2. Summary Projected Business Landscape Physician Employment's Role
Growth in physician employment is expected to continue
Nearly one-third of future physician strategies will be around co-managements, directorships, and other professional arrangements
Physician Employment's Role
Less than one-fourth of CFOs expect physician employment to result in positive ROI
Employment's role in improved care coordination, market share, physician engagement, and referrals will be key benefits, say CFOs 2

3. Summary (contd.) Shifts in Performance Management
Physician incentives will begin to focus less on productivity and more on quality, costs, and panel size
Few hospitals have the structure, infrastructure, or capabilities to use data to manage population health within an accountable care environment
Key Relationship Dynamics
Physician practice functions that most frequently report to hospital/system leadership include IT, financial reporting, and billing; patient registration is less likely to report to the hospital/system 3

4. Summary (contd.) Satisfaction with Group Processes
Overall, executives are more satisfied with physician group processes when reporting into the hospital vs. the physician practice
Executives indicated they were “somewhat” or “not at all satisfied” most often with practice-based oversight of coding and documentation and least often with practice-based financial reporting and billing 4

5. Growth in Employment Expected to Continue
Anticipated Growth in Physician Employment
Median = 10%
12-Month Growth
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 5

6. Less Than a Quarter Will Maintain Current Physician Strategy
Future Physician Community Strategies
Increasingly pursue clinical co-managements, directorships, or other professional arrangements
Increasingly pursue professional service agreements (PSAs)
Increasingly pursue joint equity/ownership ventures
Maintain current physician strategy
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 6

7. CFOs Do Not Expect Physician Employment to Yield a Positive ROI
ROI Expectation for Physician Strategies
Do you believe your organization will achieve a positive ROI after 2 years of physician employment? No
Yes
* Further breakdown shows 21% of hospitals with >100 beds; 29% of hospitals with 500+ beds
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 7

8. Care Coordination Seen as Chief Benefit to Physician Employment
Results Anticipated Two Years Post-Employment
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 8

9. Physician Employment Expectations
“Our emphasis is on care coordination to gain efficiencies throughout the system.”
Chief Finance Officer, Hospital with 100 Beds or Less
“It is increasingly becoming a defensive strategy …we are particularly targeting cardiologists.”
Chief Financial Officer, Hospital with Beds
“Employing physicians will be the key to our survival in our marketplace.”
Chief Financial Officer, Rural Hospital 8

10. Today’s Physician Contracts Chiefly Incent Volume
Basis for Incentive Under Current Physician Agreements*
* Participants asked to select all that apply
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 10

11. Basis for Incentive Under Physician Agreements*
Future Physician Contracts More Likely to Incent Quality, Cost Management
Basis for Incentive Under Physician Agreements*
* Participants asked to select all that apply
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 11

12. Accountable Care Preparedness
Few Hospitals Have the Structure, Infrastructure, or Capabilities to Manage to Physician Data
Accountable Care Preparedness
How prepared is your organization to manage the following areas within an accountable care environment?
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 12

13. Reporting Relationship by Function
Most Practice Functions Report to Hospital/System Leadership or Are Co-Located
Reporting Relationship by Function
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 13

14. Key Relationship Dynamics
“Clinic-based services is an area that could no longer stay alone as a department of the hospital. A new VP was hired to reorganize the 501(a) structure from the revenue cycle to management of physicians.”
Chief Finance Officer, Health System
“Culture is important. There is a difference between an organization being led by physicians and one that just employs physicians.”
VP Finance & Treasury, Hospital with More Than 500 Beds 13

15. Satisfaction with Physician Group Processes
Executives Are Somewhat to Not at All Satisfied with Processes of Their Employed Physician Groups
Satisfaction with Physician Group Processes
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 15

16. Satisfaction Level Considering Reporting Structure
Executives Are More Satisfied with Hospital- or System-Based Billing, Collections, and Coding
Satisfaction Level Considering Reporting Structure
40%
35%
30%
25%
20%
10% 5%
Percentage Indicating “Completely Satisfied”
Source: Executive Survey on Hospital and Physician Affiliation Strategies, Sponsored by McKesson. 16

17. Physician Strategies
“We have a multi-layered approach with employed, contracted, and community-based physicians, transitioning from FFS to value–based arrangements.”
Vice President and CFO, Multi-Hospital System
“Our physician strategy involves establishing incentives and revising contracts.”
CFO, Critical Access Hospital
“Our emphasis is managing costs. This includes increasing the number and use of physician extenders.”
CFO, Hospital with Beds
“We are working to put the physicians — rather than the hospital — at the center of care coordination, but it is very difficult.”
CFO, Hospital with Beds
Q10 Do you have any additional comments or feedback related to your hospital-physician strategy? 16

18. Summary of Research Response
139 Responses from Hospital and Health System CFOs and Vice Presidents of Finance
Bed Size Category
Response
Greater than 500 Beds
22%
Beds
12%
Beds
24%
Fewer than 100 Beds
42%
Geography
Response
Urban
54%
Rural
46% 17

19. About HFMA About Our Sponsor
HFMA is the nation's leading membership organization for healthcare financial management executives and leaders. More than 39,000 members-ranging from CFOs to controllers to accountants-consider HFMA a respected thought leader on top trends and issues facing the healthcare industry. HFMA members can be found in all areas of the healthcare system, including hospitals, managed care organizations, physician practices, accounting firms, and insurance companies. For more information, see hfma.org.
About Our Sponsor
McKesson Revenue Management Solutions is a leading provider of medical billing and practice management services. Now with the recent acquisition of MED3OOO, a healthcare management and technology services company, the combined organization offers a comprehensive portfolio of advanced technology and strategic services designed to improve productivity, grow revenues and help customers succeed in an accountable care environment. McKesson RMS supports McKesson’s Better Health 2020™ strategy which is focused on providing the capabilities needed to reduce costs, improve financial performance and successfully manage complex payment models. 19