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4 essentials to physician-hospital alignment (MGMA-ACMPE meeting)

Signing the deal that joins doctors and hospitals is easy. The challenge comes in making sure everyone is on the same page once conflicts arise.

By — Posted Dec. 10, 2012

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Medical practices have been aligning and integrating with hospitals, but the question being asked by those attending the recent MGMA-ACMPE annual meeting was this: Now that we’re aligned and integrated, how do we make it last?

“It’s hard to keep these things together long-term,” said James Lineberger, PhD. “Disintegration is a very real possibility, but it doesn’t have to be that way.” Lineberger is principal with the Solutions Group in Boise, Idaho, and moderated a standing-room-only session called “Optimizing integration — wedding, marriage and the seven-year itch” at the Oct. 21-24 meeting in San Antonio for the organization of more than 22,000 medical group practice managers.

Numerous education sessions at the meeting focused on how to keep alignment structures — including accountable care organizations, patient-centered medical homes, employment arrangements, co-management deals and medical directorships — from falling apart.

Strategies recommended by consultants and medical practice managers include having hospitals and physicians build governance with significant physician involvement, and designing physician compensation plans that line up with payment from insurers. Hospitals and physicians should have ways to address conflict and ramp up communication. Physicians should have input into most of these issues. If they don’t, it may be a sign not to move forward.

The goal is to avoid the fate of many alignment arrangements of the 1990s, the last time large numbers of hospitals and practices tried to work together. Many of those deals tore apart before the decade was out.

“A lot of people only talk about organizational structure, and they will struggle,” said Kenneth M. Hekman, president of the Hekman Group, a practice management consultancy based in Holland, Mich., who gave a presentation on ways to turn hospital-physician conflict into collaboration. “The organizational structure is important but just a skeleton. You have to talk about the soft tissue — the organizational climate and culture.”

Who should govern?

The first key is to ensure there is governance structure involving physicians.

“You have got to get doctors to the table,” said William F. Jessee, MD, former president and CEO of MGMA-ACMPE and now senior vice president with Integrated Healthcare Strategies, a health care consultancy.

This means health systems encouraging physicians to be on various boards and committees at every level of the organization, and physicians stepping up to do so. Some health systems have dedicated physician organizations to provide direction to the institution, while others have physician leadership training programs to ensure they have doctors with the skills to fill key roles.

“Not all physicians have the qualities required,” said Cristina Arredondo, regional director for Christus Santa Rosa Medical Group in San Antonio, which employs about 200 physicians. “We have to cultivate potential physician leaders. We have to provide development opportunities for every level of physician so they can be effective leaders.”

People who work on alignment issues say having physician governance is particularly important, because some insurers say they don’t want to work with ACOs or other alignment structures that do not have this in place. Many of the ACOs chosen to participate in programs run by the Centers for Medicare & Medicaid Services have physicians in charge. In addition, the experts say physician leadership makes it more likely that an alignment structure will achieve the desired ends and that physicians will go along.

“When physicians are aligned, physicians will participate in programs to improve hospital effectiveness,” Arredondo said.

Setting up physician pay

The next key is for hospital administrators and physician leaders to design compensation plans in line with reimbursement from payers.

“Nonproductivity incentives play a key role in the current compensation arena and will continue to gain importance in future years,” said Justin Chamblee, senior manager with the Coker Group in Dallas. “But you cannot incentivize physicians based on outcomes, when all your reimbursement is on fee for service.”

The goal is to design a plan that keeps doctors productive without burning out, while making it more likely a medical practice will earn quality bonuses or a portion of shared shavings. Straight salaries have become less common for employed physicians, and physicians connected to hospitals by other means will be paid in a variety of ways. Many compensation plans will involve base pay with bonuses for quality or other outcomes.

A survey of 182 health care organizations released Oct. 17, 2011, by the international business consultancy Hay Group, indicated that 66% incorporated quality measures into incentive pay programs for physicians. Most range from 5% to 15% of total compensation.

“The 1990s was all about income guarantees,” Chamblee said. “The 2000s was all about work RVUs [relative value units] and productivity. In 2012, we’ve entered an outcomes-based realm. I don’t see work RVUs going away anytime soon, but we can keep adapting how we use them.”

For example, some entities have designed a “distributable net income” model. Physicians earn fees for services provided, along with a portion of income that comes into the practice for participating in an ACO or taking part in insurer quality initiatives. The size of the incentive earned can be determined as a percentage of a fixed bonus amount or a proportion of base salary. Some health care entities are experimenting with work RVUs that vary based on nonproductivity incentives.

What happens when you disagree?

A third key is to have strategies to deal with conflict. Alignments work better if conflict is dealt with rather than being allowed to simmer.

“Conflict is inevitable,” Hekman said. “We have lots of ways in our American culture to avoid conflict, but you have to work through it. Conflict can be a management tool. It’s a prerequisite for change, and a byproduct of change.”

Getting conflict out in the open may mean establishing regular meetings where physicians and hospital system administrators talk about emerging issues. Tools used by management consultants may come in handy. These could include values mapping, a communal writing exercise process in which physicians and administrators answer questions about how market forces affect medical practices, the long-term vision for improving clinical care and how much parties trust each other. The intention is to identify commonalities as well as conflict.

