While most physicians understand the need to integrate with hospitals, many of them seem ambivalent about taking the plunge. For example, a recent survey of physicians by PricewaterhouseCoopers found that just a little more than half of them wanted to align more closely with a hospital, while two-thirds thought hospitals needed physicians to reduce inpatient costs.
Here several experts cite ways hospitals can improve integration with physicians, and they identify specific integration strategies.
Work with independent physicians
Buying practices can be a useful integration strategy but it also creates new challenges for hospitals, says Peter Young, president of HealthCare Strategic Issues in Ft. Myers, Fla. "I read a vast number of hospital bond disclosures and in nearly all with physicians practices, the column entries are red ink," he says. "Near-term ROI is not there." To make money on practices, hospitals need "a high-powered, innovative practice manager and to reduce the response time for physicians' concerns," he says. In many cases, such as markets with little competition, Mr. Young thinks it's not necessary to buy practices.
Even when hospitals acquire a lot of practices, they still have to reach out to independent physicians, says Mary C. Reed, vice president of Gateway Health, part of the Gateway Group in Cleveland. For this to be successful, "the hospital has to bring something of value or physicians to the table," she says. "The hospital should bring business to the physicians," while still complying with Stark and Antikickback laws. She says the hospital can provide special services to independent physicians such as discounted electronic health records systems or access to databases. Middlesex Hospital in Middletown, Conn., for example, provides independent physicians access to a data repository for laboratory and radiology results.
Work through culture barriers
Paul Keckley, director of the Deloitte Center for Health Solutions, says hospitals that want to integrate with physicians have to work through culture barriers that keep physicians and hospitals apart. "Many physicians are not used to working in teams or exercising leadership," he says. "It's hard sometimes for physicians to be effective leaders."
Mr. Keckley says it is important to establish trust with physicians. St. Elizabeth Hospital in Appleton, Wis., for example, has a physician advisory council to share information about operations and growth strategies for the future with physicians. It is also important to create a common purpose with physicians, he says. Each year, McLeod Regional Medical Center in Florence, S.C., charters a dozen major clinical effectiveness improvement efforts. While the McLeod administration initially proposes a list of measures, a leadership group of physicians makes the final recommendation to the board.
Make physicians accountable
"How do you address behavior of physicians who are not practicing according to guidelines?" Mr. Keckley asks. For integration to work, it has to be more than just voluntary, Ms. Reed says. "Physicians have to take on more structured responsibilities and accountability," she says. "This is possible when physicians are involved in creating and establishing the clinical protocols they will need to use." They can be measured in a variety of ways, such as by patients' ability to access care, hospital readmission rates, mortality data, delays in treatment, patient satisfaction survey data and enhanced patient care coordination across provider settings, according to Kathleen Rausch Henchey, president of Henchey Information Solutions, in an article for the Healthcare Financial Management Association.
Physicians need to be in leadership roles, Ms. Reed adds. "It's more than just having physicians on the board," she says. "They should be on key clinical committees. One of the ingredients in the FTC definition of clinical integration is the ability to demonstrate that physicians are at the table and are actively creating the clinical protocols and the hospital is working with physicians to modify their behavior, if that is needed." At McLeod, for example, leadership specifically invites a physician to lead each major improvement initiative.
Make deals with payors
Even though Medicare ACOs no longer seem workable for many hospitals, private payors are very interested in integrated arrangements with hospitals and their integrated physicians, says Rob Parke, a principal and consulting actuary with the New York office of Milliman. "Private payors offer more flexibility than the federal government," he says. "They can also structure a number of alternative payment arrangements to choose from, such as sub-capitation, case rates, bundled payments and limited networks." He says health plans are very interested in integrated arrangements because they are anticipating insurance exchanges under healthcare reform. In the exchanges, plans will have to compete head-to-head on price. "Plans have to work with providers to become more efficient and thus offer lower premiums," Mr. Parke says.
Different ways to integrate
Here is sampling of possible integration projects a hospital could take on.
- Focus on readmissions. One of the first challenges for integration efforts will be the CMS initiative to reduce Medicare payments to hospitals with excess preventable readmissions, starting in 2012. This will require hospitals to follow up with discharged patients to make sure they do not need to be readmitted. "When you discharge the patient, you need to know you are getting them back to primary care physician and other outpatient services," Ms. Reed says.
- Expand outpatient services. "The logical ancillary services to consider are directly related to employed and aligned physicians: outpatient diagnostics, imaging, surgery centers and oncology," Mr. Young says. Ms. Reed mentions partnering with rehabilitation facilities, home health and other outpatient services that could help the hospital provide "seamless care" throughout the continuum of care.
- Enhance disease management. Ms. Reed advises focusing on the 20 percent of people who are responsible for 80 percent of costs. The work involves use of nurses and allied health professionals to track patients. "Disease management is not typical for the hospital," she says. "It should involve clinical decisions based on real-time data that results in more cost-effective, efficient delivery of care."
- Start with service lines. A natural place to start working closely with physicians is around service lines like orthopedics and cardiovascular. "If these are already successful service lines for the hospital, it is probably due to strong relations with the physicians involved," Ms. Reed says. She adds that because of their relatively high charges, payment arrangements for these services would be very interesting for private payors.
- Agree to bundled payments. Under bundled payments, hospitals and physicians get a single discounted rate for providing all services in a particular episode of care, such as heart surgery or orthopedic surgery. "Figuring out how to manage both the clinical and financial aspects of a bundled payment program and value-based payments is not easily done," says the consultant Peter R. Kongstvedt, MD. "It is likely that as payment models migrate further in this direction, we will see tighter and tighter clinical integration."
- Set up patient-centered medical homes. Hospitals are beginning to show more interest in this approach, which assigns caregivers to a particular patient. "Motivating the patient is a big part of it," Ms. Reed says. "It's getting patients themselves to do what they need to do." For example, Danville, Pa.-based Geisinger Health System's medical home program significantly reduced admissions and ED visits for many chronically ill and elderly patients.
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