Understanding the best practices in managing an employed network is critical to the health system’s success. HSG’s insights, developed in fifteen years of consulting with hospital-employed physician networks and two years of managing them under contract, can be applied to all networks. There are six areas of focus we recommend.

Leadership. Selecting the right leadership dyad (administrative and physicians) will help set the tone, providing clinical, strategic, operational, financial, and cultural direction. These individuals must work together to drive a plan, the culture, accountability, and communications. We address some of these factors in more detail later in this article. Click here to read an article on group leadership.

Building a Strategy. Know where you are going and how you intend to get there. Ideally, start with a formal strategic plan for the group that complements and supports the health system’s overall strategy. This is not something that the physician organization does on its own, but rather completes in collaboration with hospital leadership.

A key part of such a process is the long-term vision of the network, what the players want the network to look like 5-10 years down the road. A vision shared by hospital executives, the physician network’s leadership team, and the physicians of the network will go a long way toward improving group performance. Click here and here to read case studies on how to create a shared vision and the value it can produce.


Engage your physicians in defining and reinforcing the desired culture for the network. Never losing sight of “the patient first” will help foster a great culture. We find it useful to task a Physician Advisory Council with defining the culture, but also find that vision of the group is valuable as well.

That said, the real culture must constantly be reinforced and starts with the physician leaders of the group. Bottom-line, the best of intentions with a strategic plan are destined to fail if the group lacks the culture to make necessary changes, to stay disciplined and focused on the long-term vision. What’s more, a culture of accountability at every level is imperative if the network is going to be successful and bring true value to the health system. Click here to read more.


Accountability is such an important part of a group’s culture that is deserves its own section. And, it’s likely one of the most difficult issues to address in a newly formed network.

Accountability must permeate every aspect of a physician’s practice: accountability for outcomes, costs, productivity, interactions with partners and support staff, and responsiveness and availability to referring physicians that produce greater patient volume. Too many times we’ve seen organizations struggle unnecessarily because they were afraid to hold physicians accountable. Again the tone must be set by the leadership dyad and the Physician Advisory Council.

Management must also be accountable for results. Accountability for budgets, customer service, EMR operations, and revenue cycle are generally key areas of focus. We see group accountability generally mirror the level of accountability in the hospital/health system, and is difficult to create if the broader organization is slacking.

Finally, hold support staff accountable. Staff should have goals, targets, and metrics that they are measured against. Targets such as percentage of “clean claims” and filling the daily patient schedule. Like the physicians in the group, staff must be accountable for customer service, including attitude, effort, and progress toward stated goals. If your “leaders” are not holding them accountable, then you’ve got the wrong leaders.


Communication failures often cause group failures, and we recommend communications of both expectations and results. Expectations must be communicated to frontline physicians and those in leadership roles. This is also critical in dealing with practice acquisitions and the changes that will be inherent in that transition. Try to explain how operations and governance will change after the transition—don’t say “your practice won’t change.” Having the physicians understand the chain of command and how decisions will be made is critical to culture long term success.

Finally, set goals for physicians and staff and communicate performance as it relates to those goals. This communication comes in the form of dashboard reports that show performance versus goals, budget, historical performance, and benchmarks. It also comes in the form of weekly staff meetings in the offices, monthly office manager meetings, quarterly Advisory Council meetings, the administrative leader of the group and regional supervisors making the rounds at the practices. Other techniques like group email blasts and newsletters can support these face to face efforts. And as always…influencing daily word of mouth co-worker to co-worker and colleague to colleague is important.

Revenue Cycle.

Many of our clients have utilized their hospital revenue cycle infrastructure and team to do the professional service billing for their employed provider networks. Some have done so successfully, but most have not. They have lost hundreds of thousands of dollars, and often millions, unnecessarily. Frequently, we find issues with workflow and manpower—too many claims and not enough people to be effective. Hospital billing and electronic medical record systems with a “physician practice module” has frequently been a source of frustration as well.

A major issue with many networks has been at the front end of the entire process—credentialing. No matter how eager you are to get a physician employed and started practicing within the network, you must allow enough time for the physician to be appropriately credentialed with Medicare and the commercial payers. Otherwise, the physician will end up sitting idle or seeing patients and providing professional services for free. In order to get off on the right foot, networks need to allow 90 to 120 days for appropriate economic credentialing. To learn more about this topic, read our eBook on Revenue Cycle Management.


HSG’s consulting and management contract practices have taught us a lot. One of those lessons is to focus on the leverage points, to focus where you can make a difference. The factors above are those points. By effectively addressing these issues, you will improve your group’s performance. And if you need help to jumpstart the effort, we are always available.

Neal D. Barker

Partner and Managing Director, Compensation and Compliance