Tips for Successful Management of Hospital-Owned Physician Practices

  • 1. Marketplace sensitivity :-Before acquiring a practice or employing physicians, hospitals need to explore the marketplace needs of the community. No physician group should be developed without a specific need for its services. "Hospitals that look strategically at how to invest scarce capital in this area are in the best position to successfully deliver healthcare to a community".

  • 2. Careful selection of physicians :-Physicians employed by a hospital or health system need to share the same values as the parent organization. "An amalgam of individuals with individual business plans is not a best practice for a group to deliver desired operational and quality outcomes of the system," . "You need physician partners who share the same values and will work collaboratively toward these outcomes."

  • 3. Don't underestimate the financial impact of an acquisition :-Because of the downward pressure on reimbursements for purely physician services, such as office visits, many practices have begun offering a "menu" of ancillary services, such as imaging, physical therapy, durable medical equipment and device sales and drug research, . When a hospital acquires a practice, these ancillary services are often moved to the hospital, transferring corresponding revenues away from the practice itself and into a hospital outpatient department. While adding physicians may lead to increased referrals for these hospital services, the acquiring organizations must keep in mind that apparent practice revenues may drop accordingly."It's important to take a careful look at the total value stream accruing to the organization. Compensation to the employed physicians of course must meet external independent review to ensure that compensation is within fair market value".

  • 4. Recruit experienced practice managers :-Hospitals that are new to the hospital management side of things should recruit skilled and experienced managers of physician practices to lead the physician group.

  • 5. Physician leadership in governance :-Physician leadership in governance and operations is a critical component of a successful hospital-owned practice.
    Physician leadership also often improves the ease at which practices can gain buy-in from other physicians for changes. Dr. Naas reports that a paired leadership model, where a physician leader and a chief administrative officer jointly lead a practice, is becoming increasingly popular

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