Navigant Healthcare Pulse Summer 2012

A Letter from Dave & Alex

Clients, Colleagues and Friends:

As we talk to health systems across the U.S., we are increasingly encountering questions about physician executives. Who is best equipped to be in charge of a system’s clinical enterprise? What traits define an effective physician executive? What tools do systems need to provide so physician executives can be successful?

Navigant Managing Director David Burik says the questions underscore the urgency of developing a clear strategy of what kind of physician leadership is needed and how to most effectively utilize physician executives. Health systems must be clear about the extent of physician executives’ control – where they will have clear authority over decisions, versus only influencing those decisions. Clarity is vital because health systems’ success is becoming more dependent on physician decision-making as the industry moves from volume-based to outcome-based care.

Identifying and empowering effective physician executives can be challenging because traditional physician management roles have not prepared physicians for new leadership demands. For example, much of past physician leadership has been focused on prescribed roles such as approving physician credentials and privileges and overseeing peer review. Physicians selected for these roles typically are excellent clinicians who offer valuable input, but they often lack deep understanding in enterprise operating strategy, management issues or the broad authority and accountability needed to be effective in an environment of rapid change.

There are some obvious prerequisites for effective physician executives. They must be respected by their clinical colleagues. They must be committed to the health system’s agenda. They must be just as passionate about the need for change, and be able to persuade their colleagues that change is imperative. Physician leaders must be able to communicate the importance of practices becoming more efficient and effective in delivering quality of care rather than volume of care – and that quality will be increasingly monitored by objective measurement. They must be able to communicate that physicians will be held accountable for the fiscal consequences of their decisions. Any signs of ambivalence will quickly undermine their leadership.

In this issue of Pulse, we’ve asked Navigant’s experts and clients to share their perspective on questions surrounding the greater involvement of physician executives in leading healthcare systems. Navigant’s Andy Epstein discusses how health systems can help new physician executives gain greater competence and confidence. Navigant’s Simita Mishra and Frank Bonanno, currently helping lead Queens-Long Island Medical Group in New York under a practice management contract, describe the advantages and attributes of “physician champions” – change agents that health systems must identify to overcome some physicians’ natural reticence to adopt a fundamentally different approach to delivering care. Navigant’s Ron Vance and Rick Cameron examine needed new ways
to categorize and compensate physician executives, including accountability standards to qualify for performance incentives.

William Knopf, M.D., chief operating officer and chief medical operating officer at Piedmont Hospital in Atlanta, explains how his dual role is helping Piedmont bridge the divide between administrators and physicians by both actively listening to physicians and instilling a culture of accountability and discipline. President and CEO Jeff Korsmo and Chief Medical Officer Jack Shellito, M.D., of Via Christi Health in Wichita, Kan., describe how closer physician interaction has been crucial in developing a clinician-led, patient-centered model of care.

As always, we welcome your comments and stand ready to continue the conversation with you as health systems involve more physician executives in leadership roles. Please visit our website, or contact us directly by phone or email.

Best regards,

Dave Zito
Managing Director
Navigant Healthcare and Life Sciences Practice Leader
dzito@navigant.com
(312) 583-5871

Alex Hunter
Managing Director
Navigant Healthcare Practice Leader
alex.hunter@navigant.com
(770) 814-4480      

Preparing Physician Executives for Health System Leadership

By Andrew Epstein, M.D.

“Our biggest constraint to success in the future is our need for effective physician leaders.”

That sentiment has been expressed by nearly all hospital and health system executives as their organizations evolve from administratively led businesses that provide clinical care, to integrated clinical enterprises that are led and managed successfully as businesses. This poses a challenge for both health system executives and physicians.

Before health systems focus on developing a new wave of physician executives, they need to determine the enterprise leadership and management design and then, within that design, the leadership role, authority and accountability of physicians. They also should anticipate how the health systems’ physician leadership will change over time. A key question here is how physicians will be integrated into the system five years from now. For example, does your health system expect to have all employed physicians, all independent, or a mixture – and how will that affect the extent of physician leadership authority and the number and types of physician executives you will need?

Until now, we have been compensated primarily for units of work rather than the outcome of that work. Health systems and physician practices were successfully operated primarily through administrative means. If a hospital wanted to improve its financial performance, the focus was on increasing efficiency with initiatives such as improved revenue-cycle management, streamlined supply chain and purchased services, or more efficient corporate services. But as greater emphasis is placed on outcome-based determinations of safety, quality, service and efficiency, health systems and practices must be both effective and efficient administratively and clinically. A new breed and a deeper bench of physician executives will be needed as healthcare continues its transformation from our traditional activities-based reimbursement system to an outcomes-based system emphasizing patient-centered, safe, high-quality, accessible and affordable care that achieves the Triple Aim – improving the experience of care, improving the health of populations, and reducing per capita costs of healthcare.

In our experience, 50 to 60 percent of financial improvement in a typical health system today is based in traditional operational and administrative functions. The remaining 40 to 50 percent must come from improvements deep in the delivery of care: Who needs to be in the hospital? What procedures are performed? What tests and how many consultations are ordered? How long does a patient need to stay? As hospitals and systems become more efficient administratively, the proportion of potential financial improvement that must be achieved will grow in clinical care through improvements in safety, quality and efficiency. This work will be led by physicians in collaboration with operations, nursing, care managers and others whose work touches patients and their care.

These physician executives will serve in new roles and will need new capabilities, authority and accountability. In particular, they will need to be well versed both in hospital and ambulatory operations. They also will need to be knowledgeable about evidence-based practice that reduces inappropriate clinical variation and the undesirable safety, quality, service and financial outcomes that result. To be successful, they will need to honor the tradition of professional autonomy while at the same time establishing, and enforcing, clinical standards that are at the heart of the profession and the scientific evidence. Hospital executives cannot accomplish this deep physician work alone. At the same time, physician executives need the collaboration of others to hardwire the best practices into daily operations, the electronic health record, and standard reporting and improvement.

