Intelligence Report: Physician Alignment

Healthcare leaders face the alignment challenge of more closely integrating physicians across the continuum.

This article first appeared in the September 2016 issue of HealthLeaders magazine.

Healthcare providers are being challenged to balance the requirements of today's fee-for-service model with a plethora of current and developing risk-based payment models, managing their organizations as best they can as they navigate a changing industry landscape. One of the keys for succeeding in this environment is developing a physician alignment strategy that is rigorous enough to meet today's needs, and flexible enough to adjust to industry developments as they arise. Respondents to our 2016 HealthLeaders Media Physician-Hospital Alignment Survey indicate they are using a variety of alignment mechanisms, including clinical integration, employment contracts with incentives, ACOs and risk-sharing agreements, and others. No one alignment technique dominates.

A common thread in many of the alignment strategies is a recognition of the growing need for collaboration across the continuum—organizations that are fully integrated and aligned will likely reap the rewards under value-based models, and those who falter will face an uncertain fate.

Physician alignment business objectives
Perhaps not surprisingly, respondents say that maximizing financial performance (67%) is the top business objective behind their organizations' physician alignment strategy. Note that the response for maximizing financial performance is inversely correlated with organizational size: based on net patient revenue, a greater share of small organizations (72%) than medium (64%) and large organizations (56%) mention this. Establishing primary care as a continuum foundation (53%) and standardizing care for predictable costs (52%) round out the top three business objectives as physician alignment strategies.

While maximizing financial performance is the top physician alignment business objective, the degree to which respondents report achieving major success in attaining it places third on the list. Ranked for major success, the top three are offering full range of care in the continuum (23%), establishing primary care as a continuum foundation (13%), and maximizing financial performance (8%). Combining responses for major success and moderate success yields an identical list: offering full range of care in the continuum (71%), establishing primary care as a continuum foundation (69%), and maximizing financial performance (61%). So, while leaders are finding success, very few are reporting major success in any of these business objectives.

Creating common goals for employed and independent doctors is a hurdle that will likely come up as organizations expand their networks across the continuum. According to respondents, the current percentage of employed physicians (46%) and independent physicians (42%) is roughly equal. While respondents indicate that employed physicians will increase to 56% and independent physicians will decline to 32% in three years' time, independent physicians will remain an important part of alignment strategy for the foreseeable future.

Bill Breen, MBA, FACHE, is senior vice president of physician alignment at Methodist Le Bonheur Healthcare, an integrated healthcare network located in Memphis, Tennessee, and the lead advisor for this Intelligence Report. He says that, although Methodist has a large primary care group of physicians, it is important to maintain relationships with independent physicians. However, fostering alignment with them can be a bit more challenging.

"We value our independent physician partners," Breen says. "It may not be as integrated a relationship as with our employed physicians, but that doesn't mean they can't provide just as much value. There are plenty of independent doctors that are highly engaged in an effort to produce value. However, I think if the incentives are not aligned between the independent physician and the hospital—and most of the time they're not in the industry—it can be very difficult to overcome.

"On the quality side, I'd say if you're building a clinically integrated network, it helps to have a modest or a large cadre of employed physicians because they might have more reasons to engage in the overall strategy of the health system than an independent doctor would. But it's not an always statement; it's more times than not."

Physician alignment care objectives
The top three patient care objectives driving respondents' physician alignment strategy are engaging physicians in quality initiatives (62%), engaging physicians in value-based care transformation (57%), and standardizing care for quality improvement (50%). While establishing primary care is a major business objective, maximizing the patient population served is a top choice of just 28% as a patient care objective, with emphasis on quality and value over expanded access.

Note that the top three patient care objectives in which respondents say they are having major success in aligning physicians are forming a network to deliver value-based care (12%), engaging physicians in quality initiatives (11%), and establishing care coordination (8%).

Physician alignment and engagement
According to respondents, the most difficult aspects of aligning physicians are physician engagement (24%), finding physicians to lead care transformation (15%), and physician compensation expectations (14%).

Providers use a variety of strategies to encourage physician engagement. Respondents say the two actions that are most effective when engaging physicians in strategic planning are seeking physician input for key decisions (51%) and early physician involvement (38%). The least effective action is offering leadership and fiscal training to physicians (9%), a sign that many physicians may not be interested in a leadership role. In addition, sharing financial results with physicians (16%) also receives a low response; and while financial transparency is considered increasingly important, these results suggest that it is not necessarily improving engagement.

Breen points out that alignment can be especially challenging for providers these days due to the high levels of merger and acquisition activity in the industry. Along with using physician leaders in executive leadership, he says much of the success in physician engagement is due to culture.

"I think culture is very important," says Breen. "Some groups are nothing more than a collection of practices purchased, and don't see themselves as part of anything greater. I've heard a lot of people say that about alignment efforts around the country. So finding that sweet spot of developing a culture within a group where they see themselves as one entity and not 17 different locations is not easy. But I think that's the holy grail; that's what you're looking for."

Compensation at risk
According to respondents, 34% of employed physician staff and 19% of independent physician staff currently have some portion of their compensation at risk.

Within three years, respondents expect a significantly larger share of physician staff will have compensation at risk—employed physicians increases to 50% and independent physicians increases to 29%.

It is not surprising that the percent of physicians with compensation at risk is higher for employed physicians—their employment mission is currently more closely aligned with that of the provider organization than independent physicians, and those organizations are expected to take on increased risk in the coming years. However, the alignment challenge for providers in the future will be to more closely integrate with physicians across the continuum, a large number of whom will be independent.