• 8 Subcompetencies for Successful Hospital-Physician Integration

    Apr 20, 2010

    For integration among providers to be successful, incentives should be clearly aligned, and providers should enhance efficiency through efforts to reduce redundancy and waste. The key question is how to achieve the goals of integration.

    HFMA has identified the following subcompetencies that should be addressed in executing an effective integration strategy, based on discussions that took place at HFMA's most recent payment reform retreat. The September 2009 retreat, "Payment Reform: Leading the Way to Change," brought together 115 healthcare thought leaders and major stakeholders from around the country. 

    Market Analysis

    A clear view of the market position of each of the component organizations involved in the integration process will be essential.

    Key questions include the following:

    • What are the primary and secondary markets of each organization?
    • How do customers view each component, and how are they likely to view the combined entity?
    • What competitive response, if any, is the integration likely to elicit in the market?

    Goal Setting

    One key to success as an integrated organization is setting realistic goals based on organizational capabilities and an assessment of market and customer base. Key questions include the following:

    • What are the most effective techniques for assessing the capabilities of newly integrated organizations?
    • What key areas should goal setting cover?
    • What is the role of the financial executive in shaping goals for an integrated organization?

    Physician Leaders/Champions

    Developing key physician leaders/champions who have a high level of credibility with physicians and other providers will be critical to producing the changes necessary to create a sustainable healthcare industry. Key questions include the following:

    • What makes a "credible leader" credible?
    • Are there optimal structures with which physician leaders may engage?
    • Are there recommended structures for physician leaders to engage with employed clinical professionals and community staff?
    • What methods should be employed to compensate physician leaders/champions?

    Data Sharing

    The development and sharing of credible data on utilization, cost, and quality will be essential to making informed decisions on system composition, process, and incentives. Key questions include the following:

    • What data should be shared to build an effective integrated relationship?
    • What are the barriers to obtaining and sharing this information?
    • What strategies should be employed to foster effective discussions and transform data into knowledge useful to the integrated entity?


    Compensation policies and economic incentives are powerful tools that can be employed to align incentives and foster change. Key questions include the following:

    • How do you establish integrated goals amenable to compensation/economic incentives?
    • How do you identify stakeholders who are key to achieving goals?
    • How do you tailor compensation/economic incentives to stakeholders and ensurethat major goals are accomplished?

    Engagement/Cultural Blending

    One definition describes engagement as a heightened level of ownership wherein each employee does whatever he or she can for the benefit of internal and external customers and for the success of the organization as a whole. The complexity of integrated organizations and the importance of efficiency and cost effectiveness make it essential that the organization develop sound processes to heighten stakeholder engagement.

    Cultural differences between the various component organizations proved to be a significant factor behind the failure of many organizations that attempted to integrate in the 1990s. Examples of these cultural differences are rural versus urban cultures, religious versus secular views, or simply the demographic differences among the customers an organization serves.

    Key questions include the following:

    • Are engagement/cultural blending planning, analyses, and processes owned by human resources departments? What can finance professionals do to influence these competencies?
    • Can engagement/cultural blending be measured? What are reasonable goals for success in these subcompetencies?
    • Are there change management or other specific strategies that have proven effective in smoothing the transition into a truly integrated organization?


    Shared IT can serve as an important, unifying backbone to support an integrated organization by providing a common syntax and shared data that can be used to build knowledge of system performance. Key questions include the following:

    • How can the disparate needs of stakeholders be accommodated while still implementing standardized platforms?
    • What organizational structures and processes have proven effective in planning, implementing, and maintaining enterprisewide IT systems?
    • What can finance professionals do to foster effective investment and processes around technology?

    Process Improvement

    Given the enormous challenges facing healthcare organizations, those that engage in continuous process improvement are likely to be more successful. This competency requires a well-trained staff, sound tools to measure processes, and a culture that encourages "outside-the-box" thinking and communication. Key questions include the following:

    • What strategies can be employed to engage stakeholders in continuously thinking about process improvement in both clinical and administrative processes?
    • What role do finance professionals play in process improvement?
    • How does an organization make sound decisions on the portfolio of process improvement initiatives it undertakes (balancing between those with positive ROI and those that are mission related)?

    This article is excerpted from HFMA's payment reform paper, Healthcare Payment Reform: Accelerating Success Report, March 2010.