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Building strong bonds with physicians on staff

ECG Management Consultants

Building strong bonds with physicians on staff is an invaluable asset at any time, but well cultivated relations are particularly rewarding when a hospital is embarking on ambitious new projects.

Expanding clinical service lines, building new facilities or developing new programs require close cooperation with your physicians. It won't work simply to pick a potentially profitable service line -- say, in cardiology or neurosurgery – lay out your strategy, and then plunk physicians into it. Performance-driven leadership teams need to understand that effective hospital strategies have to include a strategy that is focused on physicians from the beginning.

As consultants advising hospitals across the country, we have worked with some organizations that have come to master the art of building relationships with their physicians and have flourished as a result. We have also been called in to help hospitals with some fairly dysfunctional relationships with physicians, which had thrown some promising projects off-course.

Hospital executives have to put themselves in their doctors' shoes. They need to be sensitive to physicians' wants and needs. For example, if your growth plans hinge on the development of specific programs, you need to ask yourself what you have to do with physicians to ensure success. Employ them? Start a joint venture? Create new physician leadership roles? What are the implications on other programs and on your medical staff as a whole?

We advised a medium-sized hospital in the Mid-Atlantic Region that was planning a major expansion of neurosurgery services. It is an ambitious project because neurosurgeons are as rare as hen's teeth. For example, current ads by other hospitals seek to lure them with payment packages worth $600,000 or more in the first year and with the prospect of relatively undemanding call schedules, such as one night in five. But improving neurosurgery services can pay off. It can improve call coverage, boost admissions and help other doctors win back patients who went to other communities for neurosurgery care.

This hospital approached the only group of neurosurgeons in the area about recruiting another member, but the group decided it could not afford to do so at that time. The neurosurgeons were very busy, but a high proportion of their work was in relatively low-paying office visits, rather than with money-making surgeries, where they can earn $20,000 for a seven- to eight-hour operation. While the average neurosurgery practice sees five patients in the office for each surgery it performs, this group was seeing 15 office patients for each surgery performed.

The hospital decided to go ahead with the recruitment plan on its own, but it was mindful that the existing group was concerned about competition. So the hospital developed an elegant solution. It contracted with neurosurgeons at a nearby academic institution.

It was a win-win-win situation for everyone involved. The hospital got neurosurgeons for call duty and a chance to start building up its neurosurgery capabilities. The local neurosurgeons got a chance to reconfigure their practice without fear of competition from the academics. And the academics got some valuable teaching opportunities.

Good relations allow for great changes

Good relations with physicians allow a hospital to make great changes without a lot of disruption. For example, a large Mid-Atlantic hospital decided to move from a departmental structure broken down into clinical departments to one based on service lines. Under a department-based framework, oncology services, fo r example, are spread between medicine, surgery and imaging. You had to go to all kinds of different people to get permission to buy one piece of equipment.

So the hospital dispensed of departments for all but a few responsibilities, such as credentialing, and created new organizational “silos” for oncology, cardiology, and other services. Everybody who had anything to do with cancer began reporting to one person.

Such changes are risky because they upset the clinical order that physicians are used to, but the hospital succeeded because it got physicians involved in planning from the get-go, and physicians assumed leading roles in the new structure. A physician became medical director of the In the new oncology silo, working directly with an administrative vice president. They basically run a kind of “hospital within the hospital,” with its own budget and its own responsibility for profit and loss.

Physicians need to be encouraged to take leadership roles, which is not easy to do. Busy clinicians with full schedules are not wont to spend hours in planning meetings. Identifying and nurturing physicians who will step forward to become organizational leaders should be central to your planning efforts.

It pays to be flexible

Working with your physicians can, at times, require the skills of a diplomat. You need to b e flexible and always be aware where your sphere of interests intersects with that of your physicians. When trying to build physician partnerships, it's usually a mistake to impose rigid concepts, such as deciding that the hospital will either work with physicians in joint ventures or employ them.

The relationship you choose should be based on the needs of the physician. Primary care physicians, for example, tend to be looking for a stable home. Do you have secure practices available to them on your campus, or will you need to set up a hospital-affiliated network for them?