What’s needed in physician executives?

Physician executives must be respected by their peers for clinical excellence. Even very talented physicians from outside the market can struggle when named to major leadership roles simply because they lack credentials as a local practicing physician. The best candidates also may not be interested. In a leadership development and succession study conducted in 2005, I found that those doctors who existing executives identified as having the best leadership potential often were interested only in being good doctors – while those who expressed the greatest interest in leadership roles lacked the confidence of the existing executives.

In healthcare, the Mayo Clinic is the gold standard for commitment to leadership development. Under its structured approach, many potential physician executives are identified and participate in a structured four-stage leadership development process. They advance only after they have completed their course responsibilities and proven mastery of their current leadership responsibilities. Leadership succession at Mayo is all but guaranteed. According to Drs. Leonard Berry and Kent Seltman in Management Lessons from Mayo Clinic, “Mayo Clinic’s senior executives have few worries about the next generation of Clinic executives, including physician executives. In fact, two generations of future executives are mostly on campus today, and they are being deliberately readied for senior leadership positions.” Most health systems lack the tradition and resources of the Mayo Clinic, but every organization can (and must) get started by involving more physicians in organizational and strategic planning work, new management roles for ongoing operations and value-based outcomes that are needed – and educating, training and mentoring them and rigorously evaluating their performance.

Learning by Doing: Practical Model of Physician Leadership Development

Navigant has worked with many organizations that have embarked on this journey. They have focused physician involvement in strategic planning and new accountable roles in collaborative leadership of care delivery. For example, in Atlanta, Piedmont Healthcare has found a number of effective channels for physician involvement in strategic planning.

We also have helped reorganize physician leadership at dozens of hospitals and health systems by designing a collaborative physician-operations leadership model, the Clinical Operating Council, to manage the services, service lines and operational areas in the hospitals. In addition to the physician executive of each area, four to six other physicians participated along with colleagues from nursing, operations, pharmacy, care management and other units. These councils are responsible for market development, patient care outcomes, effective and efficient physician practice, excellence in nursing work life, the care and compassion experienced by patients and their families, and innovation. The physician-administrative partners also participate on an integrated leadership team – the Medical Operations Team – that governs the hospital. This new model has demonstrated improvements in market growth, clinical outcomes, efficiency, and patient, nurse and physician satisfaction in many hospitals and systems.

Physicians on the integrated leadership team quickly learn how the hospital works – its anatomy and physiology – and become effective stewards of its mission. However, we have often seen clinically excellent physicians flounder when appointed to accountable leadership role, for two reasons. First, they may assume that their role is to promote stability when, in fact, their role may be more important in provoking instability with innovation and breakthrough improvement in today’s rapid-paced and highly competitive environment. Second, when placed in leadership roles physicians who confidently introduce serious interventions in their patients because they understand how the human body works, often are timid in committing to organizational interventions because they do not understand the anatomy and physiology of the organization. They are unsure how the parts are related and how they affect each other – and what will happen as a result of their decision. Physician executives achieve a breakthrough in confidence and authoritative decision making when they can predictively understand the impact of their decisions on the organization.

Doing the Right Thing for Patient Care and Organizational Performance

In addition to understanding how the organization works, physicians need to develop the ability to move the agenda forward with their colleagues as well as hospital leadership and staff. We focus on connecting the physician’s experience in patient care to their new responsibilities in management with the concept of “Influence Without Authority,” described in the leadership guide by Allan R. Cohen and David L. Bradford. Physicians are authoritative and trusted advisors in patient care, but unless the patient is anesthetized or comatose, they produce results that are only as good as their ability to influence the patient to do the right thing for their care. We call this compliance. Research has demonstrated that patient compliance is dramatically higher when the patient rates the physician at the highest level of trust and personal connection: “My doctor understands me and my concerns as well as my medical problem.” Navigant works with physician executives to bridge their clinical experience of influencing patients to do the right thing for their care to influencing colleagues to do the right thing for patient care and organizational performance. The more new physician executives or those with expanded responsibilities can connect their clinical success to management success, the faster they will be able to contribute to clinical and organizational outcomes. This ability is a critical asset to succeed in overcoming the daunting change-management challenges that face healthcare organizations as they respond to market forces and healthcare reform.

These insights are critical when preparing physicians for roles in leading change. It is instructive to remember how physicians learn to practice medicine: intensive education, demanding apprenticeship, and watchful coaching by more experienced physicians, with progressive independence as proficiency is demonstrated. We call this progression, “See one, do one, teach one.” We have found that the same model works when teaching physicians to be effective executives, starting with excellent education programs offered by groups such as the American College of Physician Executives and the Institute for Healthcare Improvement, as well as university-based MBAs in healthcare, among other programs.

The collaborative physician-administrative or nurse partnership model, described above, enables physicians to learn from more experienced organizational executives from other disciplines, and supports a team-based approach to care through apprenticeship. This is true whether in ongoing management of the clinical area or in project work to address constraints to excellence in care and organizational performance. The physicians’ partners, however, must understand that part of their role is to mentor the physicians; the physicians, conversely, must accept the mentoring as part of their learning. The development of physician executives also must become part of the responsibility of the physician executive (including vice presidents of medical affairs, chief medical officers and chief clinical officers), with formal education, mentoring and continuing development. In addition, Navigant frequently has been asked to provide mentoring to physicians in new roles. In one example, we advised an academic medical center in Boston on its primary care strategy and have served as an ongoing mentor and coach for implementation. The quickest way to learn is by being observed closely to find the teachable moment.

