At a Glance

To work together,physicians, finance leaders, and other executives need:

  • A shared vision that is compelling enough to promote cooperation
  • A culture of accountability, which helps weed out the disrupters who can stall change
  • Forums to identify implementation tactics
  • Leadership skills, which help them come together to solve problems

The ability of physicians, finance leaders, and operations leaders to work together is increasingly critical—and requires a commitment on all sides to overcome differences in training, experience, and perspective.

Clinical integration, bundled payments, pay for performance, referral management, and other challenges facing the healthcare industry will require relationships that go beyond simply coordinating activities for personal gain. Finance leaders, physicians, and operations leaders will need to cooperate, which often means subordinating personal agendas to achieve something for the greater good. By doing so, these stakeholders can better adapt to changes driven by healthcare reform, realize synergies, and achieve a sustainable competitive advantage.

What Drives Physicians

Physicians are the consummate “knowledge workers,” as described by management theorist Peter Drucker. In other words, their main capital is their knowledge and skills. As knowledge workers, physicians are trained to make judgments and decisions independently. Rarely do they have time to ponder alternatives. Instead, they assess individual circumstances and take remedial action—which often produces immediate results. Physicians are also highly mobile—able to take their services wherever they choose. They often require technical tools, which are useless without their knowledge and experience. All of these factors make it difficult for other physicians, as well as finance and operations leaders, to supervise physicians—even in employment settings.

Although compensation is important to many physicians, their loyalty is not won by a paycheck. Instead, these professionals thrive on opportunities to use their knowledge and skills. Ultimately, physicians, like other knowledge workers, decide how much energy they will commit to their practice, which determines how much their efforts will yield (Drucker, P., Peter Drucker on the Profession of Management, Boston: Harvard Business School Publishing, 1998).

As knowledge workers, physicians are process focused, approaching their work one patient at a time—which is exactly how we want them to be when we are “that patient.”

How Finance Leaders and Other Executives Think

Healthcare executives come from a variety of backgrounds, training, and circumstances. Some are experts in areas such as accounting, finance, human resources, and IT. Others are line managers who have worked their way up through the ranks, with ever-increasing responsibility for direct operations. These are the implementers who achieve success by being on time and within budget.

Still other executives are trained as clinical professionals who pursue advanced degrees or experience in organizational administration. As these leaders rise through the ranks, they often become more strategic in their thinking—less focused on the immediate and more focused on long-term direction and outcomes.

Successful finance leaders and other hospital executives learn to anticipate and make risk-based decisions. Their targets may be very short term (such as quarterly financial results), or they may be much more strategic in nature. These leaders are trained to consider alternatives carefully in light of internal and external circumstances. They may take days, weeks, or longer to weigh their options before zeroing in on a strategy—the results of which may not be apparent for months or even years. These executives often assume the role of “boss” rather than that of professional peer.

So Who Leads?

In the future, successful integrated delivery systems (IDSs) will not be solely managed by physicians or administrative executives. Functional integration (more than integration in name only) will require the very best thinking and cooperation of clinical, operational, and finance experts, working in partnership to maintain and enhance clinical quality, service quality, productivity, operational sustainability, and financial viability—all this in an era of decreasing payment, increasing regulation and costs, and greater demand from an aging population. Even in settings in which physicians are employed by hospitals, the board-appointed fiduciary—the legal “boss”—should be wise enough to engage his or her employed physicians as partners in strategy development and implementation oversight.

The traditional volunteer medical staff model is based on coordination of personal agendas and objectives rather than on cooperation, which often requires the subordination of some personal preferences or objectives to achieve synergy. The future will demand even greater cooperation to achieve a compelling vision shared by all who participate—not just the hospital or the subspecialists or the primary care physicians—for the benefit of patients and communities served.

In the years to come, most hospitals will depend on both employed and private practice physicians. Although elected medical staff leadership hasn’t always been strong in some organizations, IDSs will need effective physician leaders. Ideally, these leaders will represent a mix of independent and employed physicians.

So how can hospitals and health systems put this vision into action? One step is to change medical staff bylaws so they reflect the increased coordination—and accountability—that the new models demand. The strength of medical executive committees and their ability to hold employed and independent physicians accountable for clinical quality, service quality, and their influence on financial performance will be an essential factor in the success of functionally integrated organizations.