Proceduralists, on the other hand, are looking for ways to boost their ancillary income. Potentially, they can go off and develop ancillary services without you. You need to identify opportunities for collaboration early on, being careful to work with them as partners. If you insist on everything your way, they obviously will have no incentive to work with you. The autonomy you allow them now may reap rich returns in the form of significantly higher patient volume for your programs in the future.

Sometimes hospitals lose sight of this give-and-take. For example, a hospital in the Northeast was approached by some gastroenterologists who wanted to partner with it to build an endoscopy suite. Relatively strong certificate-of-need laws in the state forced the doctors to partner with the hospital rather than going it alone. Assuming the doctors had nowhere else to go with their proposal, the hospital refused the offer. Defying the hospital's expectations, the doctors signed an agreement with a hospital down the road. By insisting on complete control, the jilted hospital lost a valuable group of physicians.

Hospitals also have to be mindful that an ambitious expansion in their strategic plan is going to require more help from physicians. When a hospital plans new facilities, new programs, clinical service lines or improved coordination of care, the implications for physician alignment need to be clearly spelled out.

One hospital that we worked with in the South had great plans to expand its service line, but we found that its medical staff was aging and something had to be done to make sure that there would be enough doctors to meet its goals. To reestablish its links with local primary care physicians, the hospital brought them into a foundation-model network, in which doctors continue to work in scattered sites but have one tax ID status, with productivity standards for each of them.

It is always important to keep an eye on the local supply of physicians – particularly in primary care, which is often overlooked as hospitals focus on high-return specialties such as cardiology, oncology, and orthopedics. ( See radial chart)

For example, a recent client of ours asserted that it had a “solid” primary care base, but it immediately became clear that this base was wobbly. I was flabbergasted when the head of the local chamber of commerce told me she couldn't find a primary care physician. Here was a well educated, well informed person telling me, “I go to the emergency department at the hospital.”

Our research in this rapidly growing community showed that physician supply was stable but patient demand had grown considerably. The supply of internists and pediatricians was so inadequate that newcomers were seeking care in nearby communities where rival hospitals operated.

Although referrals and admissions from primary care physicians to our client's were not falling, its market share was. Money-making services such as o ncology and orthopedics were slipping away to other communities. The hospital had lost 501 potential patient admissions that year. At $10,000 per admission, that amounted to $5 million.

Tools to Shape Your Physician Strategies

You can take a number of specific steps to create a physician strategy and improve relations with your medical community.

For starters, you can learn to think like your physician constituents. Physician practices are fundamentally different financially and organizationally from hospitals. Understanding the differences will help you build successful incentives and other strategies for physicians.

You can help your key managers learn the differences by sending them to meetings of the Medical Group Management Association (MGMA) or the American Medical Group Association (AMGA). Consider creating a senior management position for physician network development and outpatient services, and fill it with an experienced physician practice manager rather than someone with a hospital background. We often see that an experienced physician administrator makes a great resource for managing ambulatory operations.

You can create a physician council. Members should be physicians who have shown a strong commitment to the hospital and are important to its future. Membership is not supposed to reflect specialty mix or leadership of the medical staff. Instead, you want members who can provide you with reasoned input into management decisions. You should meet with this council regularly -- at least each month -- to get advice on long-term strategic needs and physician-related concerns.

Another step is to hold a physician strategy retreat. Current and future physician leaders come to a planning session with senior management and board members. To make sure everyone's time is well spent, you can interview participants in advance, perform a local market analysis and present your findings at the retreat.

Topics might include hospital-physician relations, physician supply and demand in the area, specific workforce needs by specialty, physician leadership development, and new ways to foster successful physician relations. In addition to helping you develop a physician strategy, these meetings often lead to many dynamic and successful opportunities to improve relationships between hospital leadership and the medical community.

It's not so hard for a hospital to improve its physician strategy once leadership has figured out what physicians want and how those wants can dovetail into the basic goals of the hospital. Then it can truly be a win-win situation.

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