Changes in health care economics are driving the trend toward physician alignment as systems form partnerships with providers through mergers, acquisitions and employment. However, it's important to realize that physician alignment is a means, not an end. Health care organizations' ultimate goal as they race to align with physicians today is to capture patients tomorrow. The good news is that when this approach works best, no one benefits more than patients.
Stated another way, growing market share requires that your organization understand market needs and provide necessary services to drive patient volumes. To gain that knowledge and understanding, organizations need physicians because of the critical role they play in aggregating patients. This positions physicians as the linchpin in the health care system of the future, which brings us back to why physician groups, health systems and even payers are in an all-out race to recruit them. But it's not quite as simple as merely adding physicians.
Trustees will need to approach the goal of increasing patient market share not just by amassing providers, but by moving through distinct phases to develop a successful partnership.
Phases of Physician Alignment
Experience shows that successful physician alignment that increases patient market share should occur through four separate, sequential phases: aggregation, optimization, patient outreach and patient market share.
- Aggregation. Alignment begins when an organization increases the number of physician practices and locations in a specific geographic marketplace. This can be achieved through employment, practice acquisition, or formal, exclusive clinically and financially integrated groups with long-term common goals for providing care in the local marketplace.
A primary care physician is often the first touch point for a patient at the earliest stage of a health care need, which is why primary care physicians should be a significant consideration in an organization's overall alignment strategy. Additionally, an organization has to make key decisions about its market type, size, geography, existing physician infrastructure/organization and desired service lines, as well as the type of care demanded from its emergency department. While the health care system can emphasize particular service lines, the demands of its local market and competitive landscape ultimately will influence its patient market share strategy.
- Optimization. Following alignment, systems should implement best practice workflows and operations at the physician practice level to increase the profitability of each practice. Optimization is more than new technology deployment; it involves transparent, benchmarked, sequential information that will create positive behavior changes at the practice and physician level.
Three levers, which are most effective when used in the following order, can optimize a physician practice:
• Productivity is defined as revenue-cycle management functions, charges, relative value units, accounts receivable days outstanding, payment per RVU, over-the-counter collection rates and managed care contracting. Breaking these functions into digestible pieces of information for evaluation is critical to achieving optimization for the physician practice. These metrics not only identify results, but also provide insight into operations.
• Overhead costs in a general physician practice are approximately 60 percent people, 20 percent occupancy, 10 percent supplies and 10 percent administrative costs. Medical practices are fixed-cost businesses whereby additional revenue above the break-even point contributes to a higher margin. Enhanced workflow processes and operating metrics are essential for optimizing overhead relative to the productivity of the individual practice.
• Physician compensation includes salaries, bonuses and any benefit costs. This lever comes after productivity and overhead because it should be the result — rather than the driving force — of optimization. Compensation is the most complex portion of the physician practice optimization phase and, while compensation methods have evolved, they typically have little impact on the optimization of an individual practice. Regardless of compensation model, it is important that the physician have an economic influence on the financial and clinical outcomes of the practice.
Without improvements and transparency in productivity and overhead, physician compensation discussions can become unproductive, emotional arguments about an individual physician's value. By first focusing on the improvements, workflow processes and operational metrics, the conversation can turn to tangible expectations, productivity and deliverables rather than emotion.
- Patient outreach. Once a health system has aligned with a provider and optimized the practice, patient outreach can begin. This is the process of using patient data to reach, direct and manage patient access along care patterns and within the local physician network. Patient outreach involves the use of patient navigator processes and agnostic patient scheduling systems to improve patient access with better information on a timely basis.
As an example, data can be used to determine if Medicare patients have scheduled their annual wellness visits or can provide overviews of how many diabetic patients older than 65 have not scheduled an office visit in more than 180 days. With these indicators, health systems and individual practices can tap into a new level of patient understanding and customer service, which directly boost office revenues.
The data used for patient outreach are derived from optimized revenue cycle management information and do not require use of electronic health records, which makes it an administrative vs. clinical initiative.
By using patient information that already has been collected, the outreach phase can provide immediate good medicine, positive practice economics and proactive customer service. It's a win for the doctor, the organization and the patient.
- Patient market share. Remember, it's ultimately about growing market share. So, beyond patient outreach, the provider seeks to gain patient market share by identifying distinct local market needs. These needs then are matched with services provided by a physician practice in the right setting, at the right time, with the right provider and under the right practice economics.
Once a practice has achieved the first three phases, a view into the local market helps health system leaders to understand the needs of the community. Tailoring care to these specific needs organically drives patient volumes. The ongoing collection and refinement of data provide statistically significant information that can be applied to meet real health care needs and economics. In this phase, alignment becomes a viable tool to provide better quality health care with significant market share benefits.
Successful physician alignment goes beyond a health system partnership with physicians. With the proper approach, physician alignment is a method of aligning a health system with the needs of the community it serves. To be successful, a health system must follow a phased approach with the ultimate goal of expanding patient market share. While it can be tempting to look for a quick, easy method, each phase of physician alignment has a unique objective that naturally progresses to the next phase.
Through this process, alignment creates mutually beneficial provider relationships that improve care delivery and the system's function as a whole. When done successfully, however, it fosters the most important relationship: the one with your patient.
John R. Thomas (email@example.com) is chief executive officer of MedSynergies Inc., Irving, Texas, and serves on the foundation board for the Dallas County Community College District.