As this forum noted recently, and as reported by the MGMA, there is a renewed trend for physicians to seek employment in hospital-owned practices. We asked a prominent physician, M. Tray Dunaway, MD, FACS, CSP, CHCO, to share his perspective on these issues.

Doctor Dunaway is a frequent speaker and advisor whose goal is to create better relationships between physicians and hospitals. As he likes to say, his job is to "connect the dots of healthcare." Drawing on first-hand experience, Dunaway says most physicians think compliance is a "choke collar on a leash of bureaucratic interference." But while the "C-word" carries many negative connotations, he feels it can become a positive force to bridge the physician-hospital divide as the healthcare system evolves under the new reform laws.

"The trend toward physician-hospital integration is motivated largely by physicians' fears," Dunaway says. "Fear is a powerful motivator, and like most people doctors fear losing what they already have, fear government involvement, fear Congressional cuts to reimbursement rates, fear the uncertainty brought on by changing times." These are the same kinds of fears hospitals have, so he says the two groups should be working together. "To hunker in the bunker and wait until the dust settles does not well serve either the providers' or the patients' best interests."

But hospital employment as an alternative to private practice is not sufficient to create strong financial and clinical links between physicians and hospitals. "Physicians fiercely guard their independence and autonomy," Dunaway reminds us, "and a contractual relationship alone is usually not enough to create a permanent bond." He offers two simple litmus tests of the hospital-physician relationship.

• Ask whether the employed physicians refer to the hospital as "my hospital" or "the hospital."
• Ask whether the hospital's executives refer to employed physicians as "our physicians" or "the physicians."

If the answer to either question is the latter response, you don't have sound physician-hospital integration, Dunaway says. Instead, the hospital is still viewed as merely a "doctor's workshop."

This attitude changed for a time in the 1990's, but hopes faded when both parties learned the hard way that running a medical practice and a managing a hospital required significantly different skill sets. That was so in large part because the financial incentives were not congruent. Most physicians were paid per diem for inpatient visits, whereas hospitals were paid prospectively under DRGs. Thus physicians made money every day a patient was in the hospital, but hospitals lost money if stays were prolonged.

But the incentives are now changing under the health reform laws. Section 3022 of PPACA (affectionately dubbed the "Affordable Care Act" by its proponents) sets up a new Medicare program that encourages hospitals, physicians and suppliers to work together under a shared governance structure to manage, coordinate and be accountable "for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to it." These accountable care organizations (ACOs or "collaboratives" as Dunaway calls them will be eligible to share in cost savings if they meet quality performance standards to be established by the Secretary.

Dunaway argues that compliance programs can be the springboard to success for ACOs because of the critical role compliance can play in relationship-building between physicians and hospitals.

"These collaboratives will be a patient-centered approach to managed healthcare," he says. "They will differ from previous capitated managed care plans because they will invest in community level care teams, increase efficiency, provide care coordination, align incentives, reduce costs, and improve the overall health of patients."

The key to the entire concept is the shared governance structure of the ACOs. "For this to succeed physicians and hospitals must actually work together and be held accountable to improve care and spend less or they will be financially penalized. While doing this, Compliance can be the first step in an ongoing process of relationship building between hospital and physician."

Although Title VI of PPACA mandates compliance programs for all Medicare providers (both institutions and physicians), Dunaway says most physician practices just "have a dusty notebook on a shelf. They call it their 'compliance plan,' but they don't have truly effective programs and they chafe at the idea." This is where the compliance officer can be crucial to the success of ACOs and the physician-hospital relationship-by improving documentation, coding, and billing; by enhancing revenue cycle management; by mitigating the fear of third-party payor audits. "These are the skills that compliance brings to the relationship," Dunaway says. "They are skills that most physicians do not have and with which they need a lot of help."

Progressive health systems are already positioning themselves to anticipate ACOs. They are working to recruit and retain physicians [see side bar], but improving efficiency requires more. It demands true cooperation and ownership. Compliance will be pivotal in this relationship.

"I believe an almost inconceivable level of relationship and compliance success can be sustained," Dunaway says, "if physicians learn that improved documentation can be achieved with the assistance of hospital staff. This means hospital administration using some hospital employees (compliance, billing, and even nursing) to help other hospital employees (physicians) increase their efficiency. This means helping physicians bill fully for the services they perform. This means improved Medicare Severity-DRG scores and higher case mix indexes. In short, this means a huge win/win and demonstrates the power of true collaboration."

Dunaway says helping physicians improve documentation is a relatively easy first step in rebranding compliance as a physician resource rather than a curse. "But once a single victory is realized, other opportunities to work collaboratively will follow." When ACOs come into being not later than January of 2012, payment for patient care will be shared between physicians and hospitals and cost-saving measures will be in both parties' best interest. "DRGs will become as meaningful to physicians as E&M codes have been up until now," Dunaway says. Increased physician satisfaction with collaborative efforts that positively impact physician bottom lines will improve both physician recruitment and retention and will work to the benefit of patients and communities.

"Physicians working as true partners with hospitals to drive ongoing patient quality, safety, and satisfaction scores will create other opportunities for mutual success. If case mix indexes and quality, safety and satisfaction scores are monetized, beliefs and subsequent behaviors of physicians will change.

"Too often, when a CEO hears from Compliance the mindset is, 'how much is this going to cost me?' And when physicians are involved with compliance, they typically feel the choke collar tighten. But physicians, hospitals and, well … almost everyone (including the Federal Government) responds to incentives. Compliance will play the key role in interpreting and navigating the changing healthcare reform incentives for years to come."

Doctor Dunaway adds these concluding thoughts:  

"This is the ultimate challenge for compliance: to work in a collaborative care environment where profit and compliance are complementary truths. Rather than crafting ineffectual compromises that lead to polarized thinking and behavior, all parties should redirect their energy to a higher level solution that honors the truth of 'profit and compliance.' It will be compliance's contribution to create profit solutions within myriad healthcare regulations and keep corporate compliance integrity flawless.

"The secret to mutual successes in collaborative care is specifically through collaborative intelligence where individuals share different insights and expertise with each other to transcend polarized posturing and create solutions that work because of, not despite, differences. And herein is the ultimate goal: physicians and hospitals, in a framework of regulatory and ethical compliance, working synergistically better to care not only for patients but for each other." 

Publication Date: Friday, August 20, 2010