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September 2010

Physician Alignment in an Era of Change by Joe Cantlupe

C uncil HEALTHLEADERS MEDIA

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SEptember 2010 | Physician Alignment in an Era of Change |

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Foreword Controlling Our Destiny, Together

Many would agree today that the

primary intent of healthcare reform is to deliver better care at a lower cost, and that transformational change in the delivery of healthcare value will require a fundamental retooling of our business model. More specifically, we’ve been an industry that has focused on volume over value and has delivered care in a somewhat disjointed and silo-based model. Physicians and hospitals have historically lived in a perpetual power struggle, without realizing that joining forces and collaborating would be a more effective strategy for success and sustainability.

In my view, the HealthLeaders Media Physician Alignment Survey suggests that this relationship between

physicians and hospitals is changing.

First, the survey clearly indicates that hospitals, medical groups, and health systems are getting back into the

physician employment and acquisition business, a strategy that was in vogue decades ago, but didn’t turn out so well. Since that time, the MD-hospital integration playbook has changed: MDs are seeing the value in becoming part of a larger system, and hospitals have learned lessons about the importance of engaged physicians as partners and allies. As such, I predict that we will see doctors partnering with both doctors and hospitals in large volumes in the coming years. Given the nature of what it will take to succeed as accountable care organizations, clinical integration (which is far different than consolidation) of healthcare providers will be a key ingredient for success.

Second, we continue to see evidence of an industry that remains divided, with respondents highly at odds over

how insurance reform will affect MD-hospital relationships. Likewise, the results suggest a similar divisiveness over the role that ACOs will play in either driving or destroying integration. In my view, these differences simply reflect the fact that some see seismic change as a tragedy and others see it as an opportunity, as well as the fact that physicians and hospitals have historically viewed change through very different lenses.

I see greater physician-hospital collaboration as a good thing, regardless of the elements of reform. The sooner

we understand that working together makes us stronger and more effective, the sooner we will realize that we, as healthcare providers, are in a prime position to control the destiny of healthcare reform rather than be changed by it.

Craig E. Samitt, MD President and CEO, Dean Health System, Madison, WI

Lead Advisor for this Intelligence Report

WWW.HEALTHLEADERSMEDIA.COM/INTELLIGENCE | ©2010 HealthLeaders Media, a division of HCPro, Inc.


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Table of Contents Foreword

2

Methodology

4

Respondent Profile

5

Title, Place of Employment, Hospital Data, Health System Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Analysis

6

Survey Results

10

Organization’s Current Physician Alignment Models . . . . . . . . . . . . . 10 Alignment Model by Service Line/Specialty . . . . . . . . . . . . . . . . . . . . . 10 Increase in Employment Requests from Independent Physician Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Acquisition Plans for the Next 12–36 Months . . . . . . . . . . . . . . . . . . . 11 Percentage of Employed Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Plans to Employ a Greater Percentage of Physicians in Next 12–36 Months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11–12 Medical Staff Awareness and Support of Plans . . . . . . . . . . . . . . . . . . 12 Service Lines/Specialties Most in Demand . . . . . . . . . . . . . . . . . . . . . . . 13 Threats to Hospital Physician Alignment Strategy . . . . . . . . . . . . . . . . 14 Physicians’ Level of Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Impact of Increase in Insured Under Health Reform . . . . . . . . . . . . . . 15 Impact of Accountable Care Organizations on Hospital-Physician Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Non-Monetary Compensation for Physicians . . . . . . . . . . . . . . . . . . . . . 15 Number of Physicians as Members of Medical Staff . . . . . . . . . . . . . . 16 Number of Independent Medical Groups Working With . . . . . . . . . . . 16 Percentage of Physicians in Leadership Positions . . . . . . . . . . . . . . . . . 16 Number of Physicians Planned in Next 1–5 Years . . . . . . . . . . . . . . . . . 16



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Methodology The Physician Alignment in an Era of Change Study was conducted by the HealthLeaders Media Intelligence Unit. It is the first in a series of monthly Thought Leadership studies. In July 2010, an online survey was sent to select members of the Healthcare Media audience of more than 200,000 healthcare executives. For the purposes of this study, respondents were screened to ensure that they work in a hospital or health system setting. A total of 258 completed surveys are included in the analysis. The margin of error for a sample size of 258 is +/- 6.1 percentage points.

