CHAPTER 16 Physicians and Health Care Organizations: Achieving Aligned Performance Seminar 9

PhysiciansPhysicians Revenue generator Revenue generator Outside normal employment relationship Outside normal employment relationship Individual autonomy Individual autonomy Independent decision making Independent decision making Difficult to integrate into culture Difficult to integrate into culture

PhysiciansPhysicians Source of admissions Source of admissions Initiators of ancillary services Initiators of ancillary services Sole source of revenue in a practice Sole source of revenue in a practice Compensate themselves Compensate themselves Clinical and support staff Clinical and support staff Operating expenses Operating expenses Critical to understand physician behavior Critical to understand physician behavior

Traditional Roles of Physicians Office-based physicians Office-based physicians Practice owners Practice owners Independent, autonomous professionals Independent, autonomous professionals “Three-legged stool” “Three-legged stool” Clinical autonomy Clinical autonomy

New Role of Physicians Shared responsibility for patient care Shared responsibility for patient care Involvement in quality and efficiency improvement Involvement in quality and efficiency improvement Physician accountability Physician accountability Larger physician groups Larger physician groups Reduced reimbursement rates Reduced reimbursement rates

Change in Practice Arrangements Medicare payment rates declining Medicare payment rates declining Rising operating expenses Rising operating expenses Increase in volume Increase in volume Ancillary services Ancillary services Mid-level practitioners Mid-level practitioners Movement away from hospitals Movement away from hospitals Hospitalists Hospitalists

Physician Populations Three distinct physician populations Three distinct physician populations 1. “Hospital-dependent” physicians 2. “Hospital-independent” physicians 3. “Hospital-irrelevant” physicians

“Hospital-Dependent” Physicians Pathology, radiology, anesthesiology, and emergency medicine; hospitalists, intensivists, and neonatologists Pathology, radiology, anesthesiology, and emergency medicine; hospitalists, intensivists, and neonatologists Some employed by hospital Some employed by hospital Strong interest in hospital’s economic success Strong interest in hospital’s economic success Involved in hospital initiatives Involved in hospital initiatives

“Hospital-Independent” Physicians Orthopedics, cardiology, otolaryngology, gastroenterology, pulmonary medicine, OBGYN Orthopedics, cardiology, otolaryngology, gastroenterology, pulmonary medicine, OBGYN Office and hospital Office and hospital Privileges at several hospitals Privileges at several hospitals Concerned with efficiency Concerned with efficiency Don’t want to commit extra time to hospital Don’t want to commit extra time to hospital Tenuous “loyalty” Tenuous “loyalty”

“Hospital-Irrelevant” Physicians Internists, family physicians, pediatricians, dermatology, psychiatry, allergy Internists, family physicians, pediatricians, dermatology, psychiatry, allergy Rarely provide care in hospitals Rarely provide care in hospitals Little involvement Little involvement Big source of admissions Big source of admissions Significant economic influence Significant economic influence Difficult to engage Difficult to engage

Rural Hospitals Rarely more than one hospital Rarely more than one hospital Physicians dependent on hospital’s economic health Physicians dependent on hospital’s economic health Different practice patterns Different practice patterns No option to move elsewhere No option to move elsewhere Mutual dependency Mutual dependency Relationships and communication are key Relationships and communication are key

Medical Groups Growing size Growing size Professional practice administrators Professional practice administrators Most are professional corporations (PCs) Most are professional corporations (PCs) Practice autonomously Practice autonomously Access to colleagues Access to colleagues Escalating economic pressures Escalating economic pressures Productivity critical Productivity critical

Medical Groups Relative value units (RVUs) Relative value units (RVUs) Gross charges generated Gross charges generated Shared accountability Shared accountability Expectations written in a “compact” Expectations written in a “compact” “I’ll take care of my patients, and the group will run the business” “I’ll take care of my patients, and the group will run the business” Changing demographics of physicians Changing demographics of physicians

Future Concerns Emphasis on aligned incentives Emphasis on aligned incentives Hospital acquisition of practices Hospital acquisition of practices Physician-hospital organization (PHO) Physician-hospital organization (PHO) “Bundled” payments “Bundled” payments

Management Guidelines Learn as much as possible about the economics of physician practices Learn as much as possible about the economics of physician practices Understand that there may be significantly different economic motives among different groups of physicians Understand that there may be significantly different economic motives among different groups of physicians Look for opportunities to create initiatives that are “win-win” for both physicians and the health care organization Look for opportunities to create initiatives that are “win-win” for both physicians and the health care organization

Management Guidelines When launching joint ventures with selected physicians, anticipate and proactively manage opposition from physicians who are not involved in that venture When launching joint ventures with selected physicians, anticipate and proactively manage opposition from physicians who are not involved in that venture Communicate to excess Communicate to excess Develop relationships with administrative leaders of physician groups Develop relationships with administrative leaders of physician groups

Final Exam

This exam is comprised of 20 True/False questions; 40 multiple- choice questions; and 9 essay questions. The exam is timed at three hours, so please ensure that you have set aside an uninterrupted slot of time in which to complete this test, which covers the nine units of our work in this class. This exam is comprised of 20 True/False questions; 40 multiple- choice questions; and 9 essay questions. The exam is timed at three hours, so please ensure that you have set aside an uninterrupted slot of time in which to complete this test, which covers the nine units of our work in this class. What is the best way to approach this exam? Make sure that you understand the key concepts from each of the nine units of study. What is the best way to approach this exam? Make sure that you understand the key concepts from each of the nine units of study. Also, take the time to carefully read each question. Also, take the time to carefully read each question. You have over 2-1/2 minutes to answer each question. You have over 2-1/2 minutes to answer each question. Generally speaking, if you carefully read a question and the supplied possible answers, you can eliminate some of the answers right away. Generally speaking, if you carefully read a question and the supplied possible answers, you can eliminate some of the answers right away.

Final Exam (continued) Take your time. Don’t rush through the test. Take your time. Don’t rush through the test. Essay questions. Spend some time refreshing yourself on the following: Essay questions. Spend some time refreshing yourself on the following: Boston Consulting Group Business Grid Boston Consulting Group Business Grid Competency Trends Competency Trends Cultures and Subcultures Cultures and Subcultures The meaning of “proactive management program” The meaning of “proactive management program” Differences between rural and urban hospitals Differences between rural and urban hospitals

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