The trend of hospital physician employment continues and the process of transitioning a formerly independent practice is critical to the long-term success of the hospital/physician relationship. Once the “deal” is negotiated, legal contracts are drafted, signed, and executed, the process of physician “onboarding” begins. Onboarding involves all of the operational and cultural changes needed to adapt the practice to a larger organization structure and management mindset. Issues that seem minor or unimportant to hospital management may be extremely important to the recently employed physician.
Business Valuation Resources (BVR) recently interviewed two experts, Health Directions Physician Advisory Board member James P. Valek, MD, and Lucy Zielinski, VP, Health Directions, about some of the key components that make an onboarding process successful.
BVR: Can you provide an example of where a disconnect may occur in the hospital/physician relationship?
James P. Valek: Some hospital administrators do not understand the things that practicing physicians consider important. Ideally, the hospital administration and the doctors will sit down, discuss and agree on the details that make the doctors practice special. Here is an example of something that may seem silly, but it was important to me nonetheless: We had designed our office very thoughtfully and included a beautiful fish tank. This tank was specifically in place to reduce patient anxiety in the waiting area. One day, about nine months after the acquisition, a hospital administrator approached me and said, “Dr. Valek, we're taking out the fish tank. It’s not cost effective.” It was a done deal—no discussion. I was flabbergasted. The fish tank was a key feature in our office, and a lot of thought went into its placement because I valued its calming effect on patients; many of our patients over the years had commented on it, and I wanted to keep it. We ultimately kept the fish tank in place, but we could have avoided that entire situation with better upfront communication.
BVR: Who typically brings up these issues in a meeting?
Valek: Well, are there meetings? Typically, physicians rarely have meetings; they see patients. If physicians are lucky enough to be employed by an organization that actively wants to hear what they think, there would be meetings. If so, both parties bring up the issues. Administrators should not be afraid to tell doctors their specific concerns. However, administrators need to communicate in a style that works with doctors. Doctors are taught to be autonomous and patient care comes first. That may make us lousy team players, but if we are respected and listened to, it makes for easier negotiations.
Zielinski: In my experience, physicians are very interested in resolving problems, but often feel left out of any meaningful discussions and ignored. If given the chance, physicians will diagnose and think these problems through. If administrators are responsive, this will help strengthen physician relationships.
BVR: Is poor communication among administrators and physicians a deal breaker?
Valek: I've seen poor communication break down a deal, and situations were allowed to fester to the point where another party comes in and acquires that physician.
Again, it is important that hospitals acknowledge physicians’ most important needs, such as practicing styles. For example, for some physicians it's very important that they practice with the same medical assistant every day, because it is an important piece of their practice. Obviously, an administrator would want a one-size-fits-all program, but that can be difficult to achieve.
Zielinski: The hospital and the physician have to blend well as far as culture is concerned. Philosophy of care is important– how physicians treat patients; the volume of patients they see; what kind of patients they see; how long they spend with the patients. Is it a half-hour physical? Is it an hour physical? These types of questions are crucial because asking physicians to change their philosophy or how they practice is tough. You want to do that homework beforehand, because there's a honeymoon period and then the fun starts.
BVR: So how do you identify what's important and what's not during an acquisition?
Ziellinski: When I work with hospitals and physicians during an acquisition, I ask the physician, “What's important to you?” “How do you want to practice?” “What are some of your goals for the future?” “What's working now, and what's not working?” Factors that are becoming more important in setting expectations for physicians revolve around ACO participation and clinical integration requirements. Are the physicians motivated to participate in these programs? I get to the meat of those sorts of details and then ask myself “is this a good fit?” Because I want the acquisition to succeed for both parties– it has to be a “win-win.”
Valek: Doctors also want to understand the data administrators give them. There is rarely a situation where the hospital says, “Here's your monthly numbers and let's sit down and talk about them.” Some doctors just dismiss the reports because they don’t understand the data.
BVR: What does a hospital look for in a physician practice acquisition?
Zielinski: From a hospital's perspective, quality and productivity are important. In addition, many hospitals look for physicians who are leaders, because they will do a better job at leading the other physicians in the entire physician group. I see a lot more physicians who are involved in administrations and get stipends to be on committees, task forces, etc. The physician leader may be a practicing physician but also acts in an administrative way. Physician leaders help the other physicians through the whole process and assists with the transition and onboarding piece. In these situations, however, physician leaders should talk to the other physicians peer to peer, because the physician-to-physician relationship is important.
The hospitals need to consider all the operational aspects of the practice. How is the practice currently operating? What will change once they become a hospital employee? Here's an example: If the physician performs a professional courtesy for a patient—which they shouldn't be doing—but if they're treating patients a certain way, or discounting, that will change. If they're charging patients who don't have insurance $20 for a visit, that may change and the whole dynamic of the operation changes.
Valek: That’s true. Hospitals want to look at finances during the onboarding process. For example, most doctors in private practice use as many ancillary services as they can to generate income. However, once the physicians become employed that income disappears and revenues drop.
Zielinski: HR is another important piece to consider. What kind of the benefits will the physician employees receive? How are vacations and time off structured? What is and isn’t permitted at the work site? What other policy and procedures exist? These are important questions that need to be addressed early on before the ink is put to paper.
Even after the formal onboarding process is completed, the need for ongoing communication with the physician is important. In a sense, the onboarding process never ends if the goal is to have a successful employed physician relationship.