Some health systems have found early success with initiatives that put physicians in charge of lowering the cost of the care they provide.

At a Glance

To spur individual physician involvement in efforts to control spending on high-cost patients, health systems are:

  • Framing such initiatives as focused on improving quality of care
  • Requesting changes in physician-provided treatment that will yield savings
  • Using data to both select savings targets and track outcomes
  • Maintaining physician engagement with regular meetings and feedback

Hospitals and health systems at the front of the recent push to closely engage physicians in controlling healthcare cost growth report some early success with those efforts. But the experience of several hospital systems underscores the need for flexibility, communication, and trust to gain traction in a historically sensitive area of healthcare finance.

Health systems searching for ways to wring excess costs from the care they deliver have long recognized the financial ramifications of the physicians’ central role in directing all of the major components of their patients’ care. 

“When I think about the key role of physicians, by and large they determine who comes into our facilities, how long they stay, and what gets done to care for them along the way,” says Mark Miller, senior vice president of operational finance Novant Health. “The physician is the person best suited to help us drive the affordability component of our vision.”

Earlier efforts to spur a cost focus by physicians encountered strong resistance from clinicians who worried that such efforts could undermine the quality of the care they are ethically obligated to provide to their patients. Many physicians also tended to reject efforts to encourage them to be cost-conscious through the use of lower-cost treatments that they had not been involved in developing and whose clinical efficacy they doubted.

Increasing financial pressures amid declining payment levels have renewed health systems’ interest in engaging physicians on the issue of cost. The gains achieved by four leading healthcare organizations point to key factors for success in putting physicians in the driver’s seat for quality improvements that reduce costs.

Refocusing on Value: Rush University Medical Center

When Rush University Medical Center of Chicago launched an initiative three years ago to bend its cost curve, it seemed reasonable to identify cost drivers and then ask physicians what they could do to control those drivers, according to Raj Behal, MD, associate chief medical officer and senior quality and patient safety officer.

“Fairly early, we recognized that we needed to reframe this as less of a cost-reduction issue and broaden our focus to center on, ‘How can we deliver better care to our patients?’ and then ask ‘Can we do it for less?’” Behal says. “By framing the discussion with physicians differently, we’ve achieved a greater level of engagement with our physicians.”

Physicians leading each clinical program at Rush were offered the opportunity to opt out of the initiative, but none did, Behal says.

“They [physicians] agreed that we needed to take the lead in finding ways to deliver the same or better care at lower costs, because if we didn’t, then someone else would ultimately come in and say, ‘This is how you need to cut costs,’” Behal says.

In 2010, Rush officials decided to gauge whether the physician-led quality program would work by testing it on two complex programs: stroke care and bone marrow transplants. Quality improvements and savings from those two programs led Rush officials to spread the physician-led initiatives across six more complex care programs: thoracic surgery, colorectal surgery, leukemia and lymphoma, emergency department, kidney transplant, and palliative care. The spreading initiative is credited with producing an overall hospital mortality rate that “improved significantly,” Behal says. The initiative also is credited with improving or maintaining clinical outcomes in all eight areas and providing a cumulative $16 million in savings, which accrued despite an estimated $1 million revenue loss due to fewer readmissions.

Exhibit 1


Among the cost and quality improvements Rush realized from the initiative was an elimination of readmissions by bone marrow transplant patients due to infections related to long-dwelling central venous catheters. The clinical team eliminated the 14 percent readmission rate among these patients by either removing the catheters before discharge or carefully educating patients about proper care of the equipment if continuing use of the catheter was required. Rush used a similar approach to identify and address the causes driving patient readmissions in colorectal surgery and leukemia/lymphoma programs.

Exhibit 2


“In all clinical programs, we looked carefully at how we can alter the choice architecture—making the right thing the default choice—by hardwiring our care standards into the electronic health record,” Behal says.

The Rush physician-led cost-control initiative included many elements that have emerged as common features across health systems aiming to put physicians and clinicians in charge of reducing costs. Primary among the newer approaches is the importance of discussing cost control as a way of improving care quality. Specifically, many of the factors responsible for variations in quality at Rush also were driving increases in costs in the system. Rush leaders held individual conversations with physicians to discuss the need for reduced variation that could both improve quality of care and curtail cost growth that was threatening the future of the health system.

The next critical step was to provide the physicians and inter-professional teams with quality, cost and resource utilization data for their clinical programs. The data also revealed where the biggest spending and quality variations existed among physicians. Sharing this information with physicians was a powerful way to motivate Rush’s medical staff to minimize variation in care and adopt more standardized care processes.

“We agreed to minimize physician-to-physician variations in care, and we agreed that variations in care that continue have to be based on data and evidence,” Behal says.

The physician analysis not only indentified areas where appropriate clinical changes could provide savings, but also ensured the appropriateness of ongoing measurements selected to gauge individual physician performance and compare performance against that of colleagues. 

