Ronald Schmidt and Gene Altus

Challenge: Sustaining Positive Physician Relations While Physician Practices Are Facing Turbulent Times

"My doctors are hurting as much as the hospital is," reports an eastern hospital CEO. Physicians are facing the same reimbursement and cost challenges in their practices as their hospitals are facing, and they, too, are seeking additional opportunities for revenue. These opportunities may include ventures with for-profit firms or local competitors, or providing outpatient services in their offices that have historically been provided by hospitals. Such actions have reduced collaboration and trust between physicians and hospital administrators. In addition, administrators who were interviewed communicated that physicians are taking their frustrations out on employees and administrators, further alienating themselves from the hospitals.


One southern hospital CMO reported,  "The administration team was trained and coached in physician relationship management, which changed the hospital culture into a 'can do' organization."

The healthcare executives who were interviewed communicated that they were in the process of developing or have developed different approaches and strategies to economically align the hospital with the physicians on a quality platform to:

  • Support physicians and their practices within legal and regulatory guidelines
  • Enhance relations through a collaborative approach that utilizes one-on-one communication
  • Work together to identify better ways to improve access to both physician and hospital services
  • Improve scheduling of hospital services, with an emphasis on imaging and surgery
  • Reduce physician downtime in the hospital with improved turnaround time. Several executives say they are concentrating on reducing the turnaround time between procedures and surgical cases
  • Develop disease-managed, cost-efficient services coordinated by hospital representatives as well as primary care physicians and specialists in conjunction with their practices. Doing so enables hospitals to better manage disease and meet patient needs

Many executive say they are instituting formal methodologies to foster and sustain positive physician relations. These methodologies include:

  • Service line-specific physician liaisons for example with cardiovascular, oncology, orthopedics
  • Service line administrators who regularly communicate and meet with physicians 
  • Regularly scheduled service line meetings
  • CEO monthly email updates to selected physicians

Challenge: Reconnecting with the Primary Care Physicians

One COO in the west stated, "I never see my primary care physicians anymore. How do you keep your customer happy if they no longer come to your store?" Many primary care physicians reportedly are no longer coming to the hospital to follow their patients, leaving inpatient tasks to both specialists and hospitalists.

Specialists and hospital administrators no longer have the opportunity to communicate and interact one-on-one with primary care physicians in medical staff lounges or at medical staff meetings. Primary care physicians are reacting to changes in reimbursement by seeing patients in their offices, which is more profitable for them than covering inpatients at the hospital. Such changes in primary care physician practice patterns have weakened relationships, threatening referral patterns that historically supported these providers. Connecting with the primary care physicians for referrals has become difficult.


One CEO has his senior executives and administrators meet with the primary care physician office once a quarter to stay in touch and address access, business, and operational issues. The majority of the executives interviewed want to reconnect with their organizations' primary care physicians through employment. Several executives are researching various physician compensation models to determine which model will work best for both their physicians and their organizations.

There is recognition that while an employed physician network should strive to break even, the greatest value of an employed physician network to the organization lies in sustaining the referral foundation. Downstream revenue and contribution margin benefit needs to be tracked to justify the primary care physician employment investment to the board.

Hospitals with limited dollars available for employment are utilizing comanagement agreements and management service contracts with both their primary care physicians and specialists. Through these arrangements, physicians provide medical direction for the establishment of clinical institutes, hospitalist programs, on-call coverage for their emergency departments, and the development of new programs. In addition, business ventures that generate additional revenue for primary care physician practices are being utilized to support a hospital/primary care alignment strategy. Some of the venture examples identified included medical office building ownership, staff or office lease arrangements, and practice-based patient screening programs that generate additional practice revenue and support of clinical service lines.

For more information on challenges facing healthcare leaders today, see the article "Reshaping the Healthcare Delivery Network" in the January 2010 issue of hfm.

Ronald Schmidt is a principal, DMI Transitions, Brecksville, Ohio (

Gene Altus is administrator, Cole Eye Institute, Cleveland (

Publication Date: Friday, January 01, 2010

Login Required

If you are an existing member, please log in below. Username and password are required.



Forgot User Name?
Forgot Password?

If you are not an HFMA member and would like to access portions of our content for 30 days, please fill out the following.

First Name:

Last Name:


   Become an HFMA member instead