Balancing Act: Optimizing Current Practice While Stimulating Innovation

In today’s environment, healthcare systems must be profitable in the still-current fee-for-service world while simultaneously preparing for a value-based future. Physician executives will be required to contribute to this transformation and, to be successful, they will need to develop muscles they’ve not used before. They must be able to find flaws in the current system while also engaging other physicians in analyzing, experimenting, designing, piloting, evaluating and changing – in incremental, but steady forward motion. Today, they must operate in an environment where “heads in beds” are being reimbursed but where the environment is moving quickly to value-based payment models such as shared savings, bundling and new forms of capitation. This will require a level of focus on the actual process of care, including adherence to best practices, even in the face of the tradition of physician autonomy. Physician executives must be effective both in optimizing current practice while stimulating innovation in evidence-based practice.

Leading this balancing act will not be easy. As hospitals have migrated into health systems, we have created organizations that are not organized and cannot be managed as before. Physician executives from the earlier era often lack the skills, disciplines and habits needed in this new environment. For health systems, determining the type and extent of new physician leadership needed now – and in the future – is essential to navigate the increasing integration of physicians and health systems. These physician executives must share the health systems’ vision for the future – and just as passionately embrace that vision. They must understand and value the changes ahead, and over time engage their colleagues to follow their lead, for they are leaders only if they have followers.

About the Andy Epstein

Andy Epstein, M.D., is a Navigant managing director with more than 40 years of healthcare industry experience. He directs consulting engagements for the leaders of university and community hospitals, integrated health systems, faculty practices and large physician groups. Andy’s work focuses on organizational design, physician leadership effectiveness and hospital-physician relationships and structures. He speaks nationally about strategy, physician-hospital collaboration, enterprise and physician governance models and change management. He has a bachelor’s degree from Dartmouth College and an M.D. from the School of Medicine at Case Western Reserve University. Contact Andy at andy.epstein@navigant.com or 781.514.1900.

Physician Champion: Change Agent & Advocate

By Simita Mishra and Francis Bonanno

“A physician champion is an agent of change. A physician champion is a subject matter expert and has the knowledge, passion and skills to implement change in physician behavior. A physician loves the status quo but a physician champion loves change. A physician champion leads by example and has a consistent message – talking the talk, but also walking the walk.”

Suneel Parikh, M.D.
Physician champion at Queens-Long Island Medical Group

Physician champions are physician representatives who play critical roles in quality improvement initiatives such as creating Patient-Centered Medical Homes (PCMH) or implementing Electronic Medical Records. They participate in the planning, design and implementation of program goals. They add valuable clinical input to the execution of such programs, communicate physician needs to project teams and share teams’ progress with the physician community. They often lead the Physician Advisory Council and participate in steering committees and other executive leadership forums. They act as ambassadors to their peers and as change agents.

Physician champions are also opinion leaders. They are held in high regard for their opinions and tend to influence others to accept their ideas. Ultimately, physician champions are those who have the operational perspective to help select the best elements of all systems and the communication skills to foster interdepartmental understanding and cooperation. That leadership is crucial to ensure desired functions and/or services are fully integrated while delivering on best practices and outcomes for the organization.

Physicians can be skeptical about evidence pointing to the need for change. Physician champions can help overcome that skepticism by sharing their own experience in making the change. For a physician practice or health system, the physician champion can transform a mission statement into clear and meaningful organizational imperatives. The champion acts as a conduit through which the practice’s clinical and business goals and objectives will be reinforced.

What can a physician champion accomplish?

Dr. Suneel Parikh is an example of this essential new breed of leaders as physician practices and hospital systems face enormous changes. He is a physician and physician champion at Queens-Long Island Medical Group (QLIMG), the largest physician-owned medical practice group in the Queens-Nassau-Suffolk region of New York, with 19 medical offices and more than 300 primary and specialty care physicians. At QLIMG, creating a culture that encourages “asking for something better” for patients requires a patient-centric practice organized to maximize physician productivity and performance, while at the same time restoring the joy of practicing medicine. Active support by physicians is vital.

Dr. Parikh demonstrated the traits of a physician champion by leading his peers by example. He won the buy-in from his colleagues for the PCMH model by objectively validating its benefits, including reduced wait times, increased productivity, enhanced patient satisfaction, higher operational efficiencies and a significant improvement in physicians’ work-life balance. He was able to do so by proactively working with an implementation team to create a blueprint of the PCMH model at his individual office and to be the first office designated a Level 3 PCMH – the highest level of recognition – in New York state. Subsequently, all other QLIMG locations were included, modeled after his office. Persistent physician leadership, backed by a strong administrative team, was the key to the success of this huge undertaking.

What are the attributes of a physician champion?

• All physician champions share key attributes:
• Knowledge of all aspects of clinical operations, regardless of departmental affiliation, organizational goals and strategies
• Fundamental understanding of the business environment in which the practice operates
• Ability to translate conferred authority from the Board of Directors and management to effective programs designed to form a critical mass of support from members of clinical staff
• Clinical leadership-building capabilities
• Ability to charismatically embrace the corporate mission and engender support with an excellent communication strategy
• Organizational wisdom and a sense of security

What is the role of a physician champion?

The key responsibilities of a physician champion are to:

• Integrate the organizational mission with clinical practice and advocate the correlation between program efficacies and the quality of clinical practice
• Promote physician involvement (leadership on committees), acceptance, participation in program design and content, and overall readiness; help implement enforcement measures, as needed
• Develop a future physician leaders program
• Help define and facilitate policies and procedures consistent with best practices
• Provide operations management with guidance in identifying areas to improve workflows and create overhead efficiencies
• Advocate an evidence-based culture by identifying pertinent metrics, methods of collecting data and reporting information, and supporting reward programs designed to facilitate positive change

How do you identify a physician champion?

