Strategic Initiatives onPhysician-Hospital Alignment

Fact and Fancyan Insider’s Perspective

Becker's Hospital Review 5th Annual Meeting

Ronald N. Riner, MDPresident and CEO

May 17, 2014

“When you come to a fork in the road – take

it.”- Yogi Berra

“You should never cease from exploration, and at the end of all exploring

you arrive where you started and know the place for the very first

time.”- Little Gidding, T.S. Eliot

2002 2005 2008 2011

100%

75%

50%

25%

0%

Source: Physician Compensation and Production Survey, Medical Group Management Association, 2011 Survey

Private versus hospital-owned practices, 2002-2011

Physicians in hospital-owned practicesPhysicians in private practice

Changing Employment Dynamics

Facts

Majority of physicians and other healthcare providers are focused on delivering high quality and safe care

Despite common purposes, many healthcare systems and hospitals struggle to involve physicians in organizational leadership, strategy, quality and safety efforts

Need to get real about finances IncentivesCost of rules and regulationsFinancial metrics of acquired practices

Value – from all perspectives is not well appreciated

Rules and Regulations

Top Challenges Reported by US Physicians

91%

88%

83%

77%

90%

84%

78%

73%

Managing shifting reimbursement models with payers

Financial management of their practices

Patient engagement; spending time with patients

Dealing with the impacts of the Affordable Care Act

Keeping up with the latest research

Improving patient care

Using health information technology in the practice

Managing increasing patient volumesSource: Wolters Kluwer Health, 2013 Physician Outlook Survey

Thursday, February 13, 2014

Rationale

The Employment Carrot

Port in a storm Course of least resistance Possible coordinated care

Employed MDs

Who?

Why?

Where?

What’s it like inside the tent?

How are they doing?

Key Points

Where professionals are in their careersExit strategy for older physicians

Gender

Happiness is a “relative issue!”

Challenges to Physician Employment

Employer – employee relationship Accountability Transparency Scientific cynicism Engagement Credibility of the leadership Followership

Leadership

The Concept of Entrepreneurship

Philosophical Concerns

20132014201520162017201820192020

Short Term vs. Long Term

2013

Professional Concerns

The ability to innovate

Stifling bureaucracy

Transformation from profession to a “job”

Theory vs. pragmatism

Ideology vs. reality and experience

Loyalty

Finances: Not the glue

Key: Purposeful, Challenging Work

MissionVisionValues

Trust

Issues

Talent

Issues

“Go and do likewise.”Luke 10:37

A Calling? A Job?

Hospitals

View the world from their vantage point – still!

Bricks and mortar don’t practice medicine or deliver care

Hospital acquisitions lead to higher prices and the amalgamation of additional cultures

Clinical Integration

What’s the objective?

In many instances just buying revenue streams or attempting to guarantee a distribution channel

Nota Bene!

Hospital and medical practices are different businesses

Different metrics

“It takes an endless amount of history to make even a little

tradition.”- Henry James

Key Question

Are Mayo Clinic, Cleveland Clinic and the large staff models

applicable to your environment?

Importance of Culture

Decades to build

Often absent in small business other than in presence of founders

In established and stable systems, reflective leadership and training

Management Motif

Professional Service Firms Plant Management

Medical practice Factories

Accounting Hospitals

Law Practice Hotels

Management: Cultural Difference

Medical PracticeHospital

(Plant Management) Values autonomy, trained to

work independently and take ultimate accountability

The need for quick decision-making – sometimes life and death in the balance

Resistant to hierarchy Trained in biomedical sciences,

clinical expertise Seeks consensus in group

decisions

Trained to delegate and work in groups, embraces the collective mission

Deliberate decision-making Hierarchy is key to success Trained in management, social

sciences Respects top-down hierarchy

when making decisions

Adapted from: Nathan Laufer, MD, “The employment of doctors by hospitals-indentured servitude or practice salvation?”

