Population health and accountable care models continue to gain traction as the industry shifts away from the traditional fee-for-service provider payment structure.
This article appears in the September issue of HealthLeaders magazine.
The 2013 Physician-Hospital Alignment Survey demonstrates that healthcare organizations are recasting their priorities to meet the expected requirements of industry reform. And, as the annual HealthLeaders Media survey reveals, not only are there changes in emphasis regarding employment models, but also there is increased pursuit of collaborative relationships and at-risk payment models. Leaders are showing increasing interest in undertaking initiatives in population health and accountable care models.
Looking at population served
Maximizing admissions has been a long-standing objective of hospital-physician alignment efforts. As the healthcare industry shifts away from fee-for-service, more treatment will take place in outpatient and ambulatory environments and the patient mix will change in those settings as well as at acute care hospitals.
Intelligence Report: Physician Alignment in the New Shared Risk Environment
Leaders at hospitals and health systems will probably rely more on their specialists, which will make it important to offer a targeted set of specialty services and to have a primary care network with sufficient coverage to provide the necessary referrals.
Pamela Stoyanoff, executive vice president and chief operating officer for Methodist Health System, which operates five hospitals and 1,161 licensed beds in the Dallas area, summarizes the classic approach to building referrals: "You have to shore up referrals, and physicians in your primary care network are the ones who are giving specialists their referrals. I think that's one reason so many health systems are buying big physician primary care practices."
Motivating physicians to participate in quality and safety initiatives is included among the top three physician alignment objectives by 73%, more than any other objective. But nearly half of respondents (47%) say one of the top three objectives behind their physician alignment strategy is to maximize the patient population served, which doesn't necessarily mean maximizing admissions.
"We've done a lot of things to try to improve access to care, which gets patients the right care at the right place at the right time, " says Scott Nygaard, MD, chief medical officer at physician services for Lee Memorial Health System in Fort Myers, Fla., which serves Lee County through four acute care hospitals. "We're trying to create a better delivery system."
Is fee-for-service sustainable?
Alignment discussions are taking on a flavor of collaboration or mutual accountability, fostered by doubts on the part of many in acute care settings about whether the fee-for-service business model is sustainable.
"Physicians are trying to understand how they go from being just a commodity and become a value-added partner," says T. Clifford Deveny, MD, senior vice president for physician services and clinical integration for Catholic Health Initiatives, an Englewood, Colo.–based not-for-profit health system that operates 86 hospitals in 18 states.
When the very financial foundation of the industry is on the table, a different discussion can take place. Deveny, lead advisor for this report, says, "One issue is: How do you transform the physicians into accountable leaders, leaders who will help devise the models, or drive the models, or create financial sustainability? Physicians can't be passive."
Even though it is more common, still, for both parties to approach the alignment topic with income preservation in mind, larger groups with financial stability may provide an early view of what is to come in a more competitive environment.
"There's been a lot of discussion around income preservation and keeping physicians happy," Deveny observes, "but mature physicians are saying, 'We're financially sustainable. We know where we're going. We're looking for a partner, a hospital system partner.' That tends to be a better discussion, but I would say that's the rare instance where you're seeing that type of a discussion."
An emerging competitive environment
When large groups with financial stability and access to a patient population of sufficient size come to the bargaining table, it is not necessarily the hospital's bargaining table. Deveny says, "Along the front range of Colorado and in California, I've seen large organized primary care physician practices that are taking a large amount of risk directly from insurance companies, typically through the Medicare Advantage plans."
Command over the referral base will increase the competitive stature of such large groups. "Because they're organized and they're controlling a large amount of dollars, in a sense they have created almost a commodity situation with specialists and with hospital systems," Deveney says. "And because their patients are loyal to them and [reduced] payments are motivating the private care doctors to send people to the highest-quality, lowest-cost venue, they're using data to move patients to different venues of care."
Deveny calls this the advocate model of primary care, in which acute care facilities are "beholden to the new requirements and the new expectations of the primary care physicians." At this stage, he does not know how extensible the model is. "Will they develop in other markets, or will the lack of capital or the lack of physician leadership to create the necessary culture keep it from happening?"
Stoyanoff, an advisor for this report, says that even though only 32% of respondents place physician retention among their top three physician alignment objectives (sixth highest of eight response options), retention is a top mission for her. "In most of the markets I'm in, physician retention is a big reason behind our physician alignment strategy. We need to create effective models."
Deveny expects that the new dynamic will improve outcomes and lower costs. "Where the physicians become organized and are using data, they're in a position of strength. They've got a choice on health systems, and they can move populations overnight, based on cost and quality. I think it's going to be a healthier environment for everybody—we should have healthier communities and at least some flattening of the cost curve."
Which model? All of the above
Near-term shifts in organization models indicate that hospitals and health systems will place more emphasis on collaboration. One-fifth of respondents (22%) include clinical integration among their top three staffing models now, but three years out, twice as many, or 46%, expect to be involved in clinical integration.