More often than not, excellent physician candidate prospects already exist within a physician practice or health system. They typically capture management’s attention by expressing interest in making a bigger contribution to the organization. An ideal candidate would be someone who has respect of his or her peers, is knowledgeable about the broader challenges facing healthcare, is energetic and interested in taking on new challenges, and is intimately familiar with the organization’s culture. Ideally, a physician champion places the interest of the organization above self, and can motivate a similar culture throughout a team or organization. The chief medical officer and/or a medical director should be involved in scouting for physician champions.

Once selected, both the physician champion and the organization’s leadership must be committed to the success of the position. If the chosen physician is unable or unwilling to do the hard work required or has only a narrow sphere of influence – or the role is not clearly defined – the changes needed may not be thoroughly implemented, or may not be sustainable. Equivocal support from the board of directors also will encumber the champion’s ability to deliver results.

While a physician champion adds immense value to the organization, the benefit is mutual. Successful physician champions have reported intrinsic rewards that they have gained from the experience. These rewards include increased professional satisfaction, recognition, enhanced respect from others and improved patient care.

About Simita Mishra

Simita Mishra is a director in Navigant Healthcare and currently is serving as the Chief Managed Care Officer for Queens-Long Island Medical Group under a practice management contract. She has more than 12 years of experience leading projects related to medical management, physician compensation design, reporting infrastructure design, operational assessment and reengineering, Patient-Centered Medical Homes and Comprehensive Care Management. Simita has a bachelor’s degree in business from Mumbai University in India, a master’s degree in healthcare administration from Johns Hopkins University and a Ph.D. in medical informatics from Pune University in India. Contact her at simita.mishra@navigant.com or 646.227.4657.

About Frank Bonanno

Frank Bonanno is a director in Navigant Healthcare and currently is serving as Chief Administrative Officer for Queens-Long Island Medical Group under a practice management contract. He has 30 years of experience in both hospital and medical group healthcare administration, specializing in operational assessment and reengineering, managed care contract negotiations, service line development and revenue optimization strategies, physician compensation and productivity design and the evaluation of various provider integration strategies. Frank has a bachelor’s degree in accountancy from the University of Central Florida. Contact him at francis.bonanno@navigant.com or 646.227.4656.

Redefining and Compensating Physician Leadership

By Ronald L. Vance and Richard M. Cameron

Broader and expanded roles for physician leadership will be increasingly essential – demanding changing compensation models for physicians as both executives and as “rank and file” partners with hospitals and health systems – as healthcare moves from a “Curve 1” world (where providers are primarily paid based on fee-for-service) to a “Curve 2” world (where providers are primarily reimbursed based upon outcomes and/or reduced costs).

In a Curve 1 world, we anticipate that the most critical need for physician engagement and leadership will be assisting in redesigning service line/program operations and care delivery to reduce cost structures and overall resource utilization – and be thus able to withstand declining levels of payer reimbursement.

As set forth below, in a Curve 2 market, physicians will be essential to provide leadership in higher-level care redesign and health population management, rather than more episodic-focused services. For virtually all markets, we anticipate that physicians will be called upon to deliver care based upon higher levels of evidence-based and interdisciplinary care protocols. At a minimum, physician participation in Clinical Care Councils and/or other joint decision-making teams to develop such approaches will be needed. Moreover, many health systems preparing for Curve 2 believe that successfully developing effective physician executives will increase the probability of success.

We already have seen increased recognition of the need to add/expand physician leadership roles to address improvements under Curve 1 rules, while also preparing to launch into Curve 2 activities when appropriate. We expect all organizations will need to accelerate their use of physicians in defined and specific leadership roles. In turn, physician compensation for leadership will become more important and relevant to sustaining these new relationships over time.

Below are considerations for redefining and compensating those physicians who will be called upon to serve as leaders at varying levels in this evolution into the new “Curve 2” world.

Executive Level

Shifting physician clinicians into physician executive roles will require careful balancing of clinical interests with new, defined leadership roles. Compensation will be patterned after other executive roles, requiring physician skills and expertise along with management acumen and leadership.

All compensation will be tied to specific and verifiable role execution goals and objectives. Physician executive compensation increasingly will take into consideration expenses per-unit, operational efficiency, documented clinical outcomes and other quality/service metrics.

Fair market value analysis of executive compensation will follow management and executive market benchmarking and analysis. The level of required physician executive training/experience – contrasted with the level of subspecialty clinical expertise – must be carefully weighed to determine which executive role and/or clinical compensation benchmarks should be reviewed to set the appropriate fair market value range.

The need for physician expertise to assist in oversight of further clinical integration and overall physician-hospital alignment will likely enhance the demand and value for physician executives to serve within health system senior management roles. Unfortunately, most organizations do not deploy a formal executive development and training program for physicians, which will hinder the creation of a sufficiently sized talent pool to meet future demands. Consequently, in addition to competitive compensation packages, further investment and focus upon such development and training programs will be a key distinguisher in the most successful integrated health systems.

Part-Time Medical Director, Service Line/Program

These types of leadership roles will be the most crucial under Curve 1 because every healthcare organization has needs for enhanced focus on cost reduction and efficiency, in addition to market growth initiative, in the current environment. Compensation levels need to be specialty and/or service-specific, regardless of whether physicians are employed or contracted by the healthcare system.