Advisors for this Intelligence Report The following healthcare leaders graciously provided guidance and insight in the creation of this report. W.C. Dandridge, MD Senior vice president of medical affairs, chief medical officer St. John’s Regional Medical Center Joplin, MO

Craig E. Samitt, MD President and CEO Dean Health System Madison, WI

Chris Snyder, DO Chief medical informatics officer, hospitalist Peninsula Regional Medical Center Salisbury, MD

Jeff Thompson, MD CEO Gunderson Lutheran Health System La Crosse, WI

About The HealthLeaders Media Intelligence Unit The HealthLeaders Media Intelligence Unit, a division of HealthLeaders Media, is the premier source for executive healthcare business research. It provides analysis and forecasts through digital platforms, printed publications, custom reports, white papers, conferences, roundtables, peer networking opportunities, and presentations for senior management.

Upcoming Intelligence Report Topics Patient Experience Mergers and Acquisitions

Intelligence Report Editor JOE CANTLUPE [email protected]

Intelligence Unit Director ANN MACKAY [email protected]

Publisher MATTHEW CANN [email protected]

Senior Director of Sales Northeast/Western Regional Sales Manager PAUL MATTIOLI [email protected]

Reform Readiness

Editorial Director RICK JOHNSON [email protected]

HealthLeaders Media Industry Survey

Managing Editor BOB WERTZ [email protected]

Media Sales Operations Manager ALEX MULLEN [email protected]

Copyright ©2010 HealthLeaders Media, 5115 Maryland Way, Brentwood, TN 37027 • Opinions expressed are not necessarily those of HealthLeaders Media. Mention of products and services does not constitute endorsement. Advice given is general, and readers should consult professional counsel for specific legal, ethical, or clinical questions.



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Respondent Profile Senior management leaders dominate the respondents for this survey (43%), with leaders from clinical, operations, marketing, and finance management rounding out the mix. Titles for senior leaders include CEO, Executive Director, Partner, Board Member, President, Principal Owner, Administrator, CFO, CIO, Chief Medical Officer, Chief of Staff, Chief Operations Officer, and Chief Purchasing Officer. Most are from health systems (62%) with the rest from hospitals (38%). There is a mix of small, medium, and large bed sizes, along with rural settings (42%) and community hospitals (74%). Most health systems (40%) have between six and 20 sites, while a fifth have just one to five, and nearly a quarter have in excess of 50 sites.

| Title50

| Place of Employment

Base = 258

Base = 258

40

38%

Health System

30

(IDN/IDS)

20 62%

10

Hospital

0

43%

Senior Leaders

hospital

23%

Clinical Leaders

17%

8%

Operations Marketing Leaders Leaders

5%

1%

Financial Information Leaders Leaders

3%

Other

Base = 159

| Number of Beds

| Rural Area

| Community Hospital

1–50

14%

YES

42%

YES

74%

51–199

39%

NO

58%

NO

26%

200–499

32%

500–999

12%

1,000+

3%

HEALTH SYSTEM | Number of Sites

Base = 99

| Number of States Operating In

1–5

20%

1

63%

6–20

40%

2–4

24%

21–49

17%

5–9

5%

50+

23%

10–19

2%

20 or more

6%



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Uncertainty on the Journey to Hospital-Physician Alignment Analysis Passionate yet contrasting voices emerge from healthcare leaders over the impact of reform as primary care physicians are sought for employment and specialists flood hospitals and health systems with position requests. This is unfolding against the backdrop of reduced reimbursements, setting the stage for uncertain financial outcomes. What industry leaders are saying in the 2010 HealthLeaders Media Physician Alignment Survey reflects the “highly competitive, changing market” and the “general uncertainty, because the rules are just getting written and we are very early in our journey toward reform,” says Craig E. Samitt, MD, president and CEO of Dean Health System in Madison, WI, and lead advisor for this intelligence report.

