Redefining physician alignment

The economic pressures of operating independent practices and the uncertainty surrounding healthcare reform are creating instability among physicians,” said Frank J. Williams, executive chairman of The Advisory Board Company, consultants to hospitals and healthcare systems on operational best practices and continual improvement.

Mr. Williams presented “How the Twin Challenges of Improving Access and Lowering Costs Will Alter Physician and Health System Strategy in the Decade Ahead,” during yesterday’s Practice Management Symposium moderated by Thomas J. Grogan, MD, and Michael Q. Freehill, MD.

Thomas J. Grogan, MD

“Currently, more than half of physician practices are owned by hospitals, and by 2012, 25 percent of specialists will be employed by local hospitals and part of a larger delivery system,” Mr. Williams said.

Moreover, the focus in today’s value-based healthcare marketplace is on innovation in the delivery network—delivery system changes, better coordination, value-based payments, and aligned incentives. For hospitals and provider organizations, this means assessing their strategic options, which Mr. Williams defined as building an Accountable Care Organization (ACO), affiliating with an ACO, or seeking an alternative role in the market.

He outlined three possible models. The first is a proposed joint medical foundation representing 156 hospitals in southern California. In addition to owning clinics and practice assets, the foundation would contract with groups for physician services, provide centralized billing and other administrative services, advise physicians groups on payer contracting, and retain affiliations between physician groups and individual hospitals.

The second model illustrates how some physicians are going it alone, said Mr. Williams. The strategic dilemma facing the 350-physician multispecialty practice that controls 80 percent of referrals from two competing hospitals is whether to “align with one of the hospitals or essentially become the ACO and subcontract to the hospital.”

The third model is a shared savings pilot between a health system and physician group. Under this collaboration, the two groups agree to share data and coordinate care for 41,000 members.

Under this model, stakeholders would share in savings if health- care costs were below a specified level and pay the difference if costs were above that level.

It’s important to note, said Mr. Williams, that under the Patient Protection and Affordable Care Act, “physicians are at the center of ACOs—a hospital cannot be an ACO on its own.” Therefore, physicians have a real opportunity to organize and have a significant role in designing the care delivery system.

He added, “As a group, it is important that orthopaedic surgeons ensure that they are not commoditized and that the service that they deliver is highly valued and fits well within the context of the organization.”

Mr. Williams believes that physician groups that deliver high value, are collaborative, are willing to innovate, or have a strong market position will be in these new networks. “Physicians,” he concluded, must ask themselves, ‘Am I strategically important? Am I truly high performance? Am I willing to address strategic priorities, share organizational visions, and collaborate with the hospital and other physicians?’”

Prepared by Maureen Leahy, assistant managing editor, AAOS Now.