Many part-time roles under Curve 1 will morph into full-time roles under Curve 2, which further highlights the need for effective education and training to prepare this cadre for future responsibilities. Effective matching of physicians with knowledgeable administrators who can help them develop into physician leaders will be crucial to long-term success. Often this “dyad” will be held accountable under shared performance incentive metrics.

In addition to “best efforts” hourly rate payments or allocated base salary/stipends, these physician leaders also will be provided additional performance incentives. These incentives will be based on meeting goals in program development, expenses, operational efficiency, documented clinical outcomes and other quality/service metrics. Under Curve 2, the metrics to determine if “success” has been achieved will be on broader definitions of the service line/program across the inpatient, outpatient and ancillary components of the healthcare delivery system.

Integrated Group Practice

Careful selection of physician leaders for employed networks is vital to sustain momentum after a practice is acquired. Not all physicians who were effective in private practice also will be effective in an employed relationship. The ability to operate effectively within a shared management/governance environment frequently requires different skills and abilities. For most of these roles that do not require a particular physician subspecialty, there will be “Physician Executive” compensation benchmarks that are tied to the size, type and complexity of the group.

However, for other leadership roles within the integrated practice that do require a particular physician subspecialty in terms of background and experience, compensation can be set using techniques similar to those for medical director/service line roles. Generally, specialty-specific hourly rates or allocated base salary levels using specialty-specific physician compensation benchmarks may be utilized. Alternatively, production credit (e.g., proxy “Work Relative Value Units,” professional collections, etc.) may be provided and included in the total levels of performance required to determine if other production incentive threshold levels are met.

Education and training programs that provide opportunities for these leaders to add theoretical knowledge to their practical experience will be invaluable to the organization. Paying physicians for their time to become more educated also will have to be taken into account.

Managed care networks and payer contracting

As more organizations define their payer capacities under Curve 2, there will be more demand for enhanced training and education for physicians about how payers view healthcare delivery and payment. Contract negotiation skills for physicians will be increasingly important.

Compensation will either fall into executive roles or medical director-type roles. Higher levels of overall compensation for these leaders will be based on network/team performance within global budgets and achievement of payment for performance (P4P) targeted levels of quality, service, efficiency and other “value” metrics.

The trend toward payer organizations with physicians in lead roles will continue.

Medical Staff Organization

More healthcare systems will pay physicians for their time in fulfilling these important roles, utilizing hourly rates tied to specific duties and role expectations. Increased education opportunities (within Stark law regulatory spending limits) will
be necessary.

The role of the medical staff organization in hospitals will need to change over time as the character and functions of the hospital itself changes.

For many health systems, the willingness to provide compensation and overall budgets to compensate physicians for these medical staff leadership roles will be more limited by the Joint Commission or other accreditation body requirements. Payment for other physician leadership activities will incorporate other shared decision-making structures noted above. On the other hand, given the increasing reluctance of the newest generation of physicians to provide “volunteer” time and their higher emphasis on lifestyle considerations, continued payments for even the limited key medical staff officer and committee roles likely will be required.

Conclusion

Physicians increasingly will and should be called upon to assist in the redesign of healthcare delivery to improve operational and clinical performance in the current Curve 1 markets – and even more so in the impending Curve 2 markets. There are increasing needs for enhanced compensation and benefits plans that are based on physician specialty-specific rates and management of others, as opposed to personally performed volume-driven activities.

Payments for physician leadership activities will need to include expanding levels of formal full- and part-time roles, as well as more limited program/initiative-specific activities. Ultimately, the consumers of healthcare services also will demand higher levels of accountability for results, not just best efforts, from all healthcare providers. In turn, those demands also will require higher levels of risk within the emerging compensation plan designs at all levels.

About Ron Vance

Ron Vance, a managing director at Navigant Healthcare, has more than 25 years of healthcare experience, serving more than 150 health systems, hospitals, medical groups and academic institutions. His practice is largely focused on physician-to-physician and physician-hospital alignment strategic and business planning, advanced medical staff development planning, compensation, performance improvement, organizational development, governance and related leadership development issues. He has extensive experience in providing fair market value reasonableness assessments for a broad range of physician services relationships, including numerous compensation, professional service and on-call coverage arrangements for hospitals and health systems. Ron has a bachelor’s degree from Millikin University and is a cum laude graduate of Southern Illinois University of Law. He is a member of the State Bar in Illinois, Missouri and Georgia. Contact Ron at ron.vance@navigant.com or 770.814.4480.

About Rick Cameron

Rick Cameron, a managing director at Navigant Healthcare, has more than 35 years of experience in the hospital, group practice, managed care and healthcare consulting arenas. Rick provides his clients with a full range of physician-focused management and consulting services, with emphasis on practice operations and financial performance assessment and improvement; compensation design, assessment and implementation; physician-hospital relationship development, assessment and improvement; and strategic business planning and management development. He has extensive experience working with national and regional health systems, hospitals, hospital-employed and independent physicians groups, law firms and other consulting firms across the country. Rick is a Certified Medical Practice Executive by the Medical Group Management Association. He has a bachelor’s degree in management from Oakland University and a master’s degree in health services administration from the University of Michigan. Contact Rick at rick.cameron@navigant.com or 636.681.1316.

Q&A with Dr. William Knopf, M.D., F.A.C.C., F.S.C.A.I., F.A.C.P.E.

Piedmont Hospital

Rx for Physician Engagement: Listen, Instill Culture of Accountability and Discipline

William Knopf, M.D., the newly appointed chief operating officer and chief medical operating officer of Piedmont Hospital and former COO of Piedmont Heart Institute, was interviewed about the role of physicians in strategic planning. Below is an edited transcript of the conversation.

Q: How do you involve physicians in the strategic planning process?

