In the crusade for higher quality and lower costs, physicians are on the front lines. To survive under reform, hospitals and health systems must shift their focus to managing care processes, and that will require changing physician behavior. What better place to start than by using your employed physician network as the “tip of the spear” ? What you learn can then be applied to the rest of the medical staff.

As you set your employed group development priorities, HSG recommends including these five objectives in your battle plan:

Objective One: Institutionalize Best Practices.
Defining the best practices and making them part of the day-to-day reality of medicine is crucial. This requires three action steps:

  1. Determine the Care Processes with the Greatest Variability and define the relevant best practices.
  2. Manage the Data, both concurrent through the EHR and retrospective, to create a data trail that documents and helps change and improve performance.
  3. Develop Physician Leadership by determining what physician will be responsible for working with peers to drive changes in performance.

Objective Two: Make Quality a Component of Physician Compensation Models.
Compensation models must evolve as the market increasingly demands value. Operating losses may mandate a focus on productivity, but there is a real need for employed physicians to take the lead on quality, best practices, and care coordination. Updating the model to drive these behaviors is imperative. Your employed group is the place to start.

Objective Three: Develop a Physician Culture with Clear Expectations.
This is critical to transforming your employed group from a collection of independent practices to a strategic weapon. Norms and standards must be set and enforced by the group leaders. Just as senior hospital leaders have to set the tone and define expectations, being part of your group must come with clear expectations in terms of:

  • Behavior
  • Clinical Performance
  • Quality
  • Patient Satisfaction
  • Productivity

Objective Four: Improve Access to Your Network.
With the growth in insured populations, meeting the demand for access will be challenging. Provider networks that create new models, and can accommodate this new demand, will be winners. Expanding your complement and number of extenders is essential. Medical home models can help. No matter what tactics you select, meeting the demand for access is a must.

Objective Five: Reduce Operational Losses.
We see group losses as having two components: strategic and operational. A strategic loss is paying a primary care physician $200,000, because the doctor is integral to servicing a specific market, despite the fact that he/she can’t produce enough revenue to cover that salary. The bigger challenges are operational losses, created by poor systems and an inadequate management infrastructure. Our assessments indicate that about half the losses in hospital-owned practices result from revenue cycle mismanagement. Other common issues include poor compensation models, low productivity, and not consolidating practices for efficiency. Burgeoning practice losses have many hospitals feeling great pain. In fact, it’s probably the most urgent issue facing our new clients today.


David W. Miller

Founder, Board Member