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Strategic Provider Planning: Map Your Medical Staff Development Plan

Posted by Matthew Smith on Apr 22, 2013 1:30:00 PM

Medical staff mappingTraditional medical staff alignment and development planning is no longer enough. In today’s market, hospitals must 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.

Understanding 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. 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.

Developing 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.

Strategic Provider Planning, Specialty Mix

Topics: Employed Physicians, Hospital Employment, Medical Staff Development Planning, Medical Staff Planning, Strategic Provider Planning

Strategic Provider Planning: 3 Steps to Medical Staff Segmentation

Posted by Matthew Smith on Apr 16, 2013 1:26:00 PM

Strategic Provider PlanningWith so many opportunities available to them, today’s physicians need a compelling reason to choose one organization over another. Better performing hospitals are finding that the only way to develop that compelling reason is through “medical staff segmentation.” Done correctly, it can transform staff development from a static plan to a dynamic strategy for connecting with the physician talent you need.

Most hospitals take a one-sided approach to medical staff development. They study the market, identify their opportunities, then determine which specialties they need to build. The end product is the “medical staff development plan”—essentially a list of physician staff openings.

That approach worked 25 years ago, when filling a medical staff position was synonymous with placing a recruiting ad. Today however, even vigorous (and expensive) recruiting efforts often come up dry.

The problem with this approach is that it doesn’t set the organization apart—it doesn’t give physicians a reason to join your medical staff instead of pursuing any of their other options. By identifying and responding to the needs of different medical staff segments, your organization can provide physicians with good, strong reasons for choosing, and staying with, your organization. Following are the steps to successful medical staff segmentation.

Step 1: Identify and Prioritize Staff Segments

Start by analyzing your medical staff and breaking it down into its natural units and groupings. A logical segment could be an entire department, a subspecialty, a group practice, or in some instances, an individual physician.

Next, evaluate each staff segment using standard planning techniques:

  • Break down your gross revenue by segment to assess your dependency on each.
  • Calculate the contribution margin of each segment to determine its profitability.
  • Evaluate your market share for the service represented by each segment and look at demographic projections—this is your growth opportunity.
  • For procedural specialties, consider opportunities presented by any unused capacity within your facility.

Once you understand how each staff segment supports your hospital’s sustainability and growth potential, prioritize the segments by their overall financial and strategic importance.

Step 2: Understand Segment Needs

Now, reach out to your most important medical staff segments to understand their needs, concerns, and aspirations. Issues will likely fall into the following categories:

  • Financial needs. Declining reimbursement and rising costs make financial issues a priority for many physicians. Recent declines in stock values have returned financial concerns to the front and center for many older physicians.
  • Professional concerns. The complexity and bureaucracy of healthcare interfere with the ability of many physicians to simply practice medicine. Surgeons in particular are frustrated with operating room access and clinical support.
  • Lifestyle goals. Many physicians today put a premium on work-life balance. Specialists as well as primary care physicians increasingly want to limit practice demands and avoid the headaches of practice management.
  • Status aspirations. Most physicians are personally invested in their profession to a high degree. They desire recognition for their expertise, their work, and the importance of their contributions.

For each physician segment, one or two of these need categories will likely stand out from the rest. Understanding the leading concerns and goals of each segment will help you engage in productive discussions.

Step 3: Find Ways to Solve Segment Problems

Once the needs of priority medical staff segments have been identified, work with physicians to develop ways to meet those needs. Because of their size and resources, hospitals are generally in a good position to help physicians realize a broad range of goals. And, in doing so, they are securing volume, growing market share, and building strategic strength.

For example, hospitals can frequently help physicians meet financial goals by providing practice management assistance through a Management Services Organization (MSO). Alternatively, creating an employed group can increase physician income through ancillary services revenue and better referral patterns.

Employment is also an effective way to facilitate physicians’ lifestyle and professional goals. Many physicians see hospital employment as the key to reducing management hassles, controlling work hours, limiting call, and gaining the freedom to focus on patient care.

Hospitals can also help physicians realize status goals by providing leadership opportunities, such as medical directorships, roles in governance, and participation in process improvement committees. These appointments give physicians the chance to gain recognition and challenge themselves professionally.

One note: Although efforts will focus on your most important segments, be open to working with every member of your medical staff. It may not be possible to offer the same package to everyone, but the hospital can do something with each segment to develop a constructive relationship.

Effective Planning

Medical staff segmentation offers an orderly and predictable alternative to simply pouring money into recruiting and hoping for the best. Leaders responsible for medical staff development can systematically identify physicians’ needs and implement appropriate strategies for responding to those needs.

It’s an approach that will give physicians a “compelling reason” to work with your hospital—and that’s the key to creating a network of strong medical staff relationships. In short, segmentation builds a practical implementation strategy into medical staff development planning.

Strategic Provider Planning, Specialty Mix

Topics: Medical Staff Development Planning, Medical Staff Planning, Staff Segmentation, Strategic Provider Planning

Implications of ACO & Clinical Integration on Provider Planning

Posted by Matthew Smith on Apr 3, 2013 2:28:00 PM

Strategic Provider PlanningHistorically, Medical Staff planning has focused on specialties that drive care to inpatient settings. Creating a strong primary care base to support specialists has been the strategy for many successful healthcare systems.

However, the paradigm is shifting and systems must re-evaluate their provider recruitment plans along the continuum of care.  This means looking at specialists and allied providers who can improve both preventative and post-acute care and thereby reduce admission/readmission rates and ER visits.

A recent survey completed by Jackson Healthcare (December 2012)  indicates that actual and planned practice acquisitions by health systems remain focused on the primary/inpatient care model. Specialties such as geriatric medicine, psychiatry, podiatry, physical medicine, pain medicine, nurse navigators, psychologists and other important outpatient based providers are much less likely to be on a targeted acquisition list.

As systems begin to re-evaluate their specialty mix under shared shavings or risk-based payment contracts, it will be important to look well beyond the high-profile specialists and develop a larger network of providers.

Determining this balance is typically based on a number of factors, including:

  • Local population demographics;
  • The provider specialty mix;
  • Age range and quality of existing physicians;
  • The range of ambulatory and community health services;
  • and the number of health systems in the market.

Claims data helps determine what types of providers are needed by specialty. Local subjective knowledge is also a key component in completing a provider plan since many factors can impact supply and demand.

Once the optimal specialty balance is determined for a health system, strategies for recruitment will be needed.  While acquisitions have been the recent trend, it is not the only avenue for recruiting needed providers. In fact, there are some indications that health systems will begin to divest or ‘off board’ physician practices that do not meet their cost reduction and quality outcome goals. This indicates a need for hospitals to become more creative with their physician alignment strategies, such as forming Management Services Organizations to help manage/integrate affiliated provider practices or PHOs with a more clinically integrated strategy.

Physician engagement is critical to the planning process and requires constant review particularly as systems begin to build their ACO and Clinical Integration programs. Among key questions to be asked are the following:

  • What are the largest disease groups/patient needs in the community?
  • What specialties are needed to address the preventative and post-acute care needs?
  • Does our health system have the appropriate balance or providers to meet these needs?
  • What is the best way to attract providers where gaps exist?
  • What is needed to integrate care delivery along the continuum?
Strategic Provider Planning, Specialty Mix

Topics: ACO, Clinical Integration, Provider, Medical Staff Planning, Strategic Provider Planning

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