The days of laissez faire relationships with the medical staff are no longer possible. The tide has changed, and the degree to which you will be successful will depend on your ability to engage the medical staff in collaborative problem solving. In addition to the uncertainties of healthcare reform, hospital CEOs are facing:

  • declining reimbursement from all payers;
  • demands to be transparent in performance and quality;
  • competition from the medical staff for profitable services;
  • real pressures to implement clinical integration and reduce costs; and
  • the need to defend core services and grow market share.

Failure to make the right decisions now will impact your hospital’s ability to compete. The question then is, what are my options and how do I put the pieces together to solve the puzzle? We will address these questions and provide insights gained from helping hospital executives solve the physician alignment puzzle.

What are the many factors that affect the puzzle and how do they fit into your thought processes for developing a physician alignment strategy? The many factors that must be considered as you craft a physician alignment strategy include:

  1. Your hospital’s position in the market is fundamental. Are you dominating the market with real core strength in selected services? Or, are you at a competitive disadvantage with the need to strengthen or build key service lines?
  2. Have you identified the key services that will be the foundation for your hospital’s growth and profitability? This is a critical step. Proper resource allocation is a must if you are to effectively protect and grow your core services.
  3. Are you financially strong with a dependable revenue stream and a solid balance sheet? This is critically important, as you may need to fund initiatives that do not throw off a positive cash flow in the near term.
  4. Market demographics are of critical importance. If your market is growing in population and has a reasonable payer mix, then your strategy can be more aggressive than if you have a stable or declining population and an unfavorable payer mix.
  5. The capabilities of your management team are a crucial component that must be considered as you develop your strategy. You need to have the right people in the right positions if you are to be successful.
  6. Are there competitive threats from other hospitals in your market that will influence your decision making? It is rare that this is not the case, and this makes planning your alignment strategy absolutely critical. You can no longer afford missteps in today’s environment.
  7. Do you have a network of employed physicians? Most hospitals have been employing physicians either as an offensive move or a defensive position. With declining reimbursement on the horizon, employed physician networks must operate efficiently and be an integral piece of the puzzle. It is imperative that you have a strategy to maximize the value from your employed physician network.
  8. What is your relationship with the independent physicians in the community? Are you viewed as a competitor? Or is there a careful balance of trust between your hospital and the medical staff? These are important questions that need to be addressed as you prepare to embark on a planning initiative.
  9. Do you have the respected physician leadership necessary to help you garner the support of the medical staff? This is the cornerstone of the relationship puzzle and cannot be understated. Without it, you may face an uphill struggle to gain buy-in from the medical staff as you try to implement change. An investment in developing key physician leaders will pay dividends.
  10. Is your board of trustees up to speed on the challenges facing the industry and, specifically, your organization? Education and updates on key topics should be provided periodically.

These are the most critical questions and issues that we normally work through as we craft a strategy. Certainly, there may be others that are specific to your situation, but, make no mistake, failure to consider and address these issues will result in a flawed plan.

In “Physician Alignment Strategy… Solving the Puzzle, Part Two” we will focus on the alignment alternatives that we normally consider, and how these may result in strengthening your hospital’s relationship with the medical staff.  This is important to understand, as there is no one perfect strategy. Rather, there are a number of different approaches and tactics that will come together to complete the physician alignment puzzle.


Travis Ansel

Chief Executive Officer and Managing Director, Strategy