Traditional medical staff development planning is no longer enough. In today’s market, hospitals need to understand the physician segments within their medical staffs and create relationship-building strategies focused on meeting physicians’ lifestyle, financial, and status needs.
In most hospitals, medical staff development planning begins and ends with the organization’s needs. The hospital determines its market requirements, prioritizes specialties for development, allocates recruitment funds, and hopes to connect with physicians interested in relocating. This level of planning is important, but it does not go far enough. In today’s tight market for physician talent, there is a big gap between what a hospital needs and what it can easily get.
Better performing hospitals and health systems create powerful physician strategies by taking staff development planning one step further. In addition to looking at their own needs, they identify the needs and aspirations of key physicians and physician groups. The resulting psychosocial “map” enables these hospitals to develop individualized strategies for building strong physician relationships.
Understand Physician Motivations
How do you map your medical staff? Start with a traditional medical staff development plan. Look at revenue and contribution margin by specialty, and overlay market share data and demographic projections. Prioritize the specialties by profitability, growth opportunity, and strategic value, and develop recruiting targets.
Now, instead of launching directly into recruiting, investigate and categorize the concerns, aspirations, and priorities of the various physicians within these target specialties. In my experience, physicians today fall within a number of different “need segments”:
Lifestyle. One segment is made up of physicians who are very interested in work/life balance. They are typically younger physicians who do not want professional demands to overwhelm their family responsibilities. This drive is most common among primary care physicians, but it is becoming more prevalent among specialty providers.
Financial. In today’s environment of declining reimbursement and rising practice costs, many physicians are very motivated by financial pressures. This includes family practitioners with lower incomes and highly trained specialists who want a greater payoff on their career investment.
Status. A third major driver among physicians today is the need for status and recognition. This need segment cuts across the entire physician spectrum, from doctors who want to be offered the opportunity to reinvent healthcare delivery to entrepreneur physicians looking for business leadership opportunities.
There is no such thing as a doctor who is focused exclusively on lifestyle issues or an MD who is motivated purely by financial concerns. Rather, physicians generally experience all these motivations in varying degrees. Underlying them all is the desire to practice medicine without distractions. The point is to understand how these motivations exist within your medical staff so you can engage physicians constructively.
Develop Alternative Solutions
After you have mapped your medical staff in terms of their motivations and aspirations, work with individual physicians and groups to develop alternative strategies for meeting their key needs.
Physicians with lifestyle priorities
Hospitals can take a variety of approaches to deliver on the needs of physicians with lifestyle priorities. For many, an employment arrangement will be the most effective means. Hospital employment can stabilize the practice environment for physicians and, within a large group, limit call demands. Well-run employed groups will also take many of the headaches of practice management away from physicians.
Physicians with financial priorities.
Hospitals are also in a good position to help physicians satisfy financial needs. The best way for primary care physicians to supplement their income is to develop sources of ancillary revenue. Hospitals can facilitate this by creating an employed multispecialty practice that incorporates both primary care and specialty physicians. CT, MRI, and other ancillary services structured within this group can increase physician income by 15 percent or more. In addition, improved practice management can lead to further improvements in billing and collections.
Procedural specialists who are focused on financial priorities often require a different approach. These physicians have many options before them, so hospitals should be willing to offer more. When working with surgical specialists, creating a joint-venture ambulatory surgical center (ASC) continues to be the best avenue. ASCs offer significant profit potential for physicians and great strategic value for hospitals.
Physicians with status needs
Hospitals can partner constructively with physicians who are focused on status by giving them opportunities for leadership. One effective approach is to establish a “center of excellence” within the hospital and appoint physicians to comanage it. For example, engage key neurosurgeons to provide leadership for a hospital spine center. You can also provide an ambitious physician with an opportunity to innovate in the area of care delivery—for instance, as medical director of a joint venture endoscopy center. Mapping your medical staff by needs and aspirations—and using the map to forge new physician connections—can help a hospital achieve a variety of financial, strategic, and marketing goals.
Case Study 1: Penetrating a New Region
A hospital in the Midwest struggled with a poor payer mix in its primary market. Recognizing the need to reduce its dependence on this market, it sought to expand into a secondary market with more favorable financial demographics. The organization identified key surgical specialties it needed to develop, then took the extra step of engaging a number of surgeons in discussions about their needs.
The talks revealed that the physicians were dissatisfied with schedule access, turnover times, and anesthesia coverage at the local hospital’s OR. In addition, the surgeons were looking for investment opportunities to supplement their income.
The hospital offered to partner with the surgeons on creation of a joint-venture ambulatory surgery center. The ASC was run using a new collaborative leadership model. A group of surgeons established the center’s direction, and day-to-day management was shared between a medical director and the OR nursing director. Through physician leadership, the ASC emphasized efficient perioperative processes and engaged a service-oriented anesthesia group. Over several years, the center provided a 68 percent annual return to the surgeon investors and created a significant new revenue base for the hospital.
Case Study 2: Protecting a Key Revenue Stream
A hospital in the Midwest depended on cardiology for more than 30 percent of its total revenue. The problem was that its cardiology staff was aging, and recruiting new providers to the community was difficult. Salary expectations exceeded local benchmarks, partly because of the age, payer mix, and seasonality of the local patient population.
Discussions with the cardiologists revealed a wide range of financial needs, many of them stemming from practice management inefficiencies. The hospital addressed these problems by partnering with the physicians to develop a cardiovascular institute.
The institute was governed by a board made up of both hospital administrators and physicians. By incorporating ancillary services and cardiac rehabilitation, the institute provided new sources of income for the physicians. Better practice management resulted in better revenue cycle performance, and improved infrastructure and IT support led to a better practice environment. Altogether, these enhancements increased physician income by approximately $100,000 per provider. The institute also provided attractive leadership opportunities for several physicians.
The improved practice environment and income potential enabled the hospital to recruit two new cardiologists within six months and stabilize its crucial cardiology market share for the long term.
Three Guidelines for Negotiation
Medical staff mapping can help healthcare leaders manage the natural conflict between hospitals and physicians—both the financial conflicts and the conflict of diverging goals. Because relationship building is at the heart of this strategy, it is important to keep in mind three negotiation parameters:
- Be open to working with all segments. If physicians perceive that the hospital is doing backroom deals with a select few, you will end up alienating large sections of your medical staff. Although you cannot offer the same opportunity to every physician, make it known you are willing to explore possibilities with every segment.
- Realize you cannot work with everyone. Although you are open to working with every member of your medical staff, understand that some physicians simply are not suitable negotiation partners. If an individual or group clings to irrational expectations or cannot display basic courtesy, you will not be able to develop a shared vision or work together constructively.
- Make sure every arrangement makes good business sense. Before you enter into any agreement—whether it is an employment arrangement, a joint venture, or a new program—make sure the financial or strategic benefits are in line with the costs. Identify objective measures of success, and build them into the agreement. Develop mechanisms for holding each party accountable for its responsibilities and performance.
The ultimate value of medical staff mapping is that it bridges the gap between a basic medical staff development plan and a set of strong physician relationships. Taking the time to create a shared vision and workable goals with a wide cross-section of physicians will pay off in a high degree of integration between your hospital and its medical staff.