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Driving Profitable Growth Through Physician Alignment

February 12, 2012 by HSG

For hospitals and health systems around the country, the last few years have been characterized by increased financial pressures that have resulted in reduced top-line revenue and operating margins. These financial pressures come from the revenue side in the form of reduced reimbursement from payers, increased no-pay patient volume, and a lack of physicians; and from the expense side, in the form of IT infrastructure to deal with reform issues, and subsidies for physician employment, among others. These pressures have hospital administrators calling us with questions about how to grow revenue, and for that growth to be profitable.

Below, we’ve listed seven tactics that are typically addressed in physician alignment plans facilitated by HSG. In our experience, the following seven strategies are applicable to most markets, and will not likely be impacted by changes to healthcare reform:

  1. Develop your physician alignment model…whether its employment, co-management, or something else entirely. If employing physicians, develop a common compensation model that incents the physicians to produce VALUE, not just volume, for the hospital. Alignment also ensures provider availability, reducing the risk to profitable service lines in the hospital.
  2. Assess strategic physician manpower needs…in addition to doing a community need assessment. When doing manpower planning, many hospitals stick to the traditional definition of the Stark III market to meet regulatory requirements. However, in doing so, you are not assessing the need of the other markets your hospital services or could service through an employment strategy.
  3. Grow regional volume…through the implementation of a primary care strategy. Evaluate primary care need not only in your immediate market, but in the regional market. Aggregating primary care physicians in key areas, and supporting them through a defined marketing strategy and robust hospitalist program will drive volume to your hospital.
  4. Separate and strengthen physician relationship roles…in order to make sure each role is delivering value to your organization. We typically see the recruitment, services, and liaison functions combined and being executed by one or more people, preventing focus on each area. By separating these roles, and having separate goals for each, accountability, and the likelihood of success, will increase.
  5. Evaluate medical staff capabilities…with a focus on profitable service lines. By evaluating outmigration and market share by DRG within a service line, gaps in capabilities or perceptions in capabilities can be identified, and addressed through your recruitment or marketing strategy.
  6. Involve physicians in addressing clinical challenges…that will impact reimbursement and damage your bottom line. Physician leadership is required in truly impacting the way care is delivered. To address clinical core measures, HCAHPS, readmission rates, and other revenue-impacting quality measures, getting physicians involved is necessary.
  7. Engage self-insured employers…before your competition does. With costs of healthcare rising, self-insured employers are continually looking for ways to reduce costs. Engaging these employers in a discussion to see what mutually beneficial arrangements can be explored is a great first step to driving their volume to your physicians and hospital. Alternatively, ignoring these relationships is a great first step to losing what volume these employers provide to a competitor.

To discuss leveraging your physician alignment strategy into profitable growth, call us.

Category iconArticles,  Physician Strategy Tag iconPhysician Alignment

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Travis Ansel

(502) 814-1182 tansel@hsgadvisors.com

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