www'criconsult'com crimailcriconsult'com 6174923800 tel [phone] fax

1
Society for Healthcare Strategy and Market
Development
Ninth Annual Educational Conference
The Myth of Physician Loyalty September 9, 2004
presented by
Don Seymour, Sr. Vice President Cambridge
Research Institute
www.criconsult.com crimail_at_criconsult.
com 617/492-3800 (tel)
617/492-3840 (fax)
2
Contents

• Introduction
• Context
• Solutions
• Summary

3
Introduction
4
Core Premises

• Hospital Based Organizations beleaguered
• Cant be all things to all people
• Enemy of Great is Good
• Challenge how to set priorities how to say
  No
• Operational challenges overwhelming Strategy
• Strategy, to be relevant, must provide assistance
  in making trade-offs between competing priorities
• Strategy starts with the Mission
• Essential to have a galvanizing business model

5
Core Premises (cont)

• Community Health and Integration cant be the
  linchpins for Mission any more
• Mission must rediscover and embrace Acute Patient
  Care as the Core of the Enterprise
• Within Acute Care, the Core is Inpatient
• An Acute Care focused Mission provides the
  context for rebasing relationships with
  physicians
• No silver bullets Leadership essential

6
Hospital / Physician Premises

• Hospitals besieged with medical staff problems
• Always tough, hospital/physician relationships
  now taking on crises proportions
• Attempts to fix not working Executives stymied
  frustrated
• Great hospitals need great docs Managements
  job to crack the code
• Current approaches too reactive, fragmented
  operational
• Fundamental assumptions re hospital/physician
  relationships must be revisited
• Notion of physician loyalty a myth

7
Hospital / Physician Premises (cont)

• Physicians have their own problems
• No silver bullets fortitude discipline
  required
• Solutions fall into three areas
• Revisit hospital/system strategy
• Develop customer service plan for senior
  executives
• Rebase physician roles structures

8
Manifestations Of Disloyalty

• Competition ? a one way street
• Citizenship ? no obligation
• Demands ? expectation of miracles
• Progress ? impediments
• Economics ? more miracles
• Leadership ? no accountability
• End runs ? a higher power

9
Hospital Solutions
10
Context
11
Selected Provider Trends
12
Physicians Need For Hospital
13
Physicians Under Siege

• Clinical pressures
• Super-specialization ? Availability of MD
  consults
• New Dx Rx options ? Availability of hospital
  support
• Outcomes scrutiny ? Boomerism
• Litigation
• Office administrative pressures
• Flood of paper ? Expenses increasing
• Complexity of technology ? Personnel issues
• Revenue constraints ? Other small business issues
• Personal pressures
• Family personal time
• Medical School debt
• Hospital pressures
• Funding competitors
• Bureaucratic
• Demands for meeting time, call schedule

14
Different Priorities
15
Death Knell For Loyalty

• As health systems integrated structurally, they
  disintegrated culturally
• The gap between professional and managerial
  cultures widened into a chasm by the late 1990s
• Professionals lost contact, physically and
  spiritually, with the adminisphere the tiny
  handful of people running their systems

Source Jeff Goldsmith, Futurist
16
End Result Predictable Problematic

• Average physician feeling disenfranchised
• Strategic decisions
• Operational decisions
• Physician input to decision making fragmented and
  diffuse
• Physician representatives arent accountable to
  their colleagues
• Growing history of distrust and differences
  compounding everything
• Management between rock hard place some
  physician faction can challenge every decision
• Systems face special problems balancing needs
  of the System and individual Hospitals
• Frustrations growing - something must change

17
Solutions
18
Management Guiding Principles

• Great hospitals need great physicians
• Imagine the implications if physicians didnt
  want too much!
• Physicians out of time have to take the game to
  them
• Loopholes come, loopholes go (e.g., gain sharing)
• Cant meet everyones needs tough choices must
  be made
• Physician competition inevitable
• Admonition Resolution cannot be delegated

19
Specific Strategic Actions

• Develop a Focused Strategy
• Treat the Customer as King
• Revisit Rules Redesign Structures

20
Core Premises

• Hospital Based Organizations beleaguered
• Cant be all things to all people
• Enemy of Great is Good
• Challenge how to set priorities how to say
  No
• Operational challenges overwhelming Strategy
• Strategy, to be relevant, must provide assistance
  in making trade-offs between competing priorities
• Strategy starts with the Mission
• Essential to have a galvanizing business model

21
Core Premises (cont)

• Community Health and Integration cant be the
  linchpins for Mission any more
• Mission must rediscover and embrace Acute Patient
  Care as the Core of the Enterprise
• Within Acute Care, the Core is Inpatient
• An Acute Care focused Mission provides the
  context for rebasing relationships with physician
• No silver bullets Leadership essential

22
Theory Of The Business (TOB) General
Source Peter F. Drucker, The Theory of the
Business, Harvard Business Review
23
TOB Healthcare Evolution
What Assumptions?
1980s
1960s 1970s
1990s
Hospital as Hub
Hospital as Spoke
Hospital as Holding Co.
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Market Place Disintegrating
25
Theory Of The Business 2004
26
Options Hospital Based Organizations
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Acute Care As The Core

• Acute Patient Care
• Foundation for all hospitals
• Still the economic engine
• Focal point for majority of patient contacts
• No payer pays for health care
• Government and other community agencies are in
  the Health business
• Most communities dissatisfied with their Acute
  Care Services
• Access ? Quality
• Cost ? Customer Service
• Expectations for Acute Care going up
• Business
• Consumers
• Funding for Acute Care going down
• Hospitals court of last resort for Acute Care

