The Greeley Guide to Physician Employment. and Contracting. William K. Cors, MD, MMM, FACPE, CMSL Richard A. Sheff, MD, CMSL

Transcription

1 The Greeley Guide to Physician Employment and Contracting William K. Cors, MD, MMM, FACPE, CMSL Richard A. Sheff, MD, CMSL

2 The Greeley Guide to Physician Employment andcontracting William K. Cors, MD, MMM, FACPE, CMSL Richard A. Sheff, MD, CMSL

3 is published by HCPro, Inc. Copyright All rights reserved. Printed in the United States of America ISBN: No part of this publication may be reproduced, in any form or by any means, without prior written consent of HCPro, Inc., or the Copyright Clearance Center (978/ ). Please notify us immediately if you have received an unauthorized copy. HCPro, Inc., provides information resources for the healthcare industry. HCPro, Inc., is not affiliated in any way with The Joint Commission, which owns the JCAHO and Joint Commission trademarks. Richard A. Sheff, MD, CMSL, Author William K. Cors, MD, MMM, FACPE, CMSL, Author Elizabeth Jones, Associate Editor Erin Callahan, Associate Publisher Mike Mirabello, Senior Graphic Artist Amanda Donaldson, Copyeditor Karin Holmes, Proofreader Matt Sharpe, Production Supervisor Susan Darbyshire, Art Director Jean St. Pierre, Director of Operations Advice given is general. Readers should consult professional counsel for specific legal, ethical, or clinical questions. Arrangements can be made for quantity discounts. For more information, contact: HCPro, Inc. P.O. Box 1168 Marblehead, MA Telephone: 800/ or 781/ Fax: 781/ customerservice@hcpro.com Visit HCPro at its World Wide Web sites: and 05/

4 Contents Figure List... vii About the Authors... ix Introduction: Why Is Employing and Contracting with Physicians So Hard?...xiii Start by Changing Your Mind-Set... xvi The Power of the Pyramid...xix Leadership Is the Key...xxi Key Success Factor 1: Clearly Define Roles: Are You My Boss or My Partner?... 1 Finding the Middle Ground... 3 Key Success Factor 2: Master Management Strategies: Finding the Right Balance Between Managing Tight and Managing Loose Understand the Value of Managing Loose and Managing Tight iii

5 Contents Key Success Factor 3: Balance the Scales: Which Is More Important, Individual Physician Success or Group Success? Which Came First, the Chicken or the Egg?...23 Key Success Factor 4: Achieve Patient, Staff, and Physician Satisfaction Through an Employment Model Patient Satisfaction Challenges...26 Nonphysician Staff Satisfaction Challenges Physician Satisfaction Challenges Achieving the Patient-Physician-Hospital Partnership Key Success Factor 5: Determine Who s on the Bus and Who Isn t Step 1: Recognize that Past Behavior Is the Best Predictor of Future Behavior Step 2: Determine the Competencies that Your Organization Demands in a Physician Employee Step 3: Apply Credentialing Best Practices to the Application Process Step 4: Conduct Behavior-Based Interviews to Determine the Applicant s Character, Communication Skills, and Ability to Collaborate Step 5: Ensure a Good Cultural Fit Key Success Factor 6: Set Clear Expectations: What Does It Mean to Be a Great Doctor? Step 1: Articulate Your Organization s Mission, Vision, Values, and Strategic Goals iv

6 Contents Step 2: Choose a Performance Framework Step 3: Articulate Expectations that Drive Performance Key Success Factor 7: Establish the Right Compensation Plan Three Steps to an Employed Physician Compensation Plan Physicians Employed by Separate Subsidiary Corporations and Captive Professional Corporations Key Success Factor 8: Make the Contract Worth More than the Paper It Is Written On Set Clear Expectations Assess Overarching Considerations Define Specific Contract Terms Key Success Factor 9: Measure Physician Performance: It s Not What You Expect but What You Inspect that Gets Attention Normative Data Perception Data Key Success Factor 10: Master the Art of Providing Feedback Components of a Performance Appraisal System How to Conduct a One-On-One Performance Appraisal Interview What to Do During the One-On-One Interview v

