Doctors and hospitals need each other. Healthcare reform is requiring hospitals to rely more heavily on physicians to help them meet quality, safety, and efficiency goals. But in return, doctors are demanding more financial security and a larger role in hospital leadership.

Just how far are they willing to take their mutual relationship to meet their individual needs? A new report by professional services company PwC (formerly PricewaterhouseCoopers) examines the mindsets of potential partners, including an online survey of more than 1,000 doctors and in-depth interviews with 28 healthcare executives. The results suggest plenty of opportunities for alignment, though perhaps also the need for serious pre-marriage counseling.

“From Courtship to Marriage Part II” (www.PwC.com/us/PhysicianHospitalAlignment) follows an initial report that emphasizes the element of trust that’s necessary for any doctor-hospital alignment to succeed. This time around, the sequel is focusing on more concrete steps needed to take the budding relationship to the next level and sustain it. In particular, the new report focuses on sharing power (governance), sharing resources (compensation), and sharing outcomes (guidelines).

Hospitals and physicians have been to the altar before, but many of those marriages ended in divorce.

The PwC report preempts the naysayers by acknowledging at the outset that “hospitals and physicians have been to the altar before, but many of those marriages ended in divorce.” So what’s different from the 1990s, that decade of broken marriages doomed by the irreconcilable differences over capitation?

“Number one is that back in the ’90s, there wasn’t a clear consensus in defining and determining what is quality,” says Warren Skea, a director in the PwC Health Enterprise Growth Practice. In the intervening years, he says, membership societies—SHM among them—and nonprofit organizations, such as the National Quality Forum, have helped address the need to define and measure healthcare quality. The Centers for Medicare & Medicaid Services (CMS) followed up by adopting and implementing some of those measures in programs, including hospital value-based purchasing (see “Value-Based Purchasing Raises the Stakes,” May 2011, p. 1).

Another missing component in the ’90s, Skea says, was an adequate set of tools for gauging quality. “Even if we did agree what quality was, we couldn’t go back in there and measure it in a valid way,” he explains. “We just didn’t have that capacity.”

A third lesson learned the hard way is that decision-making should involve all physicians, from primary-care doctors to specialists. That power-sharing will be critical, Skea says, as reimbursement models move away from fee-for-service, transaction-based compensation methods and toward paying for outcomes and quality. Silos of care are out, and transitioning patients across a continuum of care is definitely in.

Sound familiar? It should, and the similarity to the hospitalist job description isn’t lost on Skea. “I think hospitalists have served as a very good illustrative example of how physicians can add value to that efficiency equation, improve quality, increase [good] outcomes—all of those things,” he says. In fact, Skea says, the question now is how the quarterback role assumed by hospitalists can be translated or projected to the larger industry and other settings (e.g. outpatient clinics, home care rehabilitation, and continuing care facilities).

Accountable-care organizations (ACOs) are a hot topic in any discussion of better patient transitions and closer doctor-hospital alignments, but they’re hardly the only wedding chapels in town. The new report sketches out the corresponding amenities of a comanagement model and provider-owned plan, and Skea notes that part of the new Center for Medicare & Medicaid Innovation’s mandate will be to investigate other promising methods for encouraging providers to work together.

Leaders, Partners

For most doctors, according to the survey, working together means making joint decisions. More than 90% said they should be involved in “hospital governance activities such as serving on boards, being in management, and taking part in performance.”

“That didn’t surprise me at all; there’s a huge appetite for physicians to be involved in strategic governance and oversight,” Skea says. “That’s where hospitalists have been really good: taking it to that next level of strategy and leadership.”

Next to compensation, he says, governance is the biggest issue for many hospital-affiliated physicians. One wrinkle, however, is what the report’s authors heard from hospital executives. “There’s a recognition by hospital executives that they need those physicians in those governance roles,” Skea says. But the executives felt that more physicians should be trained and educated in business and financial decision-making.

Some of the training strategies, he says, are homegrown. One hospital client, for example, is providing its physicians with courses in statistical analysis, financial modeling, and change management, and referring to the educational package as “MBA in a box.” Other hospitals are steering their physicians toward outside sources of instruction. SHM’s four-day Leadership Academy (www.hospitalmedicine.org/leadership) offers another resource for hospitalists seeking more prominent roles within their institutions.

Along with a desire for more power-sharing, doctors looking to a hospital setting have clearly indicated that they expect to hold their own financially. According to the survey, 83% of doctors considering hospital employment expect to be paid as much as or more than they are currently earning.

And therein lies another potential sticking point. Based on past experience, doctors might expect that hospitals’ financial resources will still allow them to maximize their compensation. But as health reform plays out, Skea cautions, “everybody is going to have to do more with less.”

Compromise Ahead

But other survey results hint at the potential for compromise. According to the report, physicians agreed that half of their compensation should be a fixed salary, while the remaining half could be based on meeting productivity, quality, patient satisfaction, and cost-of-care goals, with the potential for performance rewards. “This shows that physicians realize the health system is changing to track and reward performance and that they can influence the quality and cost of care delivery at the institutional level,” the report states.

And as for the guidelines doctors follow while delivering healthcare, 62% of those surveyed believe nationally accepted guidelines should guide the way they practice medicine; 30% prefer local guidelines.

Skea says he was a bit surprised that nearly 1 in 3 doctors are still resistant to national guidelines, though he believes that number is on the wane. After an initial pushback, he says, doctors seem to be gravitating toward the national standards, due in part to physician societies taking active roles in the discussions.

So what should hospitalists take away from all of this? Skea says they should continue to highlight and demonstrate the value they provide in standardizing care, measuring quality, and improving efficiencies in the four walls of the hospital. “They’ve had a track record, I think they have the mindset, and they’ve had the relationship with hospital executives,” he says.

Hospitalists likely will be called upon to help educate their physician colleagues in other specialties. Because of their background and history of success, Skea says, “they could be one of the real leaders and catalysts for change within an ACO or some of these other more integrated and aligned delivery models, and then move into governance.”

With a little assistance, perhaps this marriage might work after all. TH

Bryn Nelson is a freelance medical writer based in Seattle.

Marriage of Necessity