“The approach we’ve chosen is a collaborative approach, not a top-down mandate,” Behal says. “Our goal is to engage clinicians in improving care, making sure we do what is critical to quality, share quality and cost data, and ask how we can deliver better care for less. This is really about changing behaviors and setting new norms.”

Exhibit 3


Aiming to Increase Affordability: Novant Health

The physician savings program at Novant Health, a 14-hospital health system based in Winston-Salem, N.C., stemmed from the health system’s 2010 strategic goal to increase affordability.

“We want to be the system of health that provides value, as judged in the eyes of our patients and payers,” says Mark Miller, senior vice president of operational finance. “Our focus on value is clearly timely, since we are moving more and more toward consumer-driven health plans and higher deductibles. Today, folks are more likely to look at healthcare costs through their own lens than they were five or 10 years ago.”

Novant Health leaders knew they would gain physicians’ assistance in controlling costs only if they had physicians’ trust, so they adopted a transparent approach, sharing detailed cost and quality data with physicians, says Stephen L. Wallenhaupt, MD, chief medical officer. Such data revealed both the cost trends that required attention from the medical staff and the areas where savings could be derived—primarily unwarranted clinical variation.

Physician leaders in areas with high spending—such as cardiac and orthopedic care—were asked to suggest areas where limiting costly variation in care and equipment could provide savings without sacrificing quality of care. Savings they identified included a reduction in the number of medical devices used followed by negotiations for lower prices from the remaining vendors due to the higher volume of devices the health system would agree to purchase.

The health system met with physicians individually, sharing their average costs of care for each target treatment (e.g., knee replacements). These costs were calculated independent of payers and were broken down into individual components (such as operating room costs, device, labs, and imaging) to determine the primary cost drivers. Then, each physician’s costs were compared with those of his or her peers for the same treatment or procedure—sometimes using bubble charts. 

“A lot of times, when physicians see detailed cost data, they are prompted to question why their costs are different and whether there is an opportunity to do something differently,” Miller says. “Often, physicians will say, ‘I didn’t know this cost that much,’ and they are willing to make a change.”

Some physicians were initially shocked by the costs of the treatments they prescribed. The health system aimed to increase physicians’ comfort with the data by organizing the information to account for certain variables, such as case mix and length of inpatient stay.

Ultimately, most physicians embraced the program in much the same way physicians supported an earlier movement away from brand-name drugs to clinically equivalent generics, Miller says.

“We’re not going to be able to get everyone on the same reliable line of sight, but we have to try,” Miller says. “Most will be supportive because they want to do the right thing for their patients and the organization.”

Novant Health’s physician-driven cost-reduction initiative is credited with providing more than $1 million in savings so far this year, and those savings have been redirected toward efforts that improve quality of care. For instance, some of the funds were used to increase the number of nurse assistants and improve clinical care at lower costs.

The initiative is limited somewhat by its reliance on clinical data provided by electronic health records (EHRs) to develop and track performance related to key clinical measures. Such data-intensive requirements have limited implementation of the full program to only one of Novant Health’s facilities, but it is expected to gain traction as
all of Novant Health’s medical centers begin to use EHRs over the next two years.

“Clearly, we have better insight into whether these best practices are being adopted in the clinical setting when we have electronic data around utilization of the order sets,” Wallenhaupt says.

Targeting ‘Old Medicine’: Bon Secours St. Mary’s Hospital

Bon Secours St. Mary’s Hospital in Richmond, Va., is still in the early stages of its physician-led savings initiatives, but the hospital already can point to some benefits from the discussions that have begun. 

In preparing for a variety of savings programs, including a bundled payment program that was implemented in November for two high-cost joint replacement procedures, St. Mary’s used a physician-advisory approach to define its savings goals and methods.

For example, in addition to creating a bundled payment program and an accountable care organization (ACO) that will manage the health of specific patient populations, the hospital has begun using performance metrics agreements within several of its service lines and paying physicians for meeting those metrics, according to Khiet Trinh, MD, chief medical officer for St Mary’s Hospital.

Early discussions with physicians on the performance metrics program taught Walter Coleman, manager of healthcare reform for Bon Secours St. Mary’s, that focusing dialogue on the need to reduce clinical costs was not the best way to engage physicians on the initiative.

“Addressing the quality issues first will ultimately result in reduced costs down the line,” Coleman says. “By zeroing in on the need for physician assistance in improving quality of care at the beginning of the initiative, there will be an immediate buy-in from physicians and a willingness to listen to the messages delivered to them.”

St. Mary’s created a program to educate participating and nonparticipating physicians on the ways that the performance of physicians in the program is measured, as well as the ways in which the hospital will be assessed under the federal ACO program. That education will lay the groundwork for the expected spread of such quality and cost-improvement initiatives in the future, Coleman says. A portion of the education provided aimed to clarify for the hospital’s physicians that they were responsible for costs outside the four walls of the hospital. “That was eye-opening, and it led to physician engagement and buy-in,” Coleman says.