7 Contents What to Avoid During the One-On-One Interview Be a Coach Key Success Factor 11: Manage Poor Performance: Do I Need to Get in Their Face on This One? Step 1: Design the Intervention Step 2: Plan and Practice the Intervention Step 3: Carry Out the Intervention Key Success Factor 12: Know When to Mentor and When to Draw the Line: Terminating Physician Employment Agreements and Contracts Put the Pyramid to Work Due Process Rights Key Success Factor 13: Create a Vision and Achieve Buy-In Key Success Factor 14: Develop and Support Physician Leaders Select Strong Physician Leaders Prime Potential Leaders for the Future Develop a Leadership Curriculum Plan for Succession vi

8 Figure List Figure 1: The Power of the Pyramid...xx Figure 5.1: The Power of the Pyramid: Appoint Excellent Physicians Figure 5.2: SMART Decision Tree Framework Figure 5.3: SMART Decision Number Line Figure 6.1: The Power of the Pyramid: Set Expectations Figure 6.2: Crosswalk Between the ACPE/Pyramid and The Joint Commission/ACGME Competency Frameworks...72 Figure 6.3: Performance Expectations for Employed Physicians Using the ACGME/The Joint Commission Framework (Online only) Figure 6.4: Service Excellence Contract Figure 8.1: Physician Employment Agreement (Online only) Figure 9.1: The Power of the Pyramid: Measure Performance Against Expectations Figure 10.1: The Power of the Pyramid: Provide Feedback Figure 14.1: The Power of the Pyramid: Applying the Pyramid to Leaders Figure 14.2: Required Curriculum for Medical Staff Leadership Certification vii

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10 About the Authors Richard A. Sheff, MD, CMSL Richard A. Sheff, MD, CMSL, is the chair and executive director of The Greeley Company, a division of HCPro, Inc., in Marblehead, MA. He brings more than 25 years of healthcare management and leadership experience to his work with physicians, hospitals, and healthcare systems across the country. With his distinctive combination of medical, healthcare, and management acumen, Sheff develops tailored solutions to the unique needs of physicians and hos pitals. He consults, authors, and presents on a wide range of healthcare manage ment and leadership issues, including governance, physician-hospital alignment, medical staff leadership development, ED call, peer review, hospital performance improvement, disruptive physician management, conflict resolution, physician em ployment and contracting, healthcare systems, service line management, hospitalist program optimization, patient safety and error reduction, credentialing, strategic planning, regulatory compliance, and helping physicians rediscover the joy of medicine. ix

11 About the Authors Prior to joining The Greeley Company, Sheff served as VPMA, president of an independent practice association, medical director of a physician-hospital organization, president of a corporation that owned and operated physician practices, and a group practice medical director. He has taught at Tufts University School of Medicine and served as chair of the Massachusetts Academy of Family Practice Research Committee. Sheff is one of The Greeley Company s leading national speakers and is the author or coauthor of many HCPro/Greeley books, including: Core Privileges for Physicians: A Practical Approach to Developing and Implementing Criteria-Based Privileges, Fifth Edition (2010) The Top 40 Medical Staff Policies and Procedures, Fourth Edition (2010) Emergency Department On-Call Strategies: Solutions for Physician-Hospital Alignment, Second Edition (2009) The Greeley Guide to New Medical Staff Models: Solutions for Changing Physician-Hospital Relations (2008) Sheff is a graduate of the University of Pennsylvania School of Medicine and the Brown University residency program in family medicine. He was an undergraduate at Cornell University and recipient of the Keasbey Scholarship for the study of politics and philosophy at Oxford University. x

12 About the Authors William K. Cors, MD, MMM, FACPE, CMSL William K. Cors, MD, MMM, FACPE, CMSL, is an experienced physician executive with a background that includes 15 years of clinical practice and more than 12 years of executive hospital/health system management. Cors has extensive experience in all facets of medical staff affairs, operations, and development. His primary area of expertise is working with physicians and hospitals to implement strategic medical staff development planning. He also works with hospitals and medical staffs to integrate new medical staff models to help ensure both physician and hospital success. Other areas of expertise include leading change; improving physician-hospital relations; credentialing, privileging, and peer review; clinical resource manage - ment; improvement of quality of care and patient safety; public accountability prepared ness; and management of medical staff conflicts, change, and disruptive behavior. In addition, he has broad experience in medical staff documentation and regulatory accreditation. Cors is a Fellow of the American College of Physician Executives (FACPE) and has served on the ACPE board since April He is board-certified in neurology and medical management. In addition, he has achieved recognition as a Certified Medical Staff Leader (CMSL). In addition to working with medical staffs, hospitals, and boards across the country, Cors has authored numerous white papers and articles and coauthored xi