A: Piedmont Healthcare has placed strong emphasis on physician engagement at multiple levels throughout its history, and to this day physician involvement continues to be a common practice at Piedmont Hospital. Historically, physicians have consistently held roles in areas of governance; for example, the chair of the board of Piedmont Healthcare is always a physician, as are many of the board members at the corporate and facility levels. However, we also make a concerted effort to involve physician leaders from various service lines in the developmental stages of our strategic planning. This increased participation and feedback in the earlier stages of planning provides opportunities to more accurately identify resources and create a strategic plan that is better aligned with physicians’ needs and wants. Additionally, this physician “buy-in” generally allows for greater acceptance of strategic initiatives as we move into the execution stages.

A prime example of this involvement stems from our cardiovascular division – Piedmont Heart Institute. This service line began with two cardiology groups that had the shared vision of developing the service line and brought their ideas to the administration. Piedmont Hospital’s administration provided support by means of people, technology and other related resources. This collaboration created an opportunity for a third cardiology group to join their two groups and form the present day Heart Institute. The cardiovascular division has established a strong presence in the metro Atlanta market and now generates nearly a quarter of the hospital’s revenues.

More recently, the success of the cardiovascular program has identified the need to further develop other service lines as well. So, we gathered our physician leadership to assess various therapeutic areas and reviewed market data to identify the potential growth opportunities available. The physicians played a key role in determining which service lines would provide a good fit with regard to our other capabilities and potential for performance. They were able to prioritize the service lines, placing neurosciences as a primary focus and including oncology, orthopedics and women’s health services, respectively. This targeted approach allowed the administration to work with our lead neurosurgeon to develop a richer, deeper three- to five-year strategic plan. We are now able to effectively pursue the resources necessary to build and execute the identified service lines based upon this plan.

Q: How do you communicate with physicians?

A: Communication is always a challenge, but we have developed a number of forums, through which we are able to establish physician communications. Our Medical Executive Committees have been helpful in presenting our strategic plans to physicians for their feedback and support. We have also added several newer groups to reach the physician members of our medical staff. Approximately a year ago, we formed a Physician Leadership Council within the hospital to communicate the strategic plan to the members’ various constituencies. We have also added a Perioperative Governance Council that is composed of 14 physicians who oversee our operating room; their primary objective is to determine and communicate how the strategic plan would impact the OR, specifically. Finally, to address a more global perspective, we created the Patient Flow Panel approximately eight months ago; this group of 25 physicians looks to see what effect the strategic plan would have on the throughput and other operational efficiencies of the hospital. Through these and other groups, we are able to effectively communicate with a number of positions on our medical staff.

Q: Have you encountered resistance from physicians and, if so, how have you overcome it?

A: More so than areas of resistance, we have seen a heightened element of physician engagement as the physicians have come to recognize the impact of their contributions upon Piedmont’s strategic initiatives. The administration is actually listening to its physicians; as a direct result of this communication process, we are putting forth other plans that had not previously been considered by consultants, such as the bariatric surgery plan that was presented by our gastrointestinal group. This involvement leads to a more multidimensional approach to the development of our programs and, ultimately, our strategic plan.

The only questions of internal support deal with the limitation of capital resources available and making sure that we have clear prioritization of what we can and cannot do; furthermore, we must effectively convey those priorities to our physicians, nurses and staff. We do not want service lines to think there is a blank check but, at the same time, we want them to understand that there is a clear phased approach outlining what is affordable, doable and viable for the organization.

For example, as part of our oncology efforts, we recruited two urologists who specialize in robotic prostatectomy for prostate cancer, and they had a fairly extensive wish list, including some high-priced equipment (e.g., robots, Three Tesla MRIs, etc.). We had to circle back with them with a plan, upon which we could all agree, that would ensure that we had the right clinical care and they had the resources required for them to do their work.

Another example is in our neurosurgical program, where we are looking at a phased approach for growth. We have a robust spine program out of the neurosurgical division. But as we build our brain program, we’re going to do brain tumor surgery first, followed by brain or neurovascular surgery, because those require different resources that we will need to have in place before continuing forward.

One of the challenges we face is in finding a strategy that is considered a “win-win” for both the physician and the hospital, particularly when dealing with physicians who are not employed by the health system. It is less complex in our cardiovascular division since the cardiologists, heart surgeons and vascular surgeons are all employed and working in alignment with the strategic goals of the hospital. In other areas like neurosciences, oncology and orthopedics, which represent a mixed model of employment and non-employment, we have to figure out ways of creating a good value proposition for all parties who are participating in the program.

Q: How do you ensure physicians in your group are accountable for implementation
of the strategic plan?

A: One of the ways we are establishing physician accountability can be highlighted in my new role as the chief operating officer and chief medical operating officer. The duality of my roles as a practicing cardiologist and a member of the hospital’s executive leadership team offers a broader perspective. I am held accountable to the various goals of not only the hospital, but also those of the healthcare system, and I have to push that sense of global accountability to my physician colleagues. It is important that the physicians understand that the administration is true to their word. They are giving us the keys to the car, so to speak, filling it with gasoline, and trusting us to navigate effectively; at the same time, we as administrators are responsible for maintaining that car – that resource. Placing me in this role has reiterated to the physicians that the administration is serious about allowing us to manage the hospital while balancing its aims with our corporate goals.

Additionally, we have created a new organizational chart at Piedmont Hospital, in which we have four targeted areas that we have termed “Centers of Excellence.” These key divisions account for at least two-thirds of the hospital’s revenue and include the following: cardiovascular, transplantation, the emergency room and the operating room. In the organizational chart, we’ve placed physicians as medical directors, leaders and managers of those various areas that report directly to me. They, in turn, have nursing administrative directors reporting to them. This mixed model gives true authority and responsibility to those physicians and nurses but also the accountability to achieve the goals that we’re trying to achieve at the hospital.

