned, physician managed organization is most likely to reap the greatest benefits of rigorous peer review.

I do not know many physicians who dismiss hard clinical and financial data if they believe the data has integrity and is put in context when discussed. Most physicians I know are willing, if not eager, to compare their performance with that of their peers in an educational setting, as opposed to a punitive environment. We are a competitive and performance oriented lot who thrive on achieving.

While CHP is at the beginning stage of implementing the outcomes system, we already see the medical management committee wholeheartedly engaged in developing the analytical process for interpreting the data. Committee members are asking learned questions about how fast and how far the system can take us. For example, they want to know if the system, purchased from Codman Research Group and modeled after the ambulatory groups established by Johns Hopkins, can drill down the data to answer questions about individual patients. Can we look at the treatment and history of individual patients? Or, how can we analyze outcomes of subspecialty procedures which require greater numbers of covered lives than are available with our number of covered lives?

A presentation by Phil Caper, MD, the President of Codman who is an internist and pioneer in outcomes research, also contributed to the credibility of the data tools and underscored the mission of the medical management committee. Caper met informally with many members of the committee and emphasized the key role of physicians in deciding how to use the data and selecting the performance benchmarks to which they will cross-tabulate the performance of our own physicians.

3. Credible sources educate physicians about the organization's value

The person delivering the message is key to its credibility or dubiousness. Messages are far more likely to be believable if we take the time to research the information and cite credible sources--from nationally respected health care leaders and reporters to leaders in the health care financial community.

For example, in our newsletter, Physician Update, we are likely to cite a statistic from solid publications, like The Physician Executive published by the American College of Physician Executives, Medical Economics published by the American Medical Society, or Health Affairs published by the Hope Project.

Potential capital partners, such as bankers, practice management firms, and venture capitalists, can also be good sources for presenting information about national and regional trends and describing the inextricable relationship between care and finances. During board meetings, we have asked potential capital partners to present the value of a physician organization based on the cold, but influential, evaluations of the banking and investment community.

Knowledge of the financial stability and viability of the organization helps physicians gain the savvy to step into the world of management and make business decisions. While our intention is to build a delivery network so members do not need to sell their practices, the worth placed on the PO gives physician owners confidence in their future.

We try to keep all our communications about CHP activities compressed in brief capsules of information, such as one page bulletins or one hour meetings, yet there are times when the education process requires a lengthier process. So, for those physicians who will take the time to read through background information, we provide packets of information, including white paper reports and trade publication articles. We almost always provide a one page executive summary stapled on top of the material. With the summary, we raise the awareness levels among even topical readers of the material about the agenda at hand.

4. Small group face-to-face meetings with opinion leaders are prioritized; town hall meetings are the least preferred.

Though the tendency is to communicate with physicians and other constituencies in the most expeditious manner, it is short-sighted to send out a fax when a face-to-face meeting is, in the long run, far more effective. Sometimes, a quick fax that is intended to provide a "quick fix" to communications can even be harmful and put up roadblocks.

Many key issues will require that the total membership, board and non-board physicians alike, be given the background information before a vote. Small group informational meetings are likely required as a format in which issues can be presented and options discussed for their possible and probable impact.

Under almost any circumstance, large town hall meetings are not the best forum for productive discussions. What often happens in this setting is that a few physicians dominate the discussion, even though they are not likely addressing the opinions or concerns of the majority of the group. Dissent can be healthy, but not if it is coming from a few disgruntled physicians who are intractable and whose agenda is obstructionist.

Though small group meetings are far more likely to reap thoughtful debate, many times we have called these meetings only to find that maybe half the physicians are in attendance. But what we have discovered is that the number of attendees is far less important than the make-up of the crowd. That is, if the physicians present depict a cross-section of the opinion leaders, this is a far better showing than if the seats are filled with physicians who are unlikely to communicate the messages effectively and credibly to others. Opinion leaders can, and usually do, communicate their beliefs to the absent physicians in the lounge or in the hallways.

5. The organization is beginning to teach business leaders about the benefits of a physician-owned, physician managed organization.

After one year in formation, CHP is reaching out to employers and patients to underscore our value to the community. We use a number of channels of communications, including the media. Largely through newspaper and magazine publications, we talk about the initiatives of our physician organization that benefit patients.

To ensure that our physician organization and leaders are quoted properly and talked about in a way that reflects reality, we educate local reporters. As the organization grows and attracts attention for the unique way in which we are developing our network, we are also spending more time discussing the issues with reporters on the national scene. To support that education process about the way we look at health care delivery, including the complex world of capitation, we prepare "white papers" for reporters. These documents give a detailed overview of where our physician organization fits against the back drop of national and local trends in health care and how our delivery of care is differentiated from other networks.

Tantamount to the success of the PO is the ability to protect the hard earned relationship of trust developed over decades between patients and physicians. We must continually earn that trust by educating increasingly savvy decision-makers and patients about why it is important that physician organizations thrive in their communities. We owe it to our communities, as well as our peers, to underscore our value, set expectations for the delivery of care, and deliver on our promises.

6. The organization learned how to take a stance and say "no" to payers and hospitals.

There are many times during the young life of a PO when the board is likely to be momentarily seduced by the offers of hospitals to fold into PHOs. Perhaps the PHO is a superior choice for the physicians. Perhaps the PHO is able to attract payer contracts. Perhaps the hospital is willing to share appropriately the savings in the institutional pool.

But just in case the PHO cannot deliver, physician leaders have to be willing to look the hospital administrators in the eye and say "no" to the idea of joining the PHO. Hopefully, there are other ways to develop real partnerships with hospitals. For example, the PO and hospitals can explore ways to create separate risk pools for contracts with the same payers. Or the organizations can explore ways to share encounter information and clinical outcomes data.

As we said in part 1 of this article, physicians have to run straight toward the lion's roar if they expect to be treated with respect at the negotiating table. If physicians flinch and run and hide every time the lion roars, if they acquiesce when the time calls for tough choices and decisions, physicians are likely to lose the race. "Behold the turtle," the saying goes, "he makes progress only when he sticks his neck out."

Physicians must stick their necks out, or we will surely lose the race to manage health care in the way we know gives patients and employers the best option. Of course, it is easier to stick our necks out when we see other physicians willing to do the same, and that's what physician organizations are all about.

Elizabeth M. Gallup, MD, JD, MBA, is the Executive Director of a start up physician organization, Community Health Partners, in Overland Park, Kansas. Gallup coauthored the newly released ACPE book, How Physicians Can Avoid Surrender and Lead Change with Cyd Slayton, CHP's Planning and Marketing Director. They are also consultants with Stratics Healthcare. They can be reached at 913/894-8882.