Leadership Skills & Management Motifs

DifferentProfessional Service Firms Plant Management

Medical practice Factories

Accounting Hospitals

Law Practice Hotels

MedicalPractice

Hospital and Health System

Transferability

Value = QualityCost

Evidence-based care

Appropriate use criteria

OutcomesReadmissions

Patient/associate/ physician satisfaction

Leadership capabilities

Current Lexicon

Value

Value = QualityCost

Degree of autonomy

Purposeful and meaningful work

Supportive, knowledgeable colleagues

Trustworthy systems

Quality focused knowledgeable support staffSatisfactory compensation

Credible leadershipLearning environment

Quality of life (balance)

Professional Perspective

ValuePatient’s Perspective

Value = QualityCost

Meeting expectations with outcomes

Physician communication

Easy access

Friendly, caring staff

Reasonable cost

ValueHospital/Health System Perspective

Value = QualityCost

Favorable managed care and payor relationships

Highly productive clinicians

Positive revenue streams

Coordinated (? integrated) care

Safe, quality focused care

Market leader status

“The next morning the sun was behind a cloud, but they

started on, as if they were quite sure which way they

were going.”“If we walk for enough” said Dorothy, “we shall sometime

come to some place, I am sure.”

- The Wonderful Wizard of Oz, L. Frank Baum

Fallout if Done PoorlyFallout for Physicians

Fallout for Payors

Fallout for Hospitals

Fallout for Patients

Concerns That “You” Should Worry About Digital world realities

The importance of “thick data” Burn out Loss of excitement and professional

satisfaction Quality

For patientsFor the institutionsFor those providing the careFor yourselves and your families

LeadershipFocusing on Results

“But you have not yet told me how to get back to Kansas.”

- Dorothy, The Wonderful Wizard of Oz

Leadership

"Do you think Oz could give me courage?“ asked the Cowardly Lion.

"Just as easily as he could give me brains,“ said the Scarecrow.

"Or give me a heart,“ said the Tin Woodman.

"Or send me back to Kansas,“ said Dorothy.

The Complexity of the Task

- L. Frank Baum The Wonderful Wizard of Oz, Author

Leadership

Adaptive leadershipFocused on building skills needed for new know howDifferent than leadership charged with

organizational challenges The power of collaboration Long-term focused

Leadership

InnovationEvidence-based medicine

Best practices

Guidelines

Why People Fail to See the Changes Occurring

They choose to ignore or accept

changes in the external

environment

Issues

Alternative payment mechanisms Transformation of place of delivery of

health services Who should deliver care The importance of an energized,

creative, quality-focused healthcare workforce

“It was a lie but he believed in telling lies to people. Truth telling and medicine just didn’t go together except in dire emergencies, if then.” - Mario Pruzo, The Godfather

Future Think value Do you need to own all? Should you? Can you? Understand the business metrics and leadership

requirements of the different businesses The talent is the asset:

Science and businessCredibilityExperience

Leadership focusedThe power of credibility

Quality and safetyMultidimensional

The Brass Ring

The Brass Ring

Harmony

A Brief History of Medicine

2000 BC “Here, eat this root.”

1000 BC “That root is heathen, say this prayer.”

1850 AD “That prayer is superstition, drink this potion.”

1940 AD “That potion is snake oil, swallow this pill.”

1985 AD “That pill is ineffective, take this antibiotic.”

1989 AD “Managed care will correct all that ails us.”

1995 AD “Managed care could be dangerous.”

2000 AD “Antibiotics are artificial; here, eat this root.”2010 AD “Value is finally upon us . . . as are monumental rules,

regulations, requirements …”

2014 AD “Obamacare is 4 years old … here, say this prayer with this potion!”

“The comic and the tragic lie

inseparably close, like light and

shadow.” - Socrates

“In the end, only three things matter: how much you loved, how gently you lived, and how gracefully and effectively you let go of things not meant for

you.” - Buddha

Somewhere over the rainbow . . . . .

. . . . . an unending journey