MGMA 2008: Health system execs urge new financial model for medical groups

"According to more than one panelist, right now many systems are looking to affiliate with newer practices that don't have strong roots in the community and aren't set in their ways.

Why? Because current groups "aren't ready to meet our criteria," said W. David Holloway, MD, chief medical officer and senior vice president with Salem (OR) Hospital. Holloway wants to affiliate with primary care groups who are willing to embrace the medical home, extended practice models and EMRs; he's found that existing community groups are less cooperative."

The reason existing community groups are less cooperative is because of attitudes like the one expressed by W. David Holloway. Hospital CEO's think they know best, community groups with long standing ties in a community have seen practice models (PPOs, etc) pushed by hospitals come, and then usually go at great expense and frustration.

Furthermore, most old hands have vivid memories of ignorant CEO's trying to come in and push their vision of medicine down their throats.

Hospitals should stick to running hospitals and get out of the hiring physicians. It eventually blows up in their faces, especially in smaller communities.

Hospital executives seem to be in some kind of time warp. They are still in the 1980s mindset when it comes to strategic business affiliations with community doctors. Due to severe paranoia, they do not think straight at all. Two common examples of boneheaded behavior of hospital execs:
1) Buying primary care practices and spewing hospitals inefficiencies on them. The Docs either get burnt out or feel trampled upon. They go into a silent protest mode, stop working, stop making profit. They are paid a base salary anyway..In a year or two the hospital gets hostile and dumps the practice. The practitioner who picks up the pieces and restarts often has a negative attitude toward the hospital and starts badmouthing the hospital and referring patients to competitors! This ridiculous drama is played out thousands of times at most community hospitals.
2) Procedural specialists are income generators for hospitals; more importantly their activity helps accreditation and results in a ton of collateral business. Hospital administrators become very hostile to doctors who own their own surgical centers and refuse to work with them when it comes to paying them for doing procedures on hospitalized indigent patients, ED calls, or for procedures done in a hospital setting ( citing ridiculous reasons like "Stark violation"). Most doctors do not mind taking care of the indigent load if they are at least paid enough to cover their operating losses. Unlike the hospitals, docs do not get public funds or grants for indigent care. IF they are not careful and spend 6 hours doing Medicaid patients or the so called "self insured" people without correct reimbursement for time and expertise they will perish due to cost overruns. Increasingly, hospitals are hiring salaried specialists and spending a lot of money for very little revenue generating work. If they were thinking like smart businessmen,administrators would make supreme efforts to woo specialists with minor accommodation without actually doing "bottom-line" calculations. The very fact a trained , board certified procedural specialist operates in a hospital will bring in a lot of revenue from paying patients. By paying just fees for services rendered, the hospital will not tied into payroll activities for these doctors. Their cost of doing business remains manageable.

Very few hospitals are capable of keeping the same CEO over the long term. The challenges posed to the procedural specialist in forming a shared ownership relationship with a hospital, is the fact that those relationships are usually driven by the vision of a single hospital administrator, that being the CEO. Once that CEO departs, new management arrives and wants to put their mark on everything. In particular, when the balance sheet is studied, the conclusion is reached that they are "paying doctors too much." Even though contractual agreements can be formed, the spirit of the agreement, history of the relationship, and collaborative working relationship get thrown out the window with new administration. Having lived through this event, it becomes understandable that physicians wish to own their own surgery centers to maintain control over their destiny.