Last week, over 1,500 leaders of large medical groups met in Washington, DC for the American Medical Group Association (AMGA) Annual Conference to collaborate on how high-performing organizations are navigating the challenging and changing healthcare market. Top of mind were how to improve ambulatory operations and the growing trend of health system–employed physician practices and medical groups. According to a recent report completed by Avalere Health and the Physicians Advisory Institute (PAI), the number of employed physicians nearly doubled from mid-2012 to January 2018, when 44% of all US physicians were employed by hospitals or health systems. ECG’s National Medical Group Cost and Infrastructure Survey indicates that the average medical group invests $228,147 per physician FTE. Working with groups and health systems across the country, we have seen organizations reduce their investment per physician by up to 24%.
Evaluating Opportunities for Meaningful and Sustainable Improvement
As health systems venture into physician employment, the transition period can determine how the relationship plays out. Some physician practices expect to maintain their practice operations, including billing and administration. Others hand operational control over to the health system and in return expect high performance and a collaborative environment. Managing both types of practices can be difficult, but this initial employment period is a stage that we refer to as Physician Enterprise 1.0. To evolve to high performance, or Physician Enterprise 3.0, health systems must invest in the key levers that drive organizational excellence.Through our partnerships with health system clients, we’ve identified key elements that compose the physician enterprise maturation process. These elements are depicted in the graphic below, followed by five focus areas for health systems seeking to build a Physician Enterprise 3.0.
1. Drive Change by Being a Physician-Led Organization
As health systems adapt to value-based care models, physician engagement in enterprise-level decision-making has become critical. The physician perspective informs strategic decisions and is pivotal in designing effective solutions to reduce costs, improve quality, empower patients and physicians, and increase access to care. Many organizations have implemented dyad models, which align clinical and administrative leaders—or even triad models that add a nursing leader—to create a culture where physicians are engaged in setting the vision and are therefore more willing to support the changes required to achieve it. Organizations that successfully cultivate and empower physician leaders can manage performance improvement initiatives with faster adoption and collaboration.
Through the Physician Enterprise 3.0 framework, we identify how organizations manage day-to-day operations and implement performance improvement opportunities using leaders from across the physician enterprise. In addition to breeding a high-performing culture, a physician-led organization can build a reputation that attracts top physician candidates.
2. Align Physicians with Health System Strategy
Physician enterprise development focuses on the employment model and contracting. However, before moving to this stage, leadership must address certain critical questions to appropriately grow ambulatory operations:
- Are there specialties that we need to grow our Centers of Excellence?
- Are we serving our patient population through offices in locations they can access?
- How are we growing the physician enterprise while coordinating with the health system’s investments in new services like urgent care and ambulatory surgery centers?
Aligning the physician enterprise strategy with these questions, and more, will allow the health system to function as a single entity with a focused vision. Many organizations are establishing operating models that link physician enterprise governance to the health system’s executive team and board. Such structures mean the physician enterprise has direct accountability to the health system’s strategic plan and can coordinate resources alongside the health system to execute the necessary components of the plan.
3. Manage with Data and Transparency
Leadership must use data reporting throughout the system. Physicians who join the employment ranks from private practice are used to a level of transparency in financial and operational performance that must be met or exceeded to drive change across the enterprise.
Health systems need to build out their processes for compiling, managing, and distributing data. High-performance medical groups do this in a manner that supports a physician-led culture. The use of system-wide data and analytics capabilities that objectively evaluate clinic and physician performance using common terminology and measures is paramount. The Physician Enterprise 3.0 framework uses analytical, quantitative components that build on a foundational data management and analytics infrastructure and enable consistent and easily repeatable performance evaluation.
4. Integrate Support Services for Operational Efficiencies
While practices may insist on maintaining their revenue cycle and IT functions, integrating these services can ultimately drive physician and patient satisfaction. Health systems are moving to a single-system IT standard, which allows for billing and operations to be managed more easily across offices and staffing. Through integration, certain costs such as supply chain, recruiting, and others can be reduced.
Ultimately, the transformation to a cohesive infrastructure with a single platform for managing operations requires collaboration among all practices. Developing the right governance and management structure to advise and lead this initiative will build sustainable success.
5. Create an Ideal Patient Experience through Consumerism and Digital Health
Physician enterprises must adopt innovative methodologies to maintain communication with patients. Patient portals, wearables, and consumer-driven technologies are becoming more widely adopted, by both health systems and patients. A health system’s ambulatory operations are often referred to as the front door of the organization—the way patients and referring physicians first experience the health system brand. But this analogy is continuing to be reimagined with the emergence of telemedicine and virtual care.
To align with outside industry contemporary trends, physician enterprises should consider comprehensively engaging their patients both in the office and virtually. Hotels and ride-sharing companies are just two examples of service providers that have transformed the way organizations can engage with their consumers. Seeing healthcare through this lens provides a whole new context to the way physician offices can grow their patient panels.
Boiling It Down
With the increase in employed physician models, organizations need to develop a cohesive infrastructure that supports the physician enterprise and improves performance of ambulatory operations. Patients and referring physicians experience the brand and reputation of a health system through its ambulatory operations; therefore, organizations must drive performance improvement in ways that serve their patients and the health system’s strategic vision. Physician enterprise performance is becoming the most important aspect of achieving health system financial and operational success. However, the differences between ambulatory operations and acute care management (revenue cycle management, referral management, data and reporting capabilities, contracting, etc.) require expertise and strategic investment to achieve high-performing standards.
A health system must understand its current ambulatory position to properly invest in performance transformation initiatives that drive true change. Only through this true understanding can a health system begin to transform from its current position to a high-performing ambulatory operation, or Physician Enterprise 3.0.