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

While pulling medical groups into your integrated delivery may make sense, you may end up poisoning your relationship from the outset if you try to force the groups into your existing financial measurement models. That was perhaps the key message delivered by present and former top executives from health systems, who spoke this week at a session on aligning physicians with integrated delivery systems at the Medical Group Management Association's annual meeting.

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 problem is, once IDSs bring groups into their fold, things get tense quickly, based largely on how the groups are treated financially, says Bob Bohlmann, FACMPE, principal with MGMA's Health Care Consulting Group. Very frequently, groups are asked to carry a share of the delivery system's G&A expenses, which makes them look far less solvent than they are--while being given very little credit for the extent to which they contribute referrals to ancillary services. "Many practices say 'Hey, we were recruited and now we're being slammed because we're allegedly losing money," Bohlmann said. "I can safely say that while annual losses per physician exceeded $100,000 as reported, they might be as small as $10K."

The solution is to eradicate talk of profit and loss per physician, suggests Debra Cresta, president of Core Physician Services of Exeter, NH "If you get worn down into a conversation about loss per physician, you get into micromanagement, which is really debilitating for everyone concerned," Cresta said. "Instead, be able to explain what your losses would be on things like ancillary services if these doctors weren't part of your system." If you educate your board on these issues, eventually you'll get a breakthrough, and everyone will understand the real value physicians offer, she suggests.

While letting physicians' paper losses go may sound impractical, it can work surprisingly well, said David Taylor, FACMPE, vice president of Springfield, MO-based Cox Health System. "In seven years I've never had a conversation about losses in my group, and the losses are in the millions," he said. "But it's rare I have to have a conversation about production. Physicians get treated like they're in private practice, and that works for them."

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