• The Hospital-Physician Integration Challenge

    Take the hospital-physician integration challenge. Follow this sample route that reflects common strategies pursued by many hospitals and physicians as they experiment with varying degrees of integration (loose, partial, full).  

    Successful hospital-physician integration is considered a core element of any successful response to mounting demands for higher-quality, lower-cost patient care. Click on the following infographic to find a challenging—and rewarding—route to this still elusive destination. Also, scroll down for details and examples of the integration strategies that are highlighted in the infographic. 

    Click on the above image to view the infographic online. Alternatively, you can download a printable version for reading and sharing offline.

    Hospital-Physician Integration Strategies

    The infographic highlights all of the following strategies and risks. See the correlating footnotes on the infographic. 

    1. Hospitalists and professional service agreements (PSAs). Some hospitals directly employ hospitalists. Others use PSAs. Under PSAs, hospitals typically contract with an existing medical group or a new group formed under a single tax ID through the consolidation of existing practices, according to an August 2012 hfm article. Physicians may become either employees or contracted agents of the new group. The medical group is paid for services through the PSA, which compensates physicians at market-competitive levels using an array of funding options.   

    2. Compensating physicians for time spent in improvement activities. Franciscan St. Francis Health added a citizenship score to its physician compensation model, according to the 2011 PwC report From Courtship to Marriage. “This citizenship score is based on credits received from participating in hospital and medical group committees.” The citizenship score along with components related to quality of care and patient satisfaction makes up the incentive portion of each employed physician’s total compensation.

    3. A Fall 2012 Leadership article highlights a different type of compensation: Boston Children's is exploring the possibility of giving faculty or attending physicians continuing medical education credits or credits toward board certifications for participating in improvement projects. 

    4. Sharing performance data with physicians. An August 2012 hfm article recommends four steps: 
      • Show the assumptions behind the data.
      • Explain the rationale or methodology behind the assumptions and be sure there are no flaws in how conclusions are drawn from the data sets.
      • Explain why the metrics used are representative of the physician's practice.
      • Account for all data gaps in metrics or benchmarks, but explain how the data represent the best option for going forward.
    5. Gainsharing example. In gainsharing, hospitals share savings from performance improvement activities with physicians or others. St. Luke’s Health System—an 864-licensed-bed health system in Boise, Idaho—implemented a five-year gainsharing program, based on the U.S. Office of Inspector General’s (OIG’s) criteria, to lower costs in the three areas where it had experienced the highest spend: cardiovascular, orthopedic, and spine services,” according to a July 2013 hfm article

    6. St. Luke’s modeled its program after the safeguards laid out in the other OIG advisory opinions rather than applying for its own opinion. As a result of the program, St. Luke’s was able to save a total of $11.2 million over the program’s duration, from 2007 through 2012. 

    7. Legal obstacles to gainsharing.  In 1999, the OIG released a special advisory bulletin stating that the government could impose a civil monetary penalty on a hospital that pays a physician or physicians for reducing or limiting services to Medicare or Medicaid beneficiaries under their care, according to a July 2013 hfm article.  However, the December 2012 OIG opinion, approved a comanagement agreement that included a performance bonus program that would reward physicians based on their scores for patient service, quality of care, and cost savings. 

    8. Management service organizations (MSOs). MSOs provide practice management services, IT support, and other services to physicians. Health systems can offer MSO services for free or at market rates to affiliated physicians as an alignment strategy. In some cases, these services are provided through an independent practice association (IPA) or physician-hospital organization (PHO). 

    9. For example, Texas Health Physicians Group (THPG) felt that a separate MSO was critical to its future success, according to Sam Civello, vice president of operations, in a 2010 HFMA roundtable. “The MSO is physician-centered and structured by those knowledgeable with practice management, which greatly facilitates our talks with physicians. We were able to assure them that we have their intentions as practitioners at the forefront in building this organization. The MSO’s success can be attributed to having a common goal, common directives, and a shared technology base. Having a single operating and reporting platform allowed us to be consistent and efficient in deploying technology and processes.” 

      Some PHOs require physicians to meet certain quality targets before they are allowed to join the PHO.

    10. Joint ventures.  A successful joint venture between Summa Health System and Summa Physicians, Inc., in Akron, Ohio, brought together Summa’s orthopedic service line with Crystal Clinic, which includes an ambulatory surgery center and 30 physicians at seven sites. “Rather than trying to compete, we found a way to partner with them so that everyone wins,” said T. Clifford Deveny, MD, system vice president for physician alignment, during a 2010 HFMA roundtable discussion. “The keys to our success were sharing a common vision and mission, making sure governance was hammered out before getting started, and very important, making sure everyone understood the metrics of success as well as circumstances whereby we would unwind the arrangement, if necessary, so nobody would be harmed.” 

    11. Integrated ambulatory EHR. St. John Providence Health System worked with its PHO to develop a comprehensive ambulatory clinical IT strategy, according to an article in the Fall 2011 Leadership. This includes a health information exchange (HIE), EHR, disease registry, e-prescribing, and a patient portal. 

