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Brief analytical summaries or syntheses #49

A guide to physician integration models for sustainable success

Summary

As health care delivery and financing shifts from a volume-based to a value-based business model, improved alignment between hospitals and physicians becomes essential. This guide, published by Health Research & Educational Trust, describes the prerequisites for successful hospital-physician integration and offers an overview of integration models currently used in American hospitals and health systems.

Background

This guide offers an overview of physician integration models currently deployed at hospitals and health systems. These models include a wide array of programs, covering customer service offerings, contractual ventures, joint venture/shared equity arrangements and employment/practice acquisition models. The legal, taxation and regulatory issues surrounding hospital-physician integration are complex and changing.

Analysis and results

As health care delivery and financing shifts from a volume-based to a value-based business model, provider success will be achieved through offering services with the best possible quality, outcomes and access for the lowest possible cost across the continuum of patient care services and sites.

Improved alignment between hospitals and physicians will be essential to changing the way care is delivered, enhancing patient and physician satisfaction and improving each element of the value equation—quality, outcomes, cost and access.

Because physicians are responsible for driving the clinical care of patients, their incentives must be based on value and aligned with those of hospitals and health systems. Properly structured hospital-physician ventures reduce duplication of assets in communities and overall costs to payers, employers and patients. Such ventures also improve quality, access and satisfaction, reduce inappropriate clinical variation, and increase operating and capital efficiency.

Conclusion

Hospitals and health systems must achieve effective hospital-physician alignment to remain competitively positioned. There is no one integration plan that works for all organizations or all physicians. Service areas and physician needs are diverse, so hospitals and health systems must be prepared to offer multiple engagement options, serving multiple physician constituencies.

Models selected for use must align organizational and physician goals related to improved quality, efficiency and access within the constraints of current organizational capital resources. Finding a sustainable balance of strategic and clinical needs, capital constraints, operation capabilities and management competencies is critical.

The organizations most likely to gain and retain close integration with physicians have common attributes that include deep management expertise, shared hospital-physician leadership and a well-developed integration infrastructure. Health care boards and executives should be taking purposeful steps to align their organizations with physicians for sustainable success under a very different care and payment system going forward. Organizations whose leaders act early to build these attributes based on solid planning and monitoring are poised for future success in their communities.

Implications and recommendations

This Guide to Physician Integration Models for Sustainable Success describes the groundwork and prerequisites required for successful hospital-physician integration and offers an overview of integration models currently deployed at hospitals and health systems nationwide. These models include customer service offerings, contractual ventures, joint venture/shared equity arrangements and employment/practice acquisition models.

This guide also presents key considerations involved in implementing the models and sustaining their success, and offers 12 strategies to guide the integration efforts. These are:

  1. Understand the forces affecting physicians; design strategic offerings to meet the needs of local physicians.
  2. Understand the hospital or health system’s specific capabilities and infrastructure in the context of the communities served.
  3. Ground physician-integration efforts on a well-defined strategic financial plan with sufficient resources and performance targets.
  4. Ensure strong physician participation, leadership and governance.
  5. Use technology to connect with physicians.
  6. Ensure objective assessment of organizational readiness for value-based care transformation efforts, including a formal clinical integration program.
  7. Use a disciplined, integrated approach to practice acquisition and employment.
  8. Document and communicate the level of financial commitment required to employ physicians.
  9. Before employing physicians, model alternative compensation arrangements.
  10. Structure effective and sustainable compensation programs for employed physicians.
  11. Manage physicians to achieve goals.
  12. Use a structured process to ensure creation of a sustainable venture and consistency over time.

Source

A guide to physician integration models for sustainable success