13 About the Authors the following HCPro/Greeley books: The Greeley Guide to Physician Employment and Contracting (2010), The Greeley Guide to New Medical Staff Models: Solutions for Changing Physician-Hospital Relations (2008), and The Medical Staff Leader s Practical Guide, Sixth Edition (2007). Cors holds a bachelor s degree from the College of the Holy Cross, an MD from the University of Medicine and Dentistry of New Jersey, and a Master of Medical Management (MMM) from Tulane University. xii

14 Introduction: Why Is Employing and Contracting with Physicians So Hard? Richard A. Sheff, MD, CMSL I recently worked with a hospital that had quite the mountain to climb: The medical staff had just taken a vote of no confidence in senior management. As a consultant, the first step for me was to listen to each party s grievances to understand what had brought them to this confrontational peak. The physicians shared with me a long list of grievances against hospital administration that had been growing for years. Most recently, several incidents led the employed physicians to feel that they had been treated in a top-down, heavy-handed manner. When I asked the senior management team about these alleged incidents, several members replied, The doctors are employees and shouldn t be treated any differently than other employees. I didn t have to look much further to find out why this medi cal staff had taken a vote of no confidence. Hospital management didn t get it. There is something about physicians that makes employing them unlike employing most other hospital staff. If management treats physicians like all other employees, bad things are bound to happen. Examples of how hospital management risks treating physicians like other employees include: xiii

15 Introduction: Why Is Employing and Contracting with Physicians So Hard? Management single-handedly selects and implements an electronic medical record (EMR) rather than involving physicians in the decision to adopt an EMR and in the selection and implementation processes Management forces physicians into a particular work flow for patient care rather than developing that work flow collaboratively with physicians Management dictates how physicians can use continuing medical education (CME) funds rather than allowing physicians to choose CME activities that fit their learning styles and schedules In the 1990s, many hospitals began employing physicians. At the time, it seemed like an ideal strategy to align physician and organization interests and, in some cases, to prepare for more disciplined managed care contracts, including capitation. The majority of those hospitals soon discovered that they were not good at employing physicians. They bought profitable physician practices and then watched in dismay as money began flying out the window. The rule of thumb became that if an organization lost only $50,000 $75,000 per employed physician, it was doing well. Hospital administrators thought that employing physicians would suddenly cause physicians to eagerly align with hospital interests. After all, wasn t it in the physicians best interests for their employers to succeed? Sadly, employment was not the magic bullet they were looking for. As capitation failed to become the dominant form of reimbursement that many had predicted, the tide of red ink for employedphysician practices rose, and so did conflict between organizations and their employed physicians. The conflict became so heated that many hospitals divested xiv

16 Introduction: Why Is Employing and Contracting with Physicians So Hard? themselves of the practices they had paid handsomely to purchase only a few years earlier. Most hospital administrators who lived through that experience swore never to get back into the business of employing physicians. Fast-forward to today, and many hospitals again find themselves drawn into employing physicians. The reasons are different this time: Many young physicians shun private practice in favor of the steady pay and regular hours of employment, and those who are in private practice are finding it harder to succeed thanks to growing overhead and decreased reimbursement. Regardless of the reasons for this shift, anyone with enough gray hair to remember the experience of employing physicians in the 1990s knows that hospitals must do it differently this time. They ve learned to anticipate that physicians who were hard drivers in private practice are at risk of slacking off once they become employees if they aren t offered the right incentives. They ve become reasonably adept at designing incentive compensation plans for physicians based on an eat what you kill formula that holds physicians accountable for productivity. If organizations are getting better at financially managing employed physician practices (although not all are), then why does the field need another book on physician employment and contracting? The answer is that making the numbers work is only the beginning of sustained success with employing physicians. This book is designed to help leaders responsible for managing physician practices go beyond simply designing incentive compensation formulas. This book is designed to help them truly understand what makes employing physicians different and how to craft creative and more effective approaches to physician employment. xv

