5 Ways To...

Karen Wagner

Collaborating with physicians to improve financial performance is mission critical. Here, David Butz, PhD, an adjunct lecturer of business administration at the Ross School of Business at the University of Michigan, Ann Arbor, offers five strategies for effectively working with physicians to improve value.

Manage to the right metrics. Reducing variable costs is important, but efforts to drive down opportunity costs should drive much more decision making in hospitals than is currently the case. Conventional metrics like billed charges, cost-to-charge ratios, and total operating margins should be downplayed to avoid narrowing the focus of performance improvement to reducing costs. "Physicians should first understand management basics, like what bottlenecks and critical pathways are and why variability causes congestion and compromises performance," Butz says. Measures like opportunity costs and total contribution margin should be used because they offer physicians a greater sense of how to use clinical resources more effectively. For example, different surgeons' costs in scheduling the operating room should be measured and compared.

Give physicians direct access to data. Physicians routinely complain about the lack of useful data, Butz says. For example, rather than be told the total cost of an implant procedure, physicians may wish to know more specific details related to the cost of the procedure-such as the cost of the implant itself or a medication used during the procedure-to pinpoint cost drivers. But distributing such data to physicians in a timely manner can be challenging. Butz suggests using information systems that allow physicians or department administrators to access and query the data themselves and compile their own reports. "These tools are becoming more available," he says.

Be a better coach. Physicians should receive clear guidance about the criteria that go into a successful proposal for capital and why these criteria are necessary in a world of limited funds. If physicians understand the reason for capital constraints, they can more effectively demonstrate the urgency and relevance of their proposals to the hospital's overall strategic goals. "Physicians should understand the bigger picture beyond their proposals," Butz says.

Empower physicians with positivity. Physicians are tired of "doom-and-gloom" conversations regarding the need to cut costs and improve revenue, Butz says. They want to know that if they work hard, they will help themselves and the hospital succeed. "Stop having conversations about whether to use generic coffee instead of brand-name coffee in the medical staff office and start talking with physicians about ways they can improve value," he says. "If you change the tone of such conversations to one that is empowering, a physician might be prompted to say, 'I've got some great ideas on how I can use hospital staff and the resources that have been entrusted to me and become a much better steward of the hospital's assets.'"

Practice what you preach. When physicians see opportunities for improvement, they should receive support. If physicians come up with a proposal to break a bottleneck in the emergency department, and doing so could increase throughput by 20 percent-but could also cost a few thousand dollars to implement-the response shouldn't be, 'We don't have the money,' Butz says. "Engaging physicians in financial improvement is not always about working together in paring costs. It's also about working together to take the assets your organization has and make them do more."

Karen Wagner is a freelance writer, health care, Forest Lake, Ill. (klw@klw.ms).


Publication Date: Wednesday, February 01, 2012

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