What Healthcare Leaders Are Saying “Demands for efficiency and quality improvement often conflict.” —chief operations officer for a hospital

“Physicians resist initiatives that require additional documentation.” —director of ambulatory services for a hospital

“Assuming the increasing numbers of insured belong to payers that are reimbursing collectively less, I would anticipate that physicians will see increasing value in the security provided by hospital employment.” —vice president of operations/administration for a hospital

“Collaboration between hospitals and physicians will be the only way to survive.”—service line director for a hospital “Physicians may be looking for additional support from hospitals to help with the patient influx. My hospital is willing to consider ways to improve alignment.”—medical director for a hospital “Less reimbursement and threat of increased or enforced penalties has already led to hospital demands of physician documentation practices. Even the electronic entering of physician orders is met with tremendous whining of the medical and nursing staff.” —chief of staff, health system

Hospitals are preparing to employ more doctors and medical groups while cardiologists and orthopedic physicians are eagerly inquiring about employment with hospitals. Despite such movement toward alignment, hospital-physician relations may become more strained under the weight of additional insured patients and the development of provider-based accountable care organizations. At the same time, survey respondents say ACOs could offer an opportunity for greater partnerships, coordination, and patient outcomes. Fifty percent of healthcare leaders expect that the increase of insured patients under healthcare reform will strain hospital-physician relations,



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Analysis (continued)

27% say it will improve relations, and 23% say it will have no effect. One survey participant, a hospital-based service line director, wrote: “Collaboration between hospitals and physicians will be the only way to survive.”

Seventy-four percent of hospital leaders say they plan to employ a greater percentage of physicians 26% No in the next 12 to 36 months. 74% Yes

Indeed, there is an alignment of views that more physicians will become employed under healthcare reform. Seventy-four percent of hospital leaders say they plan to employ a greater percentage of physicians in the next 12 to 36 months. In addition, more than 70% of hospital leaders say they have received increases in requests from physician groups for employment. About 61% plan on acquiring medical groups in the next 12 to 36 months.

Primary care physicians are most in demand, but there also is a need for key specialists, which more hospitals plan to employ, according to the survey. When asked about medical service lines or specialties most in demand in their region, 63% of respondents cite primary care. Others in demand are cardiology, 48%; In addition, more than 70% of hospital leaders orthopedics, 48%; general surgery, say they have received increases 37%; and hospitalists, 30%.

in requests from physician groups

29% No

“It’s not just hospitals employfor employment. 71% Yes ing and acquiring,” says Samitt of the movement toward physician consolidation. “It’s large physician groups and systems employing and acquiring. It really is inevitable.” Despite the growing demand, there are not yet clear solutions defined under healthcare reform. The problems involving the need for primary care physicians go to the heart of medical education, says Jeff Thompson, MD, CEO of Gunderson Lutheran Health System in La Crosse, WI.



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“One of the problems is the lack of incentives for those going to medical school for family medicine,” he says. “It will help if the reimbursement changes, more people would go into that. We need serious healthcare reform; it’s very expensive and many portions of the population don’t get adequate care. There are still a lot of decisions to be made.” Indeed, in dozens of survey responses, healthcare leaders note that physician practices, regardless of size, are struggling in light of reimbursement issues and seeking employment with hospitals and healthcare systems to protect them from shrinking revenues. They discuss the need for potential integration models, repeatedly expressing concern about financial insecurity and increasingly complex and restrictive government oversight.