Q: What training are you doing to help develop physician leaders?

A: We’re trying to figure out how we can empower physicians to transcend their more traditional roles to those of physician leaders and physician executives; this concept applies to nurses, as well. How do we get clinicians to sit at a table as true executives and work with administrators in an impactful way? We’re beginning to look at internal leadership academies that can help us. Prior to that, we have given stipends and other grants to have our physician and nursing leadership train externally in specific skill sets that will help them get up-to-speed with executives.

Q: What are some of the lessons learned in engaging physicians in strategic planning?

A: I have learned that you have to begin with culture. Too often we start with tactical approaches, and we forget the bigger picture. What is the culture of your organization going to be? For us, it is instilling a culture of accountability and discipline. Secondly, as we develop various strategic plans, we want to ensure that we have a clear, focused vision upon which everyone can agree; multiple visions work against one another and create confusion. It is also important to establish a clear style of leadership that resonates on all levels, so that the physicians, nurses and staff are motivated to support the results that we are trying to achieve.

Lastly, we need to set expectations for the physicians so that they understand that the business of medicine and the delivery of care are two separate skill sets. We must take care of the needs of the patient and provide the right value at the same time. Health systems can no longer afford to be high-quality, high-cost centers. Now, more than ever, we need to provide the right value in engaging physicians and removing variability and waste – things that are fairly intuitive, but often require a bit more focus on the process at hand.

The most important tactical lesson to be learned is that administrators must be able to actively listen to and understand physicians. I am fortunate in being able to bridge that divide; however, it took me some time to learn administrative speak, quite frankly. However, I am now able to better help the physicians come across the chasm to be able to speak in a way that we can both understand. As a result, we have been very specific about listening and responding to physicians in a manner that is very prescriptive and transparent about what we are doing, what we cannot do and what we may need to do at a later date. This same lesson applies with nurses and staff as well. We cannot exclude any of these groups if we want to get these strategic plans off the ground and properly implement them. It is truly a team game these days.

About William Knopf

William Knopf, M.D., F.A.C.C., F.S.C.A.I., F.A.C.P.E., was appointed chief operating officer for Piedmont Hospital in Atlanta in January 2012 after serving for five years as COO of Piedmont Heart Institute. Prior to that, he was managing partner of Atlanta Cardiology Group, which he joined in 1987. From 1987 to 1994, he served as medical director of the cardiac transplant program at Saint Joseph’s Hospital of Atlanta. In 1990, he founded the non-profit American Cardiovascular Research Institute and currently serves as chairman of the board. Dr. Knopf was instrumental in creating a national cardiovascular symposium, which has evolved into the i2 summit, the American College of Cardiology’s premier interventional cardiology meeting. He has participated in more than 100 research studies. He is a Phi Beta Kappa graduate of Emory University and a summa cum laude graduate of its School of Medicine. Contact him at william.knopf@piedmont.org or 404.605.5484.

Navigant News

Navigant Assists Large Physician Group in Physician Compensation Modeling
A Navigant practice management agreement has helped Queens-Long Island Medical Group (QLIMG) return to profitability and win physician acceptance of a value-based compensation plan. QLIMG, located in Queens, Nassau and Suffolk counties on New York’s Long Island, is a multi-specialty group with 16 office locations. The group includes 300 primary care and specialty physicians and maintains a close affiliation with Emblem Health Plan & North Shore - Long Island Jewish Hospital.

QLIMG lost more than $14 million in 2010 and was forecasted to lose $28 million in 2011 when it engaged Navigant Healthcare. After an initial three-month assessment engagement, the Navigant team provided a comprehensive report outlining imperatives and implementable initiatives designed to right-size the organization, reduce unnecessary overhead and improve care quality. The recommendations were accepted by the organization’s leadership and Navigant was then engaged as a practice management service for three years beginning in April 2011. Navigant focused first on implementing the imperatives developed during the assessment. As a result, QLIMG achieved a $10 million profit instead of the forecasted loss.

Navigant then focused on aligning the group’s advanced patient-centered medical management program with the method it used to compensate its medical staff. Success in this endeavor required strong support from QLIMG leadership – including its Board of Directors and CEO and President – and the ability to capture, measure and report on key clinical metrics. The metrics selected were those earmarked to promote accountable care and those designed to create new value-based revenue streams needed to fund its bonus obligations under the plan. In order to gain the buy-in of medical staff, Navigant stressed greater awareness of the relationship between plan clinical metrics and compensation potential under a redesigned compensation plan, aligning performance and rewards and setting standards at achievable levels. Acceptance of the value-based compensation plan would position the group to align itself with major purchasers of healthcare interested in seeking to affiliate with groups that could help preserve and grow membership.

“We started out by using Navigant consultants leading a committee of various physicians,” explained Carlos Hleap, M.D., CEO and President of QLIMG. “The consultants where instrumental in educating our physicians on the value-based proposition and in visualizing the impact of different compensation plans. Their ability to model the different scenarios was a function we did not have the ability to confidently reproduce. The Board of Directors initially rejected the proposed plan. Our physicians were uncomfortable with decreasing wRVU values by 66 percent and placing over 50 percent of income on value-quality metrics. My experience has been that physicians prefer to leave compensation as it is and engage in value as a value-added bonus.”

With Navigant’s continued help, Dr. Hleap said QLIMG eventually came up with a compensation plan that achieves both “at risk value-based income” that ensures behavioral change among its physicians along with a “value-added bonus” for incentives earned above and beyond the current physician compensation pool. “Our physicians have accepted this compensation plan and we are currently in the process of implementing it. This has been a difficult process, but we have learned much from it.” Dr. Hleap credits Navigant’s Frank Bonanno, Chief Administrative Officer for QLIMG under its practice management contract with Navigant, for being instrumental in developing the concepts and details for the compensation plan, working in concert with Navigant consultants.

