Authors: Mitchell GoldJim Rice

To deliver on the promise of value-based healthcare and enhanced population health, successful healthcare organizations recognize the essential role of a well-designed, aligned and engaged physician enterprise. Several key characteristics can support and, conversely, frustrate a successful physician enterprise. This article outlines essential strategies that can help ensure a high-performing physician enterprise.;

Key factors contribute to a successful physician enterprise.

The era of value-based contracting and population health demands significant design clarity and disciplined operations to support fully integrated and engaged physician delivery systems. At Gallagher, our most successful clients are those that have invested in high-performing and diverse physician and related provider service delivery elements. Examples include accountable care organizations (ACOs), provider mentoring and coaching programs, and expanded service lines, among other factors. See Figure 1.

Unleashing The Successful Physician Enterprise


Lack of system and leadership coordination can weaken health systems.

Unfortunately, many health systems coordinate these elements poorly. In such cases, the health system does not use an integrated and easy-to-use electronic medical/health record. Further, the system often is understaffed, employs a dyad management model with clinician and administrative partners of unequal capabilities, and uses outdated or ineffective performance management tools.

Further complicating the landscape, governance models often include a confusing array of decision-making groups and processes. Such groups frequently lack alignment and may include the governing boards themselves; councils based on departments and service lines; and a variety of committees to include physician leadership, medical executives and clinical practices, among a variety of other forums.

Factors that frustrate physician enterprise success.

Gallagher teams that work with large and small health systems and medical groups have identified common factors that distract, disrupt and derail achievement of a high-performing physician enterprise. Confusing electronic health record systems are a common issue, but underlying deeper cultural problems commonly include unclear strategic and financial plans.

Many times, providers are not aware of or included in the development and execution of those plans, nor do they participate in any type of governance whatsoever. Consequently, burnout and decreasing engagement lead to suboptimal and even toxic environments. The results include strained provider-staff relationships, turnover, unsatisfactory patient experiences and more severe outcomes such as medical errors.

Overcoming these obstacles is not easy. The high-performing physician enterprise requires a much more disciplined and interdisciplinary process of mapping a journey to enhanced quality and financial vitality.

When the physician enterprise performs well, however, the results can be significant. Outcomes include not only enhanced financial, operational and patient outcomes, but superior culture. Better organizational wellbeing includes an enhanced provider experience evidenced by lower physician and staff burnout and turnover, as well as higher provider engagement in strategic plans. See Figure 2.

Unleashing The Successful Physician Enterprise


Moving toward tremendous: One organization's story.

Gallagher conducted a physician engagement survey for a 25-bed critical access hospital in the Northeastern U.S. Over the five years preceding the survey, virtually all the physicians in this organization had become hospital employees, with the hospital becoming the practice owner. By conducting a physician engagement survey, leaders discovered that the overall level of physician engagement measured at the 25th percentile of Gallagher's database, indicating a "troubled" physician enterprise. Results appeared somewhat better for specialists than for primary care physicians.

With the transition to owned practices, the locations of the practices in the community had not changed. Most of the primary care physicians did not practice in close proximity to the hospital. Generally, they spent little time on the campus. Hospital senior leaders made a number of changes as the physician workforce moved from independent practices to hospital employment. Examples included the following:

  • The medical staff lounge and physician dining room were no longer needed and eliminated.
  • Communication channels were redirected, primarily involving communications to the physicians through their practice managers, rather than directly from the administrative leaders of the hospital.
  • Practice employees reported to a non-physician manager, rather than to the physicians.
  • Since the employees no longer reported to the physicians, HR staff conducted personnel actions involving practice staff without the knowledge of the medical staff.
  • None of the employed physicians had received a performance evaluation, because the CHRO did not think his department should evaluate physician performance.

Making the tough changes.

Senior hospital leaders realized the situation needed to change in order to improve. Gallagher led focus group discussions with the physicians and presented a report of recommended changes to hospital leaders, which the leaders implemented. They began by reopening the medical staff lounge and set aside a part of the dining room to support better physician interaction. Senior management then pursued direct dialogue with physicians rather than relying on midlevel management personnel to serve as intermediaries. Further, leaders initiated new communication strategies to include email, bulletin boards and virtual meetings.

As part of an effort to engage physicians, hospital administrators began involving both the physicians and the practice managers in strategy discussions, as well as in employee performance reviews and other administrative activities. Senior managers also began to visit off-site medical practices on a regular basis, and managers avoided scheduling meetings with physicians during times when the physicians would be seeing patients.

To formalize a physician leadership role, hospital leaders created a new chief medical officer (CMO) position and hired a physician for that role. The CMO then launched a new structured process for annual performance evaluations of all employed physicians. Further enhancing the infrastructure, the hospital took steps to integrate the inpatient and office electronic medical records. Finally, to create a more supportive culture, senior managers instituted a recognition program for physicians to include thank you notes and recognition in hospital publications, as well as at medical staff meetings.

Following these changes, physician engagement scores increased significantly on a subsequent survey the following year. Midlevel managers also reported a more collaborative relationship with the physicians. One year after hospital leaders implemented the recommendations, physician turnover fell to zero.

Five imperatives will unleash the physician enterprise.

Health systems are more likely to achieve significant and sustainable gains in the performance of their physician enterprise by accomplishing five strategic imperatives. An interdisciplinary team of respected physician, nursing, administrative and board-level leaders can help initiate and customize the following imperatives: 

  1. Document the scope and nature of the performance dimensions of the existing physician enterprise.
  2. Co-create a strategic vision for a high-performance physician enterprise.
  3. Invest in an expanded provider engagement plan designed to enhance mutual trust and respect, removing factors that frustrate and enhancing factors that facilitate engagement of all affiliated providers.
  4. Redesign a comprehensive provider compensation system. This initiative will include modern performance planning and management, as well as competitive, incentive-based cash and benefit compensation for employed or affiliated physicians.
  5. Establish an enhanced governance model for decision-making across thephysician enterprise.

Mapping a journey to peak performance can be challenging but achievable with the right plan, guidance and focus. Gallagher offers deep experience in supporting physician enterprises on the journey from toxic to tremendous. We can walk alongside you and your leadership team to help you move to better organizational wellbeing and face the future with confidence.

Author Information:

Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc. is a licensed insurance agency that does business in California as "Gallagher Benefit Services of California Insurance Services" and in Massachusetts as "Gallagher Benefit Insurance Services." Neither Arthur J. Gallagher & Co., nor its affiliates provide accounting, legal or tax advice.

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