28
Decision Screens
Business Opportunities Community
Needs/Wants
Mission Screen
Operational Imperatives

• Business Screens
• ROI
• Resource Availability

DECISIONS
29
Sources And Uses Framework - Follow The Cash
SOURCES

• Revenue
• Pricing
• Revenue Recovery
• Volume
• Existing
• New

• Operating Expenses
• Productivity / Efficiency
• Medical
• Management
• Strategic Downsizing

Operating Margin

• Balance Sheet
• Restricted Income
• Unrestricted Income

• Other Sources
• Philanthropy
• Loans / Leases
• Sale of Assets
• Debt

Cash Flow
Depreciation
USES / INVESTMENTS

• Maintenance
• Capital
• System
• Hospital

• System Strategic
• Investments
• Facilities / Technology
• Programs / Services
• Human Resources

• Debt
• Repayment
• Existing
• Future

• Balance Sheet
• Enhancement
• Reserves
• Working Capital

• Hospital Strategic
• Investments
• Facilities / Technology
• Programs / Services
• Human Resources

• Other
• Missions
• Education
• Research
• Community
• Service

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Core Within The Core

• Not all Acute Care Services are created equal
• Cant be all things to all people
• When push comes to shove within Acute Care
  (politics aside), what comes first?
• Acute Care vs. Other, e.g., Psychiatry, Rehab
• Adult Medical/Surgical vs. OB and Peds
• Medicine vs. Surgery
• Priorities within Medicine and Surgery
• Medicine Surgery
• Cardiology ? Orthopedics
• Oncology ? General Surgery
• Pulmonary ? Urology
• Inpatient vs. Ambulatory Acute vs. Emergency Dept
• How many Hospitals could succeed without
  Inpatient Services and an Emergency Department?
• Ambulatory Care is critical to all Hospitals, but
  not the linchpin to organizational success
• Strategic challenge picking the right Clinical
  Services for long-term positioning

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Physicians (Still) The Key Customer

• Patient Information timely, accurate,
  accessible available
• Staffing nurses knowledgeable about patients
  their conditions nurses techs familiar with
  procedures equipment
• Infrastructure state-of-the-art facilities,
  equipment, clinical business technology,
  patient services
• Physician Economics understanding support of
  ways individual physicians make their money
  (e.g., efficient ORs)
• Decision Making inclusion of physicians in
  clinical decisions, level playing field
  transparency
• Leadership understanding of risks associated
  with taking a stand
• Time dont waste it
• Communications complete, succinct, customized
• Economics more is always better (as appropriate)

32
Customer Service Plan
33
Structural Shortfalls

• Physician leadership hard to identify and
  sustain
• Electoral processes
• Appointed physicians lack credibility
• Paid physicians compromised
• Everyone has conflicts
• Medical Executive Committee no longer an
  effective forum for integrating Medical Staff
  input.
• The chain of command for physicians is ambiguous
• Not clear where and how decisions get made
• Physician involvement in budgeting a major
  challenge
• Medical Staff input is, in fact, fragmented
• Multiple individuals and committees to address
  most of the trees but no forum for the forest
• Medical Staff accountability missing
• Feedback and, therefore, buy-in a real problem
• Physician representatives lack time resources
• Physicians wont read or come to meetings

34
Improving Communications With Customers

• Shift responsibility from physicians to senior
  managers
• Utilize multiple communications channels
• Mass customize
• Utilize department/section meetings
• Leverage communications -- all managers know
  understand
• Provide better staff support

35
Role Clarification
36
Other Recommendations

• Separate solicitation of physician input to
  decisions from processes of decision making
• MEC cant do everything utilize multi-specialty
  Advisory Groups
• Match right physicians with right issues
• Specify charge function
• Encourage Medical Staff to restructure
• Provide more and better staff support
• Conduct meetings that work (for physicians)

37
Clinical Trends Assessment
38
PAG Options

• Management presents its view solicits feedback
• PAG Discussion - Specialty-by-Specialty
• No input from colleagues
• Selective input from critical specialties
• Bottom-up input from most, if not all,
  specialties
• Structured formats/questions
• Limited time frames
• Skilled facilitation - Ground Rules

39
Physician Advisory Group (PAG)
Specialty Presenters
Recommendations
Physician Advisory Group

• PRIMARY CARE
• Internal Medicine
• Family Practice
• OB/GYN
• Pediatrics
• MEDICINE
• Cardiology
• Oncology
• Gastroenterology
• Pulmonary
• Neurology
• Other
• SURGERY
• General Surgery
• Orthopedics
• Urology
• Thoracic
• Neurosurgery

• Clinical Priorities
• Capital Investment
• Facilities
• Technology
• Operations Improvement
• Hospital Driven
• Physician Driven
• Recruitment Retention
• Customer Service

40
Summary
41
Summary

• Hospital Based Organizations beleaguered
• Cant be all things to all people
• Enemy of Great is Good
• Challenge how to set priorities how to say
  No
• Operational challenges overwhelming Strategy
• Strategy, to be relevant, must provide assistance
  in making trade-offs between competing priorities
• Strategy starts with the Mission
• Essential to have a galvanizing business model

42
Summary (cont)

• Community Health and Integration cant be the
  linchpins for Mission any more
• Mission must rediscover and embrace Acute Patient
  Care as the Core of the Enterprise
• Within Acute Care, the Core is Inpatient
• An Acute Care focused Mission provides the
  context for rebasing relationships with physician
• No silver bullets Leadership essential