Fifty percent of healthcare leaders expect that the increase of insured patients under healthcare reform will strain hospital-physician relations, 27% say it will improve relations, and 23% say it will have no effect. One survey participant, a hospitalbased service line director, wrote: “Collaboration between hospitals and physicians will be the only 23% way to survive.” No effect 50% Strain

W.C. Dandridge, MD, is senior vice president of medical 27% Improve affairs and chief medical officer at St. John’s Medical in Joplin, MO. He says the survey shows there is a widespread opinion that federal funding restrictions are going to seriously hamper care delivery. Regulations from CMS “require manpower in a hospital to [carry them out], and it costs money.” For hospitals, the most onerous day-to-day task will be dealing with the lack of an adequate number of physicians, Dandridge says. Still, Dandridge, like other survey respondents, says all is not lost in healthcare reform, saying he believes in the intent of “driving up quality and driving down costs.” Of course, while many are convinced that ACOs will help achieve those dual goals of higher quality and lower costs, a significant share of survey respondents express some serious concerns about the ACO model. A plurality of 42% says that ACOs will strain hospital-physician relations, 35% say it will improve relations, and 22% say it will have no effect. Some see the potential for



page 9


ACOs, noting that such structures could facilitate alignment and potentially increase collaboration. A CEO for a hospital observed that an ACO would “continue to push physician-hospital alignment in order to survive and thrive.” Samitt agrees that ACOs could lead to improvements in the healthcare system by facilitating increased collaboration, better outcomes, and better value. One component of collaboration is physician engagement, and survey results suggest there is considerable room for improvement. Healthcare executives and clinical leaders note that some physicians are not as engaged as they should be with the hospitals or systems with which they work, even among employed physicians. Reflecting the overall split in opinions, almost 12% of respondents say employed physicians are completely engaged in patient care, but A plurality of 42% says that ACOs nearly 10% say they are totally unenwill strain hospital-physician relations, gaged. Regarding nonemployed physicians, a meager 2% are considered com35% say it will improve 22% No effect 35% Improve pletely engaged, while 5% are considered relations, and 22% say totally unengaged.

it will have no effect.

Chris Snyder, DO, is chief medical informatics officer of Peninsula Regional Medical Center in Salisbury, MD. Snyder is among those who are seeing increasing engagement among physicians employed by the hospital. “You meet physicians now employed by the hospital and they are changing their behavior, and having a team approach toward healthcare,” Snyder says. 42% Strain

While alignment may advance engagement, the latter will continue to be a challenge for industry leaders.“I think engagement is always a problem, no matter what industry you are in,” Samitt says. “I think organizations are right to realize that physician engagement is what probably equates to success, but not all organizations are very good at it.” Joe Cantlupe is senior editor for physicians and service lines for HealthLeaders Media.



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Survey Results FIGURE 1 | Organization’s Current Physician Alignment Model

Q| W hat are your organization’s current staff models?

Full Employment

Volunteer Medical Staff

Paid Directorships

Clinical Co-Management

78% 67% 63% 25%

Medical Services Organization

14%

Foundation (CA Hospitals) 2%

Other

Base = 258 Multi Response

0

10%

10

20

30

40

50

60

70

80

FIGURE 2 | Alignment Model by Service Line/Specialty

Q| P lease describe the alignment model used for each of the following service lines and specialties? Medical Full Volunteer Paid Clinical CoServices Employment Medical Staff Directorships Management Organization

Cardiology Cardiovascular Dermatology Emergency medicine Endocrinology Gastroenterology General surgery Geriatrics Hospitalists Imaging Infectious disease Nephrology Neuroscience Neurosurgery OB/GYN Oncology Ophthalmology Orthopedics Otolaryngology Pediatrics Primary care Pulmonary medicine Rheumatology Urology Vascular surgery Wellness/bariatrics

36% 34% 13% 41% 26% 29% 44% 23% 65% 22% 31% 20% 31% 32% 38% 32% 11% 35% 23% 39% 63% 28% 21% 26% 30% 18%

53% 37% 54% 16% 47% 61% 57% 40% 13% 32% 41% 55% 50% 45% 60% 52% 67% 62% 62% 56% 62% 57% 52% 61% 53% 37%

