Alignment, integration strategies strengthen physician, hospital unions.
By Cindy Sanders
…And they all lived happily ever after.
In fairytales, the two protagonists manage to overcome many barriers to ultimately ride off into the sunset—presumably for a lifetime filled with sunshine and roses. In the real world, we only have to look to divorce statistics to know that “wedded bliss” frequently dissolves into angry recriminations, mistrust and broken vows.
As it turns out, marriage makes for an interesting analogy to the wave of physicians, practices and hospitals rushing to the altar under the new world order of healthcare reform. Thanks to economic strain, the market has seen quite a few shotgun weddings lately. In other cases, such as some ACO affiliate agreements, the parties have opted to cohabitate rather than legally wed. And in some instances, the belief is that the union completes and complements each party to the ultimate benefit of both.
After the Honeymoon
No matter how the parties entered the relationship, once the honeymoon phase wears off, both are left to figure out how to navigate this new partnership and work as a team. Of course if that was easy, there wouldn’t be such a high divorce rate. You only have to look back to the rash of mergers and buyouts in the ’90s to know that many of these marriages between practices and hospitals don’t end harmoniously.
So what can you do to beat the odds? Medical News had the opportunity to chat with Ken Hertz, FACMPE, principal with MGMA Health Care Consulting Group, about the keys to creating a lasting union. Hertz, who has nearly 40 years of management experience, has held leadership positions with primary care and multispecialty care organizations, as well as large integrated systems. He works with practices and hospitals on strategic planning, integration, operational improvements, compensation, conflict resolution and governance issues.
Marry in Haste, Repent at Leisure
In the current transformational landscape, Hertz has seen a lot of hasty mergers and alignment contracts executed without taking the time for proper due diligence. Call it the “chicken little” syndrome. “I tell people I’m not necessarily sure the sky is falling or that the world is ending. What we’re dealing with is this funny word called ‘change,’ and some of us can barely say it without stroking out,” he noted.
Hertz was quick to add that change is scary, but that’s all the more reason to take the time to prepare properly on the front end to ensure each partner stays committed when the relationship hits an inevitable rough patch down the road. He noted the rush to “do something” happens on both sides with physicians worried about the changing regulatory and reimbursement landscape and hospitals snapping up practices before a competitor has the opportunity to grab them.
It’s probably wise to note, however, that few couples married at a Las Vegas drive-thru chapel at 3 a.m. make it to their golden anniversary celebration. Instead, many of them wake up the next day with the question of “Now what?” hanging heavily in the air.
“It’s like the Yogi Berra line, ‘If you don’t know where you’re going, there’s a good chance you won’t get there,’” Hertz said. “When we work with physician practices and they say, ‘We need to get aligned with the hospital or need to merge with another practice,’ the first thing we ask is why?”
It’s important, he said, to really explore what each partner hopes to accomplish through the alignment or merger. How does each of you define success?
Once the “why” has been sufficiently vetted, the attention shifts to the “whom.” Hertz said it is essential to honestly evaluate
your core values and deal-breakers and then see how those align with your potential partner.
“The key to any relationship is you’ve got to understand what makes you tick and what’s important to you—and you’ve got to understand what makes your partner tick and what’s important to them,” Hertz said.
Ultimately, Hertz noted, each party is aligning themselves to a vision. “It’s really critical, that there be a shared vision, and the shared vision can’t be just about money.”
Chances are not everyone is going to get everything they want in any relationship, but both parties should address