A Shared Vision

As already mentioned, successfully working together requires a shared vision that is compelling enough to promote cooperation. That vision cannot be the hospital’s vision alone. It should be comprehensive enough to engage primary care physicians and subspecialty physicians.

On occasion, finance leaders and other hospital executives will complain about physicians not buying into “our” vision. But the question is, “Whose vision?” A vision that includes and engages the majority of affiliated physicians—employed or otherwise—as well as finance and other hospital leaders, support staff, and even communities defines what can be accomplished as a team for the greater good. The more compelling the vision, the easier it is to overcome the inevitable disagreements over tactics that are often due to differences in training, experience, and perspective.

Working together also requires one or more forums to discuss, cooperate, and even compromise on tactics that may help us achieve the shared vision.

An effective approach used in some organizations is a medical executive committee that includes both independent and employed physician leaders. Some hospitals that employ physicians use an operations council model as a forum to engage these physicians, as well as executives and management, at the individual practice sites and across hospital-owned practice networks. In this model, employed physicians are engaged with a skilled operations manager in each individual practice to focus on performance improvement using a site-specific action plan. Employed physician leaders are selected to partner with the hospital’s CEO, CFO, and chief medical officer to develop a strategy for all hospital-owned practices in the integrated network.

Although most failed, a few physician-hospital organizations have provided effective forums to promote integrated strategy and tactics, largely as a result of effective physician and hospital leadership. Regardless of the model, the partnership forum should meet frequently to develop trust, promote effective dialogue, make principled decisions, and hold itself and its members accountable for the results of those decisions.

Culture and Leadership

Building a “culture of accountability” is a critical component of working together. Such a culture goes beyond participants feeling responsible. They expect to be and are, in fact, held accountable for working together to overcome challenges and to achieve measurable outcomes for the benefit of those they serve. As an organization becomes increasingly integrated around a compelling vision, physicians, executives, managers, and support staff members are increasingly likely to jump on the train and help drive increased momentum.

There may be a few, however, who remain uncomfortable with the direction, tactics, or pace of change. Some may do the right thing and leave the organization to pursue their own vision. A few may become openly disruptive, while others may quietly sabotage progress, determined to head south on a northbound train.

Culling membership is frequently the first test of functional integration. The distraction caused by even one disrupter can be devastating in terms of political, emotional, and financial energy. Mustering the organizational will to remove those who are not willing to join, however, is essential to maintain momentum. Removing disrupters—even top-producing physicians—demonstrates the organization’s commitment to pursue its compelling vision.

Leadership development is a final essential element driving how finance and operations leaders and physicians can work together toward a shared vision.

Leadership is a function of individual personality, personal interest, training, and skill. Advanced business degrees do not guarantee one’s ability to lead, nor does a medical degree. As with any essential skill, ongoing training and practice are both critical elements for leadership development. Functionally integrated organizations provide ongoing training opportunities to both executive and physician leaders, particularly in the areas of sustainable strategy, performance evaluation, performance improvement, communication, accountability, and other critical leadership skills. Through leadership development, physician and hospital executives can develop a common language, which is essential for problem solving.

Given the significant trends driving change in the healthcare landscape, only those organizations that can work together to capture market share in primary care practices and, by extension, in select subspecialties will generate the capital necessary to support healthcare delivery in their communities.

The ability to work together is, and will remain, the hallmark of the constituents of successful IDSs. Wise physician, finance, and operations stakeholders see the value of partnership-led organizations where diversity in training, experience, and perspectives are highly valued. Their goal is to create a shared vision that is compelling enough to engage their peers to cooperate in its achievement. They develop forums to identify implementation tactics to achieve their vision. They create a culture of accountability as a requirement for membership in their IDS. And they continually develop the leadership talent that will ensure the sustainability of the work they accomplish together.


Marc D. Halley is president and CEO, The Halley Consulting Group, Westerville, Ohio, and a member of HFMA's Northwest Ohio Chapter (mhalley@halleyconsulting.com)

Publication Date: Wednesday, January 30, 2013

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