49% 29% 4% 27% 8% 13% 30% 9% 19% 27% 24% 18% 24% 17% 29% 24% 5% 26% 8% 18% 14% 32% 6% 13% 16% 14%

13% 7% 3% 8% 4% 6% 8% 5% 7% 12% 3% 4% 5% 6% 5% 7% 3% 11% 4% 7% 5% 6% 4% 3% 6% 7%

5% 4% 3% 10% 4% 3% 4% 2% 6% 11% 3% 3% 5% 5% 5% 4% 4% 5% 4% 3% 5% 3% 3% 5% 4% 3%

Foundation

1% 2% 1% 1% 1% 1% 1% 1% 2% -- 1% 1% 1% 1% 1% 2% 1% -- 1% 2% 2% 1% 1% 1% 1% 1%

Other

NA

Base

9% 7% 8% 20% 6% 9% 8% 4% 9% 22% 6% 9% 6% 7% 7% 10% 9% 9% 8% 6% 7% 9% 7% 11% 7% 4%

7% 22% 27% 8% 26% 11% 3% 33% 11% 3% 18% 16% 21% 24% 8% 13% 13% 6% 13% 14% 5% 13% 23% 9% 19% 39%

240 233 228 241 231 233 244 231 244 237 232 230 229 229 240 233 224 238 231 235 244 235 233 238 233 230

Multi Response WWW.HEALTHLEADERSMEDIA.COM/INTELLIGENCE | ©2010 HealthLeaders Media, a division of HCPro, Inc.


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Survey Results (continued) FIGURE 3 |

FIGURE 4 |

Increase in Employment Requests from Independent Physician Groups

Acquisition Plans for the Next 12–36 Months

Q| H as the hospital/system received an increase in requests from independent physician groups for employment over the past 12–36 months?

Q| D oes your hospital/system plan on acquiring medical groups over the next 12–36 months?

29% No

39% No

71% Yes

61% Yes

Base = 258

Base = 258

FIGURE 5 |

FIGURE 6 |

Percentage of Employed Physicians

Plans to Employ a Greater Percentage of Physicians in Next 12–36 Months

Q| W hat is the percentage of employed physicians at your hospital/system? Choice

Percent

None

6%

1%–10%

26%

11%–20%

20%

21%–30%

12%

31%–40%

8%

41%–50%

3%

51%–60%

4%

61%–70%

3%

71%–80%

3%

81%–90%

5%

91%–100%

10%

Base = 258

Q| D oes your hospital/system plan to employ a greater percentage of physicians in the next 12–36 months?

26% No

74% Yes

Base = 258



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Survey Results (continued) FIGURE 7 | Plans to Employ a Greater Percentage of Physicians in Next 12–36 Months

Q | I n what service lines or specialties?

Primary care Hospitalists Cardiology General surgery Orthopedics OB/GYN Cardiovascular Neuroscience Oncology Pulmonary medicine Vascular surgery Neurosurgery Emergency medicine Gastroenterology Pediatrics Urology Endocrinology 13% Otolaryngology 11% Geriatrics 10% Infectious disease 10% Imaging 9% Rheumatology 9% Nephrology 8% Dermatology 7% Wellness/bariatrics 7% Ophthalmology 3% Other specialties 10%

0

72% 52% 47% 42% 39% 28% 26% 24% 24% 23% 23% 22% 21% 21% 21% 19%

10

20

30

Base = 191 (Among those who plan to employ a greater percentage of physicians) Multi Response

FIGURE 8 |

Medical Staff Awareness and Support of Plans

Q | I s your medical staff aware of your plans to employ more physicians? 11%

40

Base = 191 (Among those who plan to employ a greater percentage of physicians)

60

70

80

FIGURE 9 | Medical Staff Awareness and Support of Plans

Q| D oes your medical staff support your plans to employ more physicians? 10% No

No

89% Yes

50

90% Yes

Base = 170 (Among those who are aware of plans)



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Survey Results (continued) FIGURE 10 | Service Lines/Specialties Most in Demand

Q| W hich five medical service lines or specialties are the most in demand in your region?

