In 2009, our hospital client — a 175-bed hospital in the Southeast — had a largely independent physician base and a handful of employed physicians. There was no alignment strategy to guide its relationships with either group. With HSG’s assistance, the hospital grew the employed group from 8 providers to 40 over a three-year period. The resulting downstream revenue turned a -2% margin in 2009 to a +4% margin in 2012.

However, as gains from downstream revenue from retained referrals leveled off, the hospital recognized the need to achieve additional “value” from the group to help offset the losses being generated by practice operations.

In addition, as the employed group grew, independent physicians in the community felt increasingly isolated and at odds with administration.

How HSG Helped

HSG facilitated a planning process that consisted of hospital leadership, independent physician leaders, and the executive committee of the employed group’s physician advisory board.  This group discussed common challenges in the market, how they could help the hospital address its strategic and operational challenges, and how to recruit new physicians into both independent and employed practices.


A common plan was defined that had buy-in from the representatives of both physician cohorts.  As a result, the employed and independent physicians had a better working relationship, and the hospital was able to jointly leverage these groups to tackle physician-driven initiatives such as quality and cost performance improvement.


David W. Miller

Founder and Chairman