For more information, contact Frank at francis.bonanno@navigant.com or 646.227.4656.

Increased Federal Funding Opens Door for More Medicaid Recipients
In an effort to encourage primary care physicians to participate in Medicaid, the Patient Protection and Affordable Care Act (ACA) requires that Medicaid pay primary care providers in accordance with the Medicare fee schedule in 2013 and 2014. Increased payment for primary care is funded entirely by the federal government. States are not required to match any of the additional federal payments. The increase will cover evaluation and management services and immunization administration services for vaccines and toxoids provided by family medicine, general internal medicine, pediatric medicine and related subspecialties, and HMOs are required to pass along the increase to their physicians. The additional federal funding is intended to help meet the expected increase in demand for services resulting from the Medicaid expansion in 2014. This expansion is expected to bring in 16 million new Medicaid-eligible recipients, making Medicaid by far the largest insurer in the country. Many of these new recipients will be previously uninsured adults.

Implementation requirements seem straightforward. States must pay Medicare rates for the designated services. During this two-year period of increased federal funds, however, states will have new opportunities to create value for their programs and beneficiaries. In the past, some states have been stymied in their efforts to develop innovative models of care delivery that include primary care physicians. Seeking to balance often-negative perceptions by physicians about Medicaid, many states have found it difficult to place new requirements on those physicians who have been willing to participate in Medicaid.

Effective in 2014, however, states can leverage the fee increase to adopt alternative models such as patient-centered medical homes and health homes that can promote wellness and potentially reduce overall healthcare costs in 2013 and 2014, and to develop sustainable models for 2015 and beyond. Similarly, primary care physicians can leverage the additional funds to support their own innovations in care delivery. The additional federal funding creates a more level playing field for states to not only strengthen but transform the delivery of primary care services. Physicians are collaborating to propose new delivery models to states and states are encouraging their implementation through pilot programs. Success in these programs can provide impetus for states to continue funding the fee increase after 2014.

For more information, contact Catherine Sreckovich at csreckovich@navigant.com or 312.583.5747.

Navigant Advisors Offer their Expertise

Navigant is knowledgeable on a variety of healthcare topics that are important to physician practices, healthcare systems and payers. Below are some highlights and links to articles featuring our experts. 

Physician Acquisition: What to Avoid After the Deal is Complete

This article by Navigant Healthcare’s Mark Driscoll and Anthony Long, published by hfm magazine, considers the challenges of physician practice acquisitions and the need for hospitals to take necessary steps to ensure that the transactions lead to successful integration. After a hospital acquires a physician practice, relations can become strained between the parties in any of the following four areas: (1) governance and decision-making; (2) technology; (3) payment structures; and (4) emotional factors related to the acquisition. The authors also include case study examples and warning signs of trouble in hospital-physician group relationships.

Exchange Deadline Creeps Closer

Navigant Healthcare’s Cristine Vogel is cited in a Healthcare IT News article titled, “Exchange Deadline Creeps Closer, Supreme Court Decision on Obama Mandate a Factor.” The article discusses that, while the provider community heaved a sigh of relief over the extension of the ICD-10 implementation date, another important deadline is right behind it. Hospitals and health systems are currently required to have the health insurance exchange infrastructure in place by 2014. Vogel says, “Large health systems are well positioned, but the concern is with the smaller community hospitals and hospitals in underserved urban areas. Many uncertainties exist with this, but if the individual mandate is allowed to continue, providers must be ready to report data to the exchange by 2014 and at this point, they are not in a position to do that.”

Picking the Right Bundle from the CMS

In this HFMA Payment & Reimbursement Forum article, entitled “Breaking Even Under Medicare Bundled Payments,” authors Richard Bajner, Eric Logue and Cliff Frank discuss the importance of hospitals and physicians selecting the right bundles in order to emerge successful from the Centers for Medicare & Medicaid Services’ bundled payment pilot. The article focuses on CMS bundled payment models two and four. It also demonstrates the need for hospitals and physicians to understand the potential risks, as well as the benefits of participating in these CMS demonstration projects.

Higher Education Searches for Clues in Healthcare

Christine Malcolm is featured in an article by the National Association of College and University Business Officers titled, “Finding the Right Prescription for Higher Education’s Ills: Can Health Care Provide Answers?” The article discusses the symptoms being experienced by higher education, including rising costs, declining public confidence and support, new competitors and concerns about quality and value. It asks the question, “Do prescriptions exist to address these symptoms, or are they precursors to something more serious for higher education?” The article also features Malcolm’s time and experiences at Kaiser Permanente.

Upcoming Events:

Navigant’s experts speak on a variety of healthcare issues throughout the year. This calendar highlights upcoming events that our experts are participating in across the country.

JUNE 30 - JULY 3
ASE 23rd Annual Scientific Session
“Medical Practice Management in the New Healthcare Norm: Leadership Tips For a Successful Practice”

Speaker: Jim Palazzo

AUGUST 9
2012 UDS Medical Rehabilitation Annual Conference
“Impact of Payment Reform on Post-Acute Care – Are Inpatient Rehabilitation Facilities Preparing for this Transition?”

Speakers: Donna Cameron and Richard Bajner

AUGUST 15
Georgia HFMA Webinar
“Physician Practice Revenue Cycle Integration: Hospital and Provider Based Billing”

Speaker: John Boland

SEPTEMBER 5-7
The Healthcare Roundtable for General Counsel

Speaker: Ron Vance