Primary care Orthopedics Cardiology General surgery Hospitalists Neuroscience 22% Cardiovascular 22% OB/GYN 22% Emergency medicine 21% Neurosurgery 17% Oncology 16% Gastroenterology 14% Urology 13% Pulmonary medicine 13% Pediatrics 11% Geriatrics 9% Otolaryngology 8% Vascular surgery 7% Dermatology 7% Imaging 6% Endocrinology 6% Infectious disease 4% Rheumatology 4% Nephrology 3% Ophthalmology 1% Wellness/bariatrics 1% Other specialties 3% Base = 258 Multi Response

0

10

20

63% 48% 48% 37% 30%

30

40

50

60

70

80



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Survey Results (continued) FIGURE 11 | Threats to Hospital Physician Alignment Strategy

Q| O n a scale of 1—7, where 1 is a “no threat” and 7 is a “very serious threat”, rate the following threats to your hospital-physician alignment strategy: Very Serious Threat (7)

(6)

(5)

(4)

(3)

(2)

No Threat (1)

Demands for call coverage

17%

16%

25%

11%

13%

10%

8%

Recruiting of your medical staff from competitor hospitals

15%

12%

14%

18%

14%

15%

12%

Physician-owned outpatient organizations that compete with your hospital

21%

9%

14%

18%

11%

16%

11%

Physicians’ requests for non-monetary remuneration (e.g., staff support, clinical equipment/technology)

6%

5%

17%

21%

22%

23%

6%

Physician shortage of key specialties

27%

25%

20%

13%

8%

4%

3%

Base = 258

FIGURE 12 | Physicians’ Level of Engagement

Q| O n a scale of 1—7, where 1 is a “completely engaged” and 7 is “totally unengaged”, rate your physicians’ level of engagement with your hospital/system: Totally Unengaged (7)

(6)

(5)

(4)

(3)

(2)

Completely Engaged (1)

Non-employed physicians

5%

10%

26%

30%

21%

6%

2%

Employed physicians

9%

15%

14%

15%

13%

22%

12%

Base = 258



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Survey Results (continued) FIGURE 13 |

FIGURE 14 |

Impact of Increase in Insured Under Health Reform

Impact of Accountable Care Organizations on Hospital-Physician Relations

Q| W hat will the impact of the increase in the insured under health reform have on hospitalphysician relations?

Q| W hat will the impact of accountable care organizations have on hospital-physician relations? 22% No effect

23% No effect

35% Improve

50% Strain 27% Improve

42% Strain

Base = 258

Base = 258

FIGURE 15 | Non-Monetary Compensation for Physicians

Q| W hat non-monetary compensation is directed toward physicians?

80 70 60 50 40 30 20 10 0

79%

56%

43%

35%

12%

IT/EHR

Clinical Technology

Nursing Support

Billing Support

Other

Base = 258 Multi Response



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Survey Results (continued) FIGURE 16 | Number of Physicians as Members of Medical Staff

FIGURE 17 | Number of Independent Medical Groups Working With

Q| H ow many physicians are members of your medical staff?

Q| H ow many independent medical groups are you working with?

Choice

Less than 50

Percent

Choice

Percent

17%

None

7%

50–99

8%

1–5

36%

100–199

12%

6–10

18%

200–499

28%

11–25

19%

500–999

22%

26–50

13%

1,000+

13%

More than 50

7%

Base = 258

Base = 159 (Among Hospitals)

FIGURE 18 | Percentage of Physicians in Leadership Positions

FIGURE 19 |

Q| W hat is the percentage of physicians in leadership positions in your hospital/system?

Q | I n the next 1–5 years, will the number of physician leaders increase, decrease, or stay the same?

Choice

Number of Physicians Planned in Next 1–5 Years

Percent

None

3%

1–5%

41%

6–10%

29%

11–25%

20%

More than 25%

7%

59% Increase

38% Stay about the same

3% Decrease Base = 258

Base = 258