17 Introduction: Why Is Employing and Contracting with Physicians So Hard? Contracting with physicians isn t much easier than employing them, at least if you want the contracts and the relationships they memorialize to drive physician success, organization success, and high-quality patient care. Paradoxically, the most common reason organizations contracts with physicians are ineffective is the exact opposite of why employing physicians is so difficult. Employing physicians is difficult because most organizations fail to treat physicians differently than other employees. Contracting with physicians is difficult because most organizations fail to treat physicians the same way they treat other contracted entities or individuals. Standard business contracts clearly delineate: The duties of each party involved in the contract A means of determining to what extent the duties are fulfilled The consequences when these duties aren t fulfilled Most physician contracts typically include few, if any, well-designed performance expectations beyond rudimentary requirements, such as showing up to work and documenting time on the job. They also include weak (or nonexistent) mechanisms for holding contracted physicians accountable for meeting performance expectations. Start by Changing Your Mind-Set This book is based on the key success factors that the authors have found to be most effective for employing and contracting with physicians. The first four success factors are based on a common insight: Some of the challenges that arise when xvi

18 Introduction: Why Is Employing and Contracting with Physicians So Hard? employing and contracting with physicians are solvable problems, and some are inherently unsolvable. Examples of solvable problems include whether to hire a particular physician, which EMR to purchase for your employed physician practices, and whether to fire the office manager of a practice that is doing poorly. Each of these problems has an answer that is either right or wrong. But what if the problem you face is inherently unsolvable? Examples of unsolvable problems related to employing and contracting with physicians are: Should the organization s management approach to employing physicians come from the top down, or should it enable the organization to empower or partner with employed physicians? How detailed should performance expectations be? How strictly should the organization hold its contracted physicians accountable for meeting performance expectations? Should the organization expect employed physicians to automatically support its interests or to focus on their own interests? At either end of each challenge are two options, which may be referred to as poles. These poles have a continuum running between them. Let s take the first challenge mentioned above: Should management s approach to employing physicians come from the top down, or should it enable the organization to empower or partner xvii

19 Introduction: Why Is Employing and Contracting with Physicians So Hard? with employed physicians? There is value in each of the poles, but focusing too much on one to the neglect of the other will undermine your success when it comes to employing or contracting with physicians. When an unsolvable problem involves two poles, it is sometimes referred to as a polarity. When it involves three or more poles (such as physician success, group success, and good patient care), it is referred to as a multarity. Polarity Management TM has developed an approach to help us better identify and manage such unsolvable problems. Barry Johnson, PhD, the initial developer of Polarity Management, says that many of our most important and difficult chal lenges are inherently unsolvable and that an unsolvable problem is also inde struc tible. Whether your organization manages a polarity well or poorly, it will still be around the next day to be managed. You can never get away from it. Recog nizing that the solution to these types of problems requires organizations to strike a dynamic, ever-moving balance between the two poles will make your organization more effective at employing and contracting with physicians. Albert Einstein once said, No problem can be solved from the same level of consciousness that created it. Rather, you have to take a step back and view the situation from a different perspective. To help you see employing and contracting in a new way, the first four chapters will focus on key success factors that address the unsolvable problems that lie at the core of why organizations flounder when employing or contracting with physicians. The following are the four keys to success that each organization must master: 1. Clearly define roles: Are you my boss or my partner? 2. Master management strategies: Finding the right balance between managing tight and managing loose xviii

20 Introduction: Why Is Employing and Contracting with Physicians So Hard? 3. Balance the scales: Which is more important, individual physician success or group success? 4. Achieve patient, staff, and physician satisfaction through an employment model The Power of the Pyramid All companies and organizations want to draw the best performance out of in dividuals they employ or contract with. Once you ve understood and implemented the first four key success factors, employing and contracting with physicians becomes a mere hill rather than a mountain. The Greeley Company, a division of HCPro, Inc., in Marblehead, MA, has found that the Pyramid approach is the most effective way to apply HR best practices to physician employment and contracting. This approach, pioneered by the late Howard Kirz, MD, MBA, FACPE, former medical director for Group Health Cooperative of Puget Sound, 1 is applicable to volunteer medical staffs, employed physicians, and physician partnerships. As you can see from Figure 1, the Pyramid consists of layers, with each layer representing an HR best practice. xix