Among the concrete changes so far that are credited to the hospital’s discussions with physicians was the decision to eliminate mandatory chest X-rays for every surgical patient. After discussing the practice with physician leaders, hospital officials realized that many patients—especially low-risk patients—do not benefit from such imaging.

“There’s a lot of old medicine out there that evidence-based practices are helping us to target,” Trinh says.

Other improvements have included better physician documentation of patient conditions. Coleman credits improved physician performance on nonclinical tasks to the hospital’s savings discussions with physicians, which highlighted the primary role of such paperwork in determining the measures by which the hospital is judged and paid under various quality programs. “Once physicians understand the importance of accurate documentation, dramatic improvement can occur quickly,” Coleman says.

Using the Insurance Advantage:Geisinger Health System

Pennsylvania’s Geisinger Health System credits its comparatively advanced efforts to engage physicians in cost-cutting efforts to its dual status as an insurer. 

Like the other organizations featured, Geisinger has found success in focusing dialogue with physicians on improving the value of the care they provide and by targeting unjustified clinical variation, according to Kevin F. Brennan, executive vice president of finance and CFO. Such approaches were key in developing, in 2006, the ProvenHealth Navigator program, the health system’s patient-centered medical home initiative. The Geisinger initiative focused on creating value by improving on the quality measures in the nationally recognized Healthcare Effectiveness Data and Information Set (HEDIS), while also creating more reliable processes to reduce unnecessary care.

After identifying the quality indicators, Geisinger brought its advanced insurer data analytics to bear to identify the patients most at risk for poor outcomes and reached out to those patients and their physicians to provide case management services in their medical home. The physicians’ ability to use best practices to improve the patient outcomes were rewarded with financial incentives. The clinical results were a “key contributor” to the 20 percent of physicians’ variable compensation that was based on quality and performance scores.

Other physician cost-control incentives used by Geisinger are those tailored for physician specialties, including 15 types of acute episodic bundles for specialties such as cardiac services, perinatal services, and orthopedics. 

The health plan notifies participating physicians regularly on the high-cost patients they need to see, tracks their appointments, and reminds physicians as needed.

“It’s not like a one-time report card once a year,” Brennan says. “The reports we provide physicians are customized based on levels of accomplishment and remaining work to be done to achieve their goals within the specified timeframe.”

Geisinger continues to add new physician-driven savings programs for both its employed physicians and the 30,000 physicians with whom it contracts as an insurer. Such programs, which are developed both “bottom up and top down,” aim to identify, test, and then widely disseminate effective savings initiatives, Brennan says. One such initiative (derived from a Geisinger rheumatologist) that has been piloted and spread through the service line has aimed to obtain more clinically useful data during the patient sign-in process. Geisinger, which usually requires peer-reviewed publication of such pilots before broad adoption, is still evaluating whether the return on the initiative’s cost justifies spreading it further. 

“We believe our focus on innovation and transformation, supported with financial incentives, has been a success that promotes value to patients and their physicians,” Brennan says.

Spreading Physician Savings Trend

Over the next few years, a growing number of health systems are likely to rely increasingly on their physicians to identify and lead their savings initiatives. Heightened financial pressure from a variety of public and private payers is expected to fuel this trend, but the path to encouraging physician involvement can be cleared by hospital leaders who recognize the unique position of physicians to drive and sustain such change. Key factors for success that could help hospitals and health systems of varying size in this effort include the following.

Frame such initiatives as focused on improving quality of care. Physicians are more responsive and committed to initiatives aimed at improving care quality, as opposed to those explicitly focused on lowering costs. However, because most quality improvement initiatives also lower costs, a quality focus will provide savings benefits from a larger number of physicians.

Request changes in physician-provided treatment that will yield savings. The changes in treatment or care delivery to derive the target savings should come at the suggestion of the physicians. Changes in practice that physicians suggest based on careful analysis of a hospital or health system’s clinical data are the changes most likely to obtain wide adoption, provide sustained savings, and best fit the system’s specific patient population. 

Use data to both select the savings targets and track the outcomes. Analyses of a health system’s own clinical data can identify the highest-cost service lines and conditions, which are the most likely to yield savings. Further analysis can identify the specific treatments, tests, or scans driving care costs for those patients. Physicians looking for lower cost alternatives can focus their efforts on these big-ticket items.

Maintain physician engagement with regular meetings and feedback. Physician participation during such meetings is a good measure of how focused physicians are on the savings initiative and can be used to drive improvements as well as identify initiatives that are not working well. The focal point of such meetings should be an updated analysis of the degree to which changes in care delivery are having an impact on clinical outcomes and the costs of care. 

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter.

Publication Date: Monday, December 02, 2013

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