"We're going to be doing more partnering with physicians rather than employing or just underwriting them," Deveny says. "It will be a shared-risk or pay-for-performance structure. We're going to come together, share data, and present ourselves as a network. Collectively, we will either all succeed or fail." On-staff physicians will have to be more collaborative as well. Clinical comanagement agreements stand at 15% now, and respondents say that will increase to 30% in the three-year time frame.
As clinical integration and clinical comanagement gain more support in the coming years, medical staff appointments, hospitalists, and paid directorships are finding fewer proponents. Overall, the result of these shifts is a broadening of support for a variety of models. Says Deveny, "The bottom line is that people do see physician engagement as being important. And they don't see employment as a be-all, end-all. Survey results confirm that there is still a lot of diversity of thought, and not everybody's betting the farm on one model."
Nygaard of Lee Memorial, a report advisor, keeps the mission in mind as alignment choices are examined. "If we can prove that we're providing pretty good access, whether through employment or partnerships, I'm not really wedded to a given model per se," he says. "How do we know when we've succeeded? When we've fulfilled our mission, which is to meet the healthcare needs and improve the health status of the people of southwest Florida. I'm open to a lot of those staffing models, but we have to achieve the goal."
"Healthcare reform provides a huge impetus for looking at other models," Stoyanoff says. "When you're implementing population health management or an ACO, you have to have physicians working with you. Physicians are not going to want to be part of every ACO on the planet. They'll start to pick and choose, and you want them to pick you."
Independents remain viable
Although much has been made of a physician hiring frenzy, survey responses show that independent physicians have critical mass and do not appear to be threatened in the near term. "A lot of the physicians still prefer not to be employed," says Stoyanoff. "Even though the numbers of physicians we're all employing are growing, there are still a lot of entrepreneurial physicians out there."
As Stoyanoff suggests, survey results do show expected increases in employed physicians and decreases in independents. The average percent increase in employed physicians in the three-year time frame is 40%. Over the same time period, the average percent decrease in independent physicians is expected to be 29%.
But with the average number of employed physicians standing at 246 per respondent compared to 693 per respondent for independents, the latter will be in the majority three years hence, despite the expected decrease. "I've doubled the number of employed physicians," Stoyanoff says, "but that's still only 10% of what we have. There still are a lot of independent physicians out there."
A learning process
When respondents talk about current and near-term initiatives, the talk is about collaboration and risk-sharing. Today, 41% of respondents are involved in an ACO, up from 26% in last year's survey. Within three years, 55% will be pursuing or involved in an ACO.
Stoyanoff acknowledges that, for Methodist Health System, learning is an important benefit to be derived from making such steps.
"A lot of healthcare institutions are wondering about learning to manage patients along the continuum of care," she says. "We are focusing primarily on the development of our ACO, which started a year ago. And we are in a Medicare Shared Savings Program, so we're learning how to manage lives from a global perspective."
Other collaborative care models are gaining traction, according to survey respondents. More than half of respondents (52%) are now undertaking initiatives related to a patient-centered medical home, up from 39% a year ago, and 58% expect to be there within three years. Similar growth is seen for the population health model, which was a current initiative of just 25% last year, now stands at 33% of respondents, and will reach 51% within three years.
Hospitals and health systems also are learning about at-risk payments. Higher percentages of employed physicians are being compensated for clinical quality and patient satisfaction metrics, and the level of incentive is increasing, too. Now, 17% of respondents report that compensation for clinical quality and patient safety for employed physicians is in excess of 10%. That percentage will increase to 44% in the three-year time frame.
"That's something that we're all going to be emphasizing over the years to come," says Stoyanoff. "Employing physicians is still an expensive endeavor, so even in an employment model, we like to have a portion of their salaries at risk for performance targets." Again, she recognizes learning opportunities when establishing at-risk incentive programs: "It's making a lot of organizations struggle because we don't necessarily know how to go about establishing those metrics, or have experience tracking them, or even know which ones we should choose, but it is something that we're all going to concentrate on."
Maturing relationships
Deveny notes that early steps are being made with physicians, steps that include accountability and data-based decisions. As relationships mature, he says, "We all have the obligation to show our value to our communities and to the people who are going to be purchasing healthcare."
Deveny anticipates a patient-as-consumer focus. "Medicare Advantage is a good example," he says. "One by one, you've got to convince every one of those enrollees that they want to give up Medicare and move to your Medicare Advantage plan, and you're going to have to have strong reasons for them to move. That's why I say physicians can't be passive. We won't be in the income preservation business anymore. We've got to require more out of both parties, but then the health systems have got to be just as accountable to the physicians on performance."
Reprint HLR0913-3
This article appears in the September issue of HealthLeaders magazine.
Michael Zeis is a research analyst for HealthLeaders Media.