21 Introduction: Why Is Employing and Contracting with Physicians So Hard? FIGURE 1 The Power of the Pyramid Manage poor performance Take corrective action Provide periodic feedback Measure performance against expectations Contract to reinforce expectations Set, communicate, and achieve buy-in to expectations Appoint excellent physicians Source: The Greeley Company, a division of HCPro, Inc., in Marblehead, MA. Each layer is a step that organizations that employ or contract with physicians should take to optimize physician performance. Each layer is composed of a collection of best practices for carrying out that step. This model is designed as a pyramid because the more time you spend on the base layers, the less time you will have to spend on the upper layers. This will make sense as we build the Pyramid layer by layer throughout the rest of the book by exploring the additional key success factors: xx

22 Introduction: Why Is Employing and Contracting with Physicians So Hard? 5. Determine who is on the bus and who isn t 6. Set clear expectations: What does it mean to be a great doctor? 7. Establish the right compensation plan 8. Make the contract worth more than the paper it is written on 9. Measure physician performance: It s not what you expect but what you inspect that gets attention 10. Master the art of providing feedback 11. Manage poor performance: Do I need to get in their face on this one? 12. Know when to mentor and when to draw the line: Terminating physician employment agreements and contracts Leadership Is the Key All the key success factors already identified are better implemented in settings in which physician leadership is effective and more difficult in settings in which physician leadership is weak. That s why the final two success factors focus on leadership. The first is articulating and achieving buy-in to a vision of what the organization and physicians are trying to accomplish together for healthcare in your community. Making that vision a reality only comes with a struggle. That s why we ve entitled this key to success: xxi

23 Introduction: Why Is Employing and Contracting with Physicians So Hard? 13. Create a vision and achieve buy-in The final key success factor is investing in physician leadership development and succession planning. We ve entitled this key to success: 14. Develop and support physician leaders Organizations that implement all these key success factors will outperform those that do not when it comes to employing and contracting with physicians. Let s now tackle each of the key success factors one at a time. Reference 1. We were first introduced to a version of this Pyramid approach by Howard Kirz through the course he taught for the American College of Physician Executives entitled Managing Physician Performance in Organizations. We ve made some modifications to the model, but the fundamental principles are the same as those initially developed by Kirz. xxii

24 key success factor 1 Clearly Define Roles: Are You My Boss or My Partner? When it comes to employing physicians, organization and administrative leaders must understand that being a physician s boss does not automatically grant them authority to tell that physician what to do. Try this some time and see how quickly your employed physicians dig in their heels. S a m p l e s c e n a r i o ED call conundrum The private practice general surgeons at Hospital X were unsatisfied with the organization s emergency department (ED) call schedule. The surgeons made it clear that they would not mind if the hospital hired new surgeons, as long as those surgeons took the bulk of the ED call. This would have worked fine if the new surgeons were willing to cover one night out of three. Unfortunately, the hospital couldn t find any general surgeons willing to take a job that required them to take call one night out of three or even four or five. Eventually, in an attempt to attract general surgery candidates, Hospital X re arranged its ED call schedule so that newcomers would only have to cover one night in seven. As a result, it was able to hire several new general surgeons. Thus, although the hospital was able to hire several new employed physicians, the employed physicians were the ones to set the bar on ED call. 1

25 Key Success Factor 1 S a m p l e s c e n a r i o ED call conundrum (cont.) The fallout from this situation was predictable. The private practice surgeons complained bitterly that they had trouble maintaining their incomes because hospital management had recruited so many surgeons that it diluted the pool of available patients. In addition, these well-established physicians witnessed the hospital subsidizing the income of all the newly hired surgeons at a level they could no longer achieve, and they became resentful. What began as Hospital X s effort to alleviate the independent surgeon s ED call burden ended with the surgeons feeling betrayed. Organizations that employ or contract with hospitalists face similar challenges to the one presented above. The organization starts by either establishing an exclusive contract with a hospitalist group or directly employing hospitalists. Over time, the hospitalists develop favorites among the consultants on the medical staff. These favorites may offer more timely responses, a stronger collegial relationship, or provide higher-quality care. As the program grows (and they almost always do), the hospitalists direct more referrals to their few favorite consultants. Physicians who aren t in the group of hospitalist favorites may perceive that the organization is behind the drop in referrals and eventually confront the CEO, demanding that he or she require the hospitalists to distribute referrals to specialists on a rotating basis. Surprised and appropriately concerned, the CEO meets with the hospitalist program medical director with what he or she feels is a reasonable and politically sensitive request that the hospitalists distribute their referrals more evenly among 2

