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3 keys to improving hospital/physician relations.

You think this is hard? You're not imagining things. The physician executive is hired to do a job that in many ways is impossible--to bring physicians and the institution together to work on common goals.


The "Powers That Be" may well think that hiring you solved the problem. You know that it's not so simple. Corralling docs has been likened to herding bees.

So how do you get the docs on your side? Let's go over the options.

First of all, it's a job that has to be done. A future that looks increasingly data-driven and customer-driven, a future in which we are looking fiercely for much greater efficiencies and much more effective care at much higher quality, demands a much higher level of teamwork between physicians and institutions.

Since the physician is the key decision-maker on almost everything that incurs cost or effects quality, any institution that wants to effect cost and quality together must do more than gain physician cooperation in a good arms-length relationship. It must make them core members of its team.

The traditional model, with the physicians as independent actors trading the use of the hospital facilities for minimal medical staff work, time spent on review committees and taking emergency calls, does not fit this future--and in any case it is increasingly breaking down.

Doctors, on their side, can do more and more procedures and tests in the office. The use of hospitalists by many institutions relieves the referring physician of the need to come to the hospital at all, and many don't.

Today's physicians are increasingly reluctant to take call, or to support the hospital's social mission. And often, they set up shop in direct competition with the large institutions, with their own clinics, specialty hospitals, and imaging services. Their customers often feel more comfortable in doctor-run environments; the doctors can design their own work environments, and they make more money.

And you, as a physician executive, are in the middle. Clearly, you are the linchpin of any new model. Yet your ability to influence your fellow physicians is seriously limited. They are more oriented to their profession and their training than to any institution.

By training, business model, self-selection and habit, physicians are independent-minded. You are often viewed as an adversary, one who has crossed over to the other side--and increasingly you feel and think less like a physician, as your administrative duties make it difficult or impossible to see patients.

Clearly this plays out differently in various national systems, such as the U.S., the U.K., Canada, and Australia. But the larger issues are the same: Physicians and institutions are growing more estranged at the very moment that the real needs of health care demand that they come together.

Fortunately, a great deal of study has gone into what works and what doesn't in getting physicians to forge better relationships with institutions. The conclusions are sometimes counter-intuitive, and they have not propagated throughout even the U.S. health care system.

And, though some of the structures and incentives are different, the U.S. experience offers some key insights to other systems. There are three keys to improving hospital/physician relations: person-to-person, financial and structural.


Decisions that affect patient care, professional prerogatives and physician control are too often made at the executive and board level without input from the working physicians. Simple listening makes an enormous difference: dinners or breakfasts that put the CEO and the medical leadership together. There should be no "black boxes."

Get the physicians involved in decision-making and take their opinions seriously. Get medical committees working on such direct clinical matters as best practices, order sets and the formulary.

Involve physicians in a serious way in strategic thinking, capital planning, care models and nursing issues. It helps as well if physicians feel that the institution advocates for them over payment issues and the malpractice problem.


Looking at physicians as true colleagues can, in itself, change the institution's relationship with them.


Financial incentives aimed at aligning the physicians' interests with those of the institution--such as pay for performance, care management program incentives, and gain-sharing--have their place, but none is a panacea.

Pay for performance, where you give physicians extra incentive pay to meet specified clinical goals (whether outcome or process), does work, but it has limitations. Patient outcome measures are problematic and must be carefully risk-adjusted. And while whatever you measure does tend to improve, other things don't.

Perhaps most importantly, if the "suits" are picking the goals, the docs are not really involved. PFP becomes just one more top-down program, so its effects do not tend to propagate into a general improvement in quality.

Giving physicians incentive pay to get involved in care management programs does work quite well, but again only when the physicians are heavily involved in designing and implementing them. If the "suits" have a strong hand in design and implementation, forget about the docs being involved.

Gain-sharing giving doctors a share in any cost savings gained through, say, normalizing on one brand of stent and letting the institution do a volume deal--has its own problems. There are serious legal and tax questions to look into.

If you are looking at something broader than the cost of an individual item like stents, you need to establish cost-per-case baselines and quality standards. Data for over-and under-65 patients need to be separated. And the whole institution must be in the black.

It really rankles people to pay a subset of docs extra for anything when the institution is suffering. But the biggest problem is that gain-sharing is self-limiting. Okay, you drove the cost of stents down 30 percent this year and established a new base line--but you can't repeat that trick every year.


Institutions in the U.S. have tried a plethora of structural changes, from paying a few physicians extra to be medical directors of specific programs to simply employing all their physicians, with varying degrees of success.

Some will form a "clinical council" that includes the CEO of a physician organization affiliated with the institution, the elected chief of staff, the institution's employed chief medical officer (CMO) or vice president of medical affairs (VPMA), a primary care medical leader and the institution's vice president of patient care services (who is often a nurse).

The council assesses outcomes, fosters collaboration and works out technology implementation issues in all aspects of the institution (outpatient, inpatient, and ancillary).

Many institutions get deeply into providing operational support to physicians, such as management services or information technology. Studies show that such support does help align the physicians with the institution's goals.

Such programs work especially well if they actually increase the physicians' productivity through the use of physician extenders, electronic medical records and other remote access IT, and through hiring hospitalists and intensivists to limit the need for the docs to come into the hospital.

Structural solutions, such as physician-hospital organizations (PHOs) and independent practice associations (IPAs) are largely not successful, mainly because they are not really independent. Institutions tend to use them to centralize decision-making in the institution, and the docs turn off to them.

What works better is setting up a management agreement, with performance incentives, with a physician group. This gives the physicians input into the operation. You can link some pay to specific performance measures. The strategy does not create a new provider which could compete with you. It does not require the docs to put up equity. And you can require a noncompete clause: These docs will not go out and set up their own competing clinic.

Simply hiring the physicians might seem to be the solution. Just pay them, and you can tell them what to do. But even this strategy has its ups and downs.

In the past, at least, institutions often paid a premium for physician practices, buying them up just to rescue them. Physicians have often been compensated without regard for either their economic productivity or their usefulness in the new team-oriented models of health care.

And the institution can end up with legal and business problems with non-employed physicians, including inadvertently encouraging them to set up shop in competition with you.

On the other hand, employing some physicians is one way, often the only way, that you can ensure that you have the personnel to build up vital product lines. It can be cheaper to employ physicians than to give them "call pay" in areas that really need physicians on call, such as neonatology and orthopedics.

You can tie some of the physicians' pay to specific clinical and cost goals. And there is no question that salaried physicians show stronger alignment with the system.

Getting them on your side

The studies and surveys show that "physician alignment" occurs in the details and the attitudes. If you want physicians on your side, you have to get them really involved.

If you want to limit their power (for instance, to compete with you), you may have to cede them some power (for example, to influence your strategic decisions, or to design and implement your clinical care programs).

You may have to help them be efficient, by lifting some of their administrative burden. In short, you have to recognize both their clinical and business concerns. As a physician yourself, you bring the key experience to the task.

Joe Flower is a nationally known health care futurist and CEO of Imagine What If, Inc., which is building the new online world for health care executives, the Healthcare Futures Exchange. He can be reached at
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Title Annotation:Next!
Author:Flower, Joe
Publication:Physician Executive
Date:Sep 1, 2007
Previous Article:A new model: outpatient pediatric diabetes improves care, profits and protocols for managing other chronic illnesses.
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