Around the country, hospitals are assembling networks of physicians. Driven by the economics of medical practice, many physicians are seeking partnerships with hospitals because they are perceived to be relatively stable and have greater market power. And, driven by the problem of ensuring an adequate supply of physicians, many hospitals are seeking partnerships with physicians, as these doctors can help to guarantee the financial stability of the hospital.
But once these partnerships are developed, it is entirely possible for the relationships to sour. Hospitals often struggle with the financial losses, while physicians struggle with the loss of autonomy. The evolving relationships require a new culture and a new way of relating, and the participants do not always have the tools needed to forge those relationships.
One important tool is the development of a strategic plan. The process of developing the strategic plan provides a forum through which physicians and hospital executives can better understand each other’s perspectives and expectations for the relationship. This greatly improves the opportunity to chart a collaborative course of action.
The elements of the strategic planning process for a physician network are not substantially different from those of a hospital strategic plan. The process should address the vision, create measureable objectives, define core strategies, create implementation plans, and include the development of a financial plan. This planning should be based on a detailed analysis of the market, competitors, the environment, and the internal capabilities of the organization.
Based on our experience with physician networks, however, there are a core set of eight issues that must be considered as the network develops its plan. Physician and executive leaders should address these issues as they discuss the vision, objectives, and strategies of the group.
Physician Leadership. Physician leadership is crucial. No network can thrive without great leaders. The two key questions are: How does the network develop leaders? And what roles will the leaders fulfill? The planning process will help define the roles. And, how leaders will be developed should also be defined in the planning process.
Quality. What is the group’s vision for quality and what are the specific objectives? How will the group approach developing a culture that supports quality? How will physician leaders engage the group in this journey? And how will it deal with physicians who cannot measure up? Again, the planning process will help the leaders define specific details that will drive the network to improve quality.
Patient Satisfaction. The importance of this issue is growing with HCAHPS, and the network should develop a unified set of expectations and a desired set of outcomes to address patient satisfaction levels during the planning process.
Utilization/Efficiency. CMS efforts are making this issue crucial. With pay-for- performance and bundled pricing growing over time, networks that can work together to produce efficiencies will have real value. A key part of this challenge is information, both on how inefficient care affects the hospital and how it affects physician’s profitability. Creating a shared vision and supporting that with strong physician leaders and good information is crucial to long-term success here.
Growth. Groups will either grow or decline, and the shared vision around this issue is an important element of long-term success. The network physicians must define their approach to six elements of growth: geographic expansion or new locations; additional physicians in existing locations; new specialties; increased retention of referrals within the network; physician productivity; and increased service offerings, such as new ancillary services. The mix of tactics selected should be consistent with the hospital’s needs and strategic priorities.
Compensation. This is always a controversial issue, and the philosophy around workload and productivity expectations and compensation expectations should be part of the planning process.
Electronic Medical Records. Trends in health care will require the development of sophisticated IT capabilities, and this issue must be part of the planning process. Based on experience, EMR implementations are both difficult and expensive, particularly as they affect billing and cash flow. Because of the upheaval that is inherent in the implementation, the physicians and the management team must work to create a shared perspective on this challenge.
Financial Performance. Expectation and reality often differ when it comes to financial performance of these networks. That becomes an acute problem when the board focuses on the dilemma. A network strategic planning effort can help with that issue by developing a financial projection that supports the strategic plan. By working together, physicians and executives can create an agreed-to road map, making it easier to get back on track when financial challenges arise.
An employed physician network must have a strategic plan. Without it, stress between the physicians and executives will be higher. Without it, teamwork to meet mutual objectives will be harder to achieve. Without it, the risks to the executive team will be higher, as they will have greater difficulty changing physician behavior and getting physician support of needed changes.
In that planning process, it may be easy to get sidetracked. By focusing on the eight elements above, the chance of developing a strong network with a strong sense of partnership will be greatly enhanced.