26 Clearly Define Roles: Are You My Boss or My Partner? the specialists. The medical director may respond by accusing the CEO of telling hospitalists how to practice and refusing to cooperate. The above example regarding ED call demonstrates that what the organization thinks it can expect from employed physicians must be tempered by the competitiveness of the market. The second example regarding hospitalists demonstrates how strongly physicians feel about the organization s attempts to infringe on the clinical decisions they make during the course of practicing medicine. Finding the Middle Ground What is an organization s leader to do in the face of these challenges? As mentioned in the introduction to this book, the key is to frame such challenges as unsolvable problems, with each problem consisting of two or more poles. In terms of physician employment, on one end of the spectrum is the economic and legal reality that the organization, by virtue of employing a physician, is technically the physician s boss and therefore has the right to expect him or her to comply with organizational policies, adhere to ethical billing practices, submit requests for vacation time in advance, and take ED call one night out of three. These are standard account abilities one would expect to see in any relationship between an employer and employee. There is a value to this hierarchical relationship. It allows the organization to manage the practice to achieve specific strategic goals, including high-quality patient care, financial strength, regulatory compliance, and patient satisfaction. However, as with any polarity, focusing too much on the hierarchy pole and 3

27 Key Success Factor 1 attempting to micromanage what physicians do may cause physicians to feel controlled and dig in their heels, causing nothing but drama for administration. On the other end of the spectrum is partnership, whereby the relationship between the organization and the physician is one of equality. At this end of the spectrum, physicians expect to remain autonomous regarding patient care decisions (more on this in Key Success Factor 2) and the ED call schedule. When the organization s management and physicians engage in a true partnership, management treats physicians as equals in regard to decisions involving staffing, scheduling, and equipment. But this end of the spectrum is no utopia. If administration does not set the direction of the organization and establish strategic goals, physicians may make decisions that drive up practice costs, create excessive burdens on non-physician staff members, and reduce patients access to care. They may also refuse to provide ED call unless the organization compensates them handsomely. Organizations that fail to establish a balance between hierarchy and partnership may inflame conflicts between management and employed physicians and lead the medical staff to take a vote of no confidence in management, as illustrated in the introduction. Why? Because management may become frustrated if the organization s employed-physician practices lose money, if employed physicians fail to support the organization s strategic goals, or if it feels that employed physicians decisions are disloyal to the organization. Physicians may perceive that management is insensitive at best and invasive and controlling at worst. They may dig in their heels, feeling that they are fighting to maintain their autonomy. 4

28 Clearly Define Roles: Are You My Boss or My Partner? The problem is that when a physician and an organization are arguing over whether the CEO is the physician s boss with the authority to control the physician s practice, each party only sees its own side of the argument. Physicians may feel a range of emotions including resentment, anger, and fear if they perceive that the organization is trying to take away the autonomy they believe is rightfully theirs by virtue of being physicians. They believe this autonomy should not be sacrificed just because they receive a paycheck from the organization. At the same time, organizational leaders expect loyalty and compliance from employed physicians every bit as much as they do from other employees and may feel angry if it is not forthcoming. If you find yourself in this kind of tug-of-war, the best practice approach is to reframe the issue at hand as one that needs an appropriate balance between hierarchy and partnership. In his book The Dynamics of Conflict Resolution, 1 Bernard Mayer explains reframing in the following way: Framing refers to the way a conflict is described or a proposal is worded; reframing is the process of changing the way a thought is presented so that it maintains its fundamental meaning but is more likely to support resolution efforts. The art of reframing is to maintain the conflict in all its richness but to help people look at it in a more open-minded and hopeful way. 1 By reframing the specific conflict as the challenge of striking the right balance between hierarchy and partnership, both sides are more able to find common ground (see the sample scenario at the end of this chapter to learn more about reframing). If management clearly communicates to physicians that they are valued 5