    12. "This will facilitate communication between providers, between the providers and the hospitals, and ultimately, between providers and patients," said Scott Eathorne, MD, medical director for the PHO. The goal is to have about 1,000 physicians connected electronically by 2013. All physicians who contract with insurers through the PHO will be expected to adopt technology that allows them to share patient data, although a range of options will be permitted. Those physicians who have their own EHR systems, for example, may use the HIE; others may only use the disease registry function. Within the limitations allowed by law, St. John Providence is subsidizing the cost of the ambulatory EHR system. 

    13. Comanagement. Lee Memorial Hospital credits its successful comanagement agreement with 24 orthopedic surgeons for reducing readmissions for knee replacement patients and other improvements. A leadership council comprised of four surgeons and four health system representatives oversees the comanagement agreement, according to a case study in the Summer 2013 Leadership.  

    14. The agreement provides a base management fee and opportunities for surgeons who are shareholders to earn a clinical incentive fee tied to the hospital’s performance on various measures. The limited liability corporation distributes its profits to surgeons who are shareholders. 

    15. Legal challenges and comanagement. Under the Stark and anti-kickback laws, any compensation paid for achieving comanagement goals are required to be set at fair market value, according to a September CFO Forum article. In addition, not-for-profit hospitals have other IRS restrictions. 

    16. Physician leadership academy. In 2010, UnityPoint Health launched an academy to prepare promising physicians for future leadership roles in the organization, according to a May 2012 Leadership article. “We had a growing need for physician leaders, and we knew there was good raw talent in house, but it had to be harnessed and developed,” says Alan Kaplan, MD, senior vice president and chief medical officer. 

    17. The academy offers a 12-month curriculum that combines self-paced, online courses with group, onsite education sessions that bring the physicians together once a quarter. 

    18. Organizing medical groups into a single group. UnityPoint Health is transitioning more than 900 employed physicians from across Iowa into an aligned medical group, according to a Summer 2013 Leadership article

    19. Dozens of disparate medical groups sent representatives to a special meeting to determine how to achieve this.  “We brought in everyone in through a senate model so that the biggest group of 300 physicians did not overwhelm the little groups of 10 physicians or 50 physicians,” says Alan Kaplan, MD, president and CEO, UnityPoint Clinic. “We sat as equals. Instead of deciding which group we were going to merge into, we used a blank piece of paper to create the medical group that we would all aspire to be part of.” 

    20. Patient-centered medical homes. Seeking to improve health and learn more about how to succeed in an accountable care framework, Adventist HealthCare (AHC) piloted a medical home delivery model, which has resulted in a 48 percent reduction in its high-risk patient population and a 35 percent reduction in per-member-per-month costs. 

    21. The pilot has shown how improved care coordination of patients with chronic conditions, supported by IT, can help position a health system for success as payment increasingly rewards value rather than volume, as reported in a June 2011 hfm article.  

    22. Employed physician compensation methods.  Many leaders interviewed for a 2010 HFMA Thought Leadership Retreat report said their organizations use or are moving toward a relative value unit (RVU)-based compensation package that includes a pay-for-performance bonus based on metrics weighted to reflect strategic priorities, including quality/outcome improvement, cost efficiency, and patient satisfaction.   

    23. In another example, Geisinger Health System uses a pay-for-performance formula, according to a Summer 2013 Leadership article. More than 800 Geisinger physicians receive a base salary that is about 80 percent of their expected total compensation. The other 20 percent—paid in two installments each year—reflects physicians’ individual performance on specialty-specific cost and quality goals that reflect Geisinger’s priorities. 

    24. Clinically integrated network. Advocate's Clinical Integration Program brings physicians together with the health system to address the quality and costs associated with an entire episode of care, according to a November 2010 hfm article

    25. Physicians receive incentives for adhering to evidence-based protocols, safety measures, and interventions that the program has identified for each key result area (116 measures in all; about two dozen measures apply to each specialty). All measures are approved by the Advocate Physician Partners board, which is comprised of physician and system members. 

      Education regarding new measures is provided through a web-based application, so that physicians can take part in the learning modules at their convenience. Adherence to the measures is tracked electronically through an online disease registry and reporting system, and physicians and their office managers receive a report each quarter from Advocate Physician Partners that provides information on their performance. 

    26. Population health management. Advocate and Blue Cross Blue Shield of Illinois worked together to develop a three-year shared savings agreement with upside and downside risk for the network, including Advocate’s nine Chicago-area hospitals and a hospital in Bloomington, Ill., according to a March 2013 hfm article.The agreement would cover patients under Blue Cross PPO and HMO plans who are treated by the roughly 4,000 physicians who make up Advocate Physician Partners—about 370,000 patients total, representing $2 billion in annual spending for Blue Cross. 

    27. For the program to work, Blue Cross agreed to share data with Advocate so that Advocate could better manage the health of this patient population. Advocate invested in technologies and staff to support predictive modeling, so the health system could better determine which patients would most benefit from preventive care and interventions that could reduce admissions, readmissions, and emergency department (ED) visits. Advocate Physician Partners also hired care management coordinators to work with high-risk patients in physician offices, improved post-acute care transitions, enhanced patient access to care through expanded physician hours and new outpatient programs, and implemented evidence-based protocols for referrals and prescribing.