“Hospitals and physicians are sometimes competitors butting heads,” Hekman said. “And they do actually have different languages. Physicians are pretty individualistic. They are trained to think for themselves. Hospital executives are trying just the opposite. This process can get them out of their own niches.”

Management coaches may help improve the leadership skills of physicians and administrators to help resolve conflicts. Any other resolutions will be individualized to the situation.

Talk, talk and more talk

The fourth key is for administrators and physicians to have extensive communication about a wide variety of issues. Withholding information is generally viewed as a sign of bad leadership, and more information that is frequent and repetitive is almost always a good thing.

“People have to hear something seven times before they believe it,” said Patrick Lencioni, author of The Advantage: Why Organizational Health Trumps Everything Else in Business. “And people don’t leave because they’re over-communicated to.”

Information should flow through a wide variety of channels. The communication should allow for feedback. The information that comes back may not necessarily lead to change, but letting people be heard could make them more amenable to what administrators have in mind.

“If people don’t weigh in on a subject, they can’t buy in,” Lencioni said. “It’s not about consensus, but you do want to have them weigh in. You need to listen.”

Some communication should be individualized and explain how an organizational change would affect a particular employee. The message that nothing will change should be avoided, because it is almost never true.

“It’s human nature to say nothing will change, and you’re kind of telling them what they want to hear,” Lineberger said. “But if you do, you can really damage someone’s trust.”

But the most crucial key, say people who work on hospital-physician alignment, is to think about how the relationship may look a month, a year or even two years down the road. This is particularly important, since a breakup can leave a bigger mess than if the parties never came together.

“Don’t do integration because everyone else is doing it,” Hekman said. “And do it right — or don’t do it at all.”

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2 key components to improving practice finances

Managing costs and quickly collecting money owed translates to healthy medical practice balance sheets, according to an MGMA-ACMPE analysis released Oct. 22 at the organization’s annual meeting in San Antonio.

Researchers compared 348 multispecialty and single-specialty practices designated as “better-performing” by MGMA-ACMPE with 1,613 practices that did not have the designation. Better-performing practices spent 54% of revenues to operate the business, while practices without the label shelled out 64% of revenue on operating expenses.

The better-performing practices tended to have swifter accounts receivable processes. For instance, 18.2% of the accounts receivable for the average single-speciality primary care practice had been around for more than 120 days. Only 7.2% of the accounts receivable at better-performing single-specialty primary care practices were this old. When single-speciality surgical practices were compared, the better-performing ones had only 6.9% of accounts receivable more than 120 days old. The average single-speciality surgical practice had 13.1% of accounts receivable older than 120 days.

These two factors translated to practices taking in more revenue per physician. Full-time equivalent physicians at better-performing practices brought in an average of $814,944 in annual revenue, while those in offices without the designation took in $666,634.

This information is in the annual MGMA Performance and Practices of Successful Medical Groups: 2012 Report Based on 2011 data. The report is available for a charge from MGMA-ACMPE.

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Business tips to boost your practice’s bottom line

Sessions at the recent MGMA-ACMPE meeting addressed ways to help physicians increase their overall incomes. Among the topics:

Using RVUs for more than measuring physician productivity. Relative value units have long been used to evaluate a physician’s work, but the data can play a role in calculations revealing a payer’s performance, according to a presentation by Cass Schaedig, president of Trellis Healthcare, a medical practice consultancy in Littleton, Colo.

“RVUs provide a great denominator for figuring out who is paying the best,” Schaedig said.

For example, many insurer contracts set payments as a percentage of Medicare payments, but calculating how much an insurer is actually paying per RVU after removing denied services and open balances may indicate which one is providing the most money to the practice. This information may be used to set a fee schedule and negotiate with an insurer.

In addition, an analysis of physician costs per RVU may reveal where a practice is spending money and how much value it is getting in return.

Conducting patient surveys to prepare for quality bonuses. Not all medical practices are being judged on patient satisfaction — yet — but most managers and consultants believe they will be soon. To prepare, practices should look at ways patients can be surveyed now on this issue.

“Successful practices don’t just focus on the money,” said Todd Evenson, MGMA-ACMPE’s director of data solutions.

To help practices in this area, the organization has launched an online patient satisfaction benchmarking tool that member practices can use at no charge. The MGMA-SullivanLuallinGroup Patient Satisfaction Benchmarking Tool derives its questions from the Agency for Healthcare Research and Quality’s Consumer Assessment of Healthcare Providers and Systems’ Clinician and Group Survey. The baseline comparative data is from MGMA-ACMPE and SullivanLuallinGroup, a consultancy based in San Diego.

“The patient satisfaction benchmarking tool will propel medical groups in the right direction by beginning the benchmarking process for their patient satisfaction scores quickly and accurately,” Evenson said.

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External links

MGMA-ACMPE annual conference, Oct. 21-24, San Antonio (link)

MGMA-ACMPE patient satisfaction benchmarking tool. Full tool is free to members; nonmembers can access some information. (link)

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