29 Key Success Factor 1 partners and treats them as equals rather than subordinates, physicians are more likely to accept the conditions, limitations, and top-down guidance inherent in any employer-employee relationship. The hierarchy/partner framework is also helpful when contracting with physicians and/or physician groups. As noted in the introduction, contracted physicians are often not treated like others with whom the organization contracts, such as vendors. For example, many organizations draft contracts with physician groups that simply provide exclusivity to the group and fail to address performance expectations (performance expectations will be addressed in Key Success Factor 6). For the purposes of this chapter, it is enough to recognize that one of the best practices when contracting with, for example, an anesthesia group is to seek a partnership between the organization and the group that drives the success of both the operating room and labor and delivery. The terms of the contract should be designed to reflect the give-and-take of this partnership. (We will address important elements of contracting with employed and contracted physicians in Key Success Factor 7.) 6

30 Clearly Define Roles: Are You My Boss or My Partner? S a m p l e s c e n a r i o Reframing a classic debate between hospitals and group practices Hospital X employed six physicians in a family medicine group practice. The manager of the practice was under pressure from senior hospital management because the practice was losing money at the rate of $60,000 per year per physician. Some patient surveys suggested that the group was losing market share because it did not offer evening hours. In an attempt to grow market share and improve the practice s financial perfor mance, the manager asked the physicians to provide evening office hours. The physi cians refused because they wanted to spend their evenings with their families. Hospital management grew angry and impatient and reminded the physicians that the hospital subsidized the group $360,000 more income per year than the practice would have generated on its own, and that the least they could do to be loyal to the hospital was provide evening office hours. The word loyalty created even greater animosity among the physicians, who felt that their primary loyalties were to their patients, their families, and their profession. Loyalty to the hospital was not on their radar screen. Tension grew between the physicians and hospital management until the medical director of the employed physician group offered to have a private meeting with just the physicians. During that meeting, the medical director reframed the issue. Rather than seeing it as the hospital s effort to control the physicians, he asked what it would take for the physicians to partner with the hospital to provide the evening office hours. As they discussed the issue, one of the physicians pointed out that a full-time office schedule was nine half-day sessions per week. If one day per week each physician worked a morning, afternoon, and evening session, they could all fulfill their nine half-day session and have a full day off each week. This suggestion appealed to the physicians interest in having more time with their families. 7

31 Key Success Factor 1 S a m p l e s c e n a r i o Reframing a classic debate between hospitals and group practices (cont.) They then tackled the issue of the call schedule. If Dr. Jones works the morning, afternoon, and evening shifts on the same day he is on call, the office staff could offer patients who called during the afternoon and evening urgent care slots the same day, reducing the number of phone calls the physician on call had to handle while simultaneously improving patient satisfaction. As the plan took shape, the physicians became excited about getting a full day off each week and didn t mind providing one evening a week in the office to make that possible. To them, it seemed like a fair trade. The medical director presented the physicians proposed arrangement to hospital management. At first, several senior hospital managers felt that it might be unfair to offer a full-time employee a salary equivalent to what independent physicians earn given how much time off the new schedule provided them. Hospital management worried that private practicing physicians on the medical staff and other hospital employees would think that the hospital was pampering the family physicians and not holding them to the same standards as the rest of the physicians in the community who worked longer hours. Although there was some truth to these concerns, in the end, the hospital realized that the physicians had shifted their approach from adversaries with their boss to partners in joint problem solving. The benefits of the proposed solution had enough win-win elements to overcome management s concerns. After the organization implemented the new schedule, patient volume grew, the loss of revenue per physician shrank (although not to zero), and physician satisfaction improved. In fact, the one-day-off-per-week arrangement became an attractive schedule that helped the practice recruit three additional physicians. With the extra physicians, 8

32 Clearly Define Roles: Are You My Boss or My Partner? S a m p l e s c e n a r i o Reframing a classic debate between hospitals and group practices (cont.) it opened a satellite office in a community on the edge of the hospital s traditional service area, helping the hospital expand its primary market. The key to all these achieve ments was the group s and hospital s ability to reframe the problem in a way that allowed them to achieve a balance between the hierarchical employment rela tionship and the partner relationship. Most of the physicians never became model loyal employees, but they found that being treated as partners helped them accept the necessary hierarchical aspects of having a boss. Reference 1. Bernard Mayer, The Dynamics of Conflict Resolution: A Practitioner s Guide (San Francisco: Jossey-Bass, Inc., Publishers, 2000). 9

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