It is Time for a Fresh Look at Hospital Losses on Employed Physicians? Part 3 of 3

05 Jun It is Time for a Fresh Look at Hospital Losses on Employed Physicians? Part 3 of 3

Silo-ImageBy Randy Bauman © 2017

It is Time for a Fresh Look at Hospital Losses on Employed Physicians?
Part 3 of 3

by Randy Bauman

Note: In Part 1 of this three part series I discussed the best ways to minimize losses, which can best be managed during the acquisition process.

Part 2 examined typical options for improvement and why they meet with little success.

Part 3 proposes some new perspectives and paradigms that are needed to effect real change.
New Perspectives and Paradigms

Perspectives need to change. There aren’t any easy fixes and throwing money at assessments and canned solutions won’t work. Actions steps need to go outside the norm.

1.    Sift, Sort and Cull – admit that some acquisitions were ill-advised. Some physicians don’t fit and will never be happy in an employed model and that is OK. Sometimes you grow by subtraction. Both sides need to recognize this and strive toward the oxymoron of a “friendly divorce.”

We recently helped a group of 12 specialists leave a hospital in the Midwest. Both sides managed to arrive at an amiable separation and still be friends. To accomplish this, both sides subsumed their egos and compromised. Both the hospital network and the physicians are better off financially as a result and are still “partners” in accountable care and population health management.

2.    Encourage Operational Innovation – treat each practice as unique, because it is. This applies to both operations and physician compensation. As Emerson said, “A foolish consistency is the hobgoblin of little minds.”

Move away from treating each physician, office and specialty as part of one homogeneous group. Providing flexibility that allows each office to experiment with operational protocols that capitalize on their uniqueness, rather than hindering them with one size fits all. Cost cutting happens from the top down but efficiency, if properly ingrained in a culture, is gained from the bottom up. Strive to create a culture that drives innovation, efficiency along with employee satisfaction.

3.    Do the same with physician compensation. Large and complex compensation plans that apply across hundreds of physicians in different specialties and subspecialties are counter-productive and generally fail in their stated goal of “aligning incentives.” In many cases they become so complex that they aren’t even understood. Aligning incentives is best done at the practice level where both the employer and the employee can get on the same page.

Losses will always be present in employed physician practices. The question I always ask CEOs is “what is the appropriate level of losses and what can I do to attain and maintain that level?” Answering those two questions thoroughly and accurately shifts the discussion from “losses” to “value” and helps the organization move forward.