Physician Integration – Operational Excellence Priorities: Practice Management, IT, and Compensation

After the initial rush to employ physicians, attention invariably turns to how to efficiently manage the employed practices.  This frequently happens when the financial drain of the practices reaches a level that the hospital or system deems unsustainable.  While the physicians are now employees of the system, it is often the case that the practices are not well organized or aligned within the system.  In some cases, large guaranteed compensation agreements are in place and physician practice management capabilities have not been built.  It is not surprising that in these situations the practices are not financially viable, nor is the physician network able to achieve its strategic goals (if goals have been identified).

The most expeditious way to overcome this hurdle is to transition as quickly as possible into optimizing operations, the second phase of physician employment.  In this phase, the physician enterprise develops its administrative core and builds skills around managing the practices, while continuing to grow the base of employed practices.  Hospital management often underestimates the specialized skill set needed to direct this process.  Given the inherent complexity of leading a medical group within a hospital or health system, we believe the following are the most critical elements to focus on in order to ensure success:

  • Ensuring effective billing and revenue cycle performance.
  • Providing ambulatory care IT infrastructure.
  • Implementing EHR and practice management systems.
  • Negotiating managed care agreements.
  • Standardizing policies and procedures.
  • Monitoring physician performance and behavior.

To be effective during this phase, leadership must have credibility with the physicians and experience in managing group practices.  It is important for managers to be able to continually engage physicians in maintaining focus on operational improvement opportunities while allowing the physicians to build and strengthen their clinical practices.  Hospitals and medical groups compete for the limited pool of people with appropriate experience, but a seasoned practice manager is essential at this point if the employed practices are to operate efficiently.

Our next post will focus on Phase 3 of physician integration:  Clinical Coordination.

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This entry was posted in Healthcare IT, Managed Care Contracting, Physician Performance, Physician Strategy, Strategic Planning and tagged , , , by Sean Hartzell. Bookmark the permalink.

About Sean Hartzell

Since joining ECG in 2007, Sean has focused on strategic and financial planning, service line development, and hospital/physician alignment with a particular interest in hospital/physician employment transactions. He is a contributing member of the firm’s transaction advisory service line, which focuses on developing and disseminating the firm’s thought leadership in the areas of transaction planning, facilitation, and implementation, and he has published thought leadership pieces and spoken nationally on these topics. In addition to transaction advisory services, Sean has extensive experience in hospital strategic planning, orthopedic service line development, physician compensation plan design and implementation, and physician compensation fair market value analysis. Previously, Sean held business development and finance positions at Inova Health System. He received a master of business administration degree from the Darden Graduate School of Business at the University of Virginia and a bachelor of science degree in operations research and industrial engineering from Cornell University.

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