The Secret to Not Losing Money on Employed Physicians
by Quint Studer, founder, Studer Group; author of A Culture of High Performance
I find there is a lot of doom and gloom about physicians in the media today: They are unhappy…leaving the profession…overwhelmed. These things are sometimes true. The disruption in healthcare today is challenging each of us in new ways. And yet, what has not changed is the deep passion physicians bring each day for quality patient care.
What a great opportunity for healthcare organizations to re-inspire physicians. When we create a culture of pride and excitement around a shared vision and mission, we set the stage for high physician engagement. When we tap into the physician’s sense of purpose (why they chose to practice medicine in the first place), we’re unstoppable! This then builds an important foundation for partnership and collaboration on how to best realize our shared goals for both positive clinical outcomes for our patients and positive financials for our organization.
Alignment through shared goals is the secret to not losing money on employed physicians. As contractual relationships increase with physicians, many organizations are finding that their most highly compensated employees are now physicians. And yet, their goals likely don’t align with the goals of the organization. (Can you think of any other industry where that is true?) While this loss may be offset from other operations now, this is unlikely to be true in the future, as the reimbursement environment becomes even more challenging.
Begin with the End in Mind
To be successful in the current operating environment, organizations need to achieve three things: easy access, high efficiency, and lower costs. Physician alignment is vital to each of these goals. We must ensure easy access to quality patient care so we can, in turn, match demand to capacity for paid patients in the most efficient way.
With the advent of the Affordable Care Act healthcare exchanges, consumers have more choice than ever, so the quality of the patient experience—greatly influenced by physicians—is key to consumer choice and therefore, to maximizing capacity. (See sidebar on Page 3: “Patients Turn to Online Physician Ratings.”)
To ensure the lowest cost, organizations must maximize process improvements. Whether the organization is using LEAN, Six Sigma, or Baldrige criteria, employee and physician engagement will be critical in hardwiring improvements. An example: UAB Medicine in Birmingham, AL demonstrated the strong correlation between employee engagement and safety with a 2011 study that showed less engaged employees are more likely to work around safety protocols while highly engaged employees perform fewer workarounds.
Moody’s Investors Service noted back in 2012 that “the most meaningful cost reduction strategies will involve standardization of clinical care and elimination of variation in patient procedures.” They said, “This will be a multi-year, ambitious journey requiring strong physician, management, and board leadership.” Clearly, physicians are key to reducing cost.
How will physicians know if they are aligned?
I find that physicians want to be aligned, but they are frequently not included in goal-setting for the organization. Sometimes they receive data that is too late to be actionable, or none at all. They may not have the administrative training they need to excel in a leadership role.
A May 2005 study1 by the Commonwealth Fund National Survey of Physicians and Quality of Care found that just one in three physicians receive any data about performance, one in five receives data pertinent to clinical outcomes, and one in four receives patient survey data. How can physicians, who are so critical to organizational success, align their behaviors to those of the organization if they do not receive feedback?
In my experience, physicians are eager to understand how their performance will be objectively evaluated. Recently, the American College of Healthcare Executives noted than the CEO turnover rate hit 20% in 2013, the highest rate on record. This creates physician anxiety when performance is assessed based on a relationship, rather than objective performance metrics. In fact, when hospital CEOs recruit physicians, one of the first questions physicians ask them is, “How long will you be here at this organization?”
To reduce physician anxiety under a new employment contract (and the organization’s anxiety about physician productivity), it’s important to create a system with objective physician feedback and performance metrics around what success looks like. Studer Group recommends a collaborative approach working with physicians to identify objective and aligned goals for outcome measures, while sometimes waiting to tie compensation directly to performance until everyone is comfortable with the metrics.
The Best Physician Goals
Physicians are very comfortable with data. But physicians also want collaboration in goal-setting. They don’t want performance metrics dictated to them. When considering goals, less is more. Also, select goals where leaders have influence that align to organizational priorities.Appropriate weighting of physician—and every leader’s—goals is critical to success because it creates organizational alignment through common priorities.
The result: Physicians align to the strategic plan (which is why they were hired); they are more satisfied because they have input into mutually agreed upon goals to understand how they will be evaluated; and the organization is much less likely to hear physicians say they didn’t understand, or something was not communicated. Instead, there is clarity and alignment.
While some organizations are still using Relative Value Units (RVUs) to evaluate physicians, we recommend organizations begin to also introduce other metrics that better reflect the national shift towards reimbursement based on clinical outcomes, patient experience, and/or access.
We find that the key to positive, mutually rewarding physician partnerships is getting alignment right, which then drives behaviors aligned to organizational priorities and appropriate accountability. As a result, the organization lives its mission by providing value-based care…the highest quality at the lowest cost.
Sample Goals: Vice President, Hospitalist Service
Increase percent of core measures met to 90%
Decrease CHF readmissions to 15% or less
Increase doctor communication from 54th to 75th percentile as measured by HCAHPS reporting
Increase discharge communication from 70th to 80th percentile as measured by HCAHPS reporting
||Decrease monthly provider turnover from 8% to 5% as measured by HR report
||Reduce expense per CMI adjusted discharge to $6800 or less
1“Physicians’ Views on Quality of Care: Findings from the Commonwealth Fund National Survey of Physicians and Quality of Care.” May 2005.
2JAMA. “Public Awareness, Perception, and Use of Online Physician Rating Sties.” Feb 19, 2014. 311(7):734.