What Do Doctors Want from Your Organization (Part 4 of 5)

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We’ve been largely philosophical in our first three installments about what doctors want from healthcare organizations, but simmering under any discussion about employment is the ROI question: What kind of return-on-investment will an organization reap from employing a physician?

We referenced this in part during the last installment, when we wrote that much of how hospitals decide who and when to hire is based on market factors, or as Karen Minich-Pourshadi described it in her March 2013 article from HealthLeaders magazine, “the clinical and financial rationale for employing physicians.” In other words, what is the demand for physicians in the area? Are there service-line gaps in a hospital’s clinical offerings that need additional personnel?

Mark Browne, M.D., MMM, CPE, FACPE, senior vice president and chief medical officer of Covenant Health, in Knoxville, Tenn., said his system  has “to assess the clinical need for the community. Employment is rarely our first choice, but given a particular physician or the circumstances, such as an underserved population in a particular specialty, then we certainly put employment on the table, but we want an agreement that leads to strong long-term alignment.”

He makes no bones about how important the ROI is. Hospitals have to make margin after all, Minich-Pourshadi notes.

Going back to our second installment, this is largely connected to how in tune the physician is with the organization’s goals. Dr. Browne told her, “These days, the best way for us to measure ROI is by tracking the quality of care of the physicians, though that doesn’t always visibly connect with the financials. Part of the secret sauce is to partner with a physician who wants to achieve the same outcomes you want. That leads to better ROI and lower costs.”

Still, this is hardly a science. He adds, “Tracking the ROI from physician employment isn’t as linear as buying an MRI and tracking use.”

If you’re looking at pay-for-performance, the ROI equation is pretty commonsense, Minich-Pourshadi writes. How much money did it take to bring the physician on board? How much money per patient is the physician generating for the organization? The catch here is, the true ROI for a newly employed physician may not become measurable for three to five years.

Healthcare reform further complicates matters, she writes. “Under health reform, with the focus on population health and the shift away from volume to quality outcomes, discerning the financial value of a new hire can be elusive. While many payers are not yet reimbursing for better-quality care, physicians are beginning to be tracked by quality and patient satisfaction metrics that are not yet tied to all payer contracts and can add to the challenge when calculating ROI.”

Julie Manas, president and CEO of Sacred Heart Hospital in Eau Claire, Wis., and division president and CEO of the Western Wisconsin division of Hospital Sisters Health System, said, “There has to be a business case. You need to look at the financial metrics of employing versus partnering, and then you also need to clearly define what you will use to gauge the measure of success for this pairing.”

She adds, “You also need to consider not only the dollar impact but the political one, too. If you’re hiring a direct competitor for a practice that’s been supporting your system in the past, you could alienate that practice. You need to be able to fully articulate the reasons why you are employing versus partnering or joint venturing, and how employment will better serve your community.”

How does your organization measure the ROI of an employed physician?

-by Pete Fernbaugh

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