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Physician Integration – Operational Excellence Priorities: Practice Management, IT, and Compensation

Integration 2

After the initial rush to employ physicians, attention invariably turns to how to efficiently manage the employed practices. This frequently happens when the financial drain of the practices reaches a level that the hospital or system deems unsustainable. While the physicians are now employees of the system, it is often the case that the practices are not well organized or aligned within the system. In some cases, large guaranteed compensation agreements are in place and physician practice management capabilities have not been built. It is not surprising that in these situations the practices are not financially viable, nor is the physician network able to achieve its strategic goals (if goals have been identified).

The most expeditious way to overcome this hurdle is to transition as quickly as possible into optimizing operations, the second phase of physician employment. In this phase, the physician enterprise develops its administrative core and builds skills around managing the practices, while continuing to grow the base of employed practices. Hospital management often underestimates the specialized skill set needed to direct this process. Given the inherent complexity of leading a medical group within a hospital or health system, we believe the following are the most critical elements to focus on in order to ensure success:

  • Ensuring effective billing and revenue cycle performance
  • Providing ambulatory care IT infrastructure
  • Implementing EHR and practice management systems
  • Negotiating managed care agreements
  • Standardizing policies and procedures
  • Monitoring physician performance and behavior

To be effective during this phase, leadership must have credibility with the physicians and experience in managing group practices. It is important for managers to be able to continually engage physicians in maintaining focus on operational improvement opportunities while allowing the physicians to build and strengthen their clinical practices. Hospitals and medical groups compete for the limited pool of people with appropriate experience, but a seasoned practice manager is essential at this point if the employed practices are to operate efficiently.

Our next post will focus on Phase 3 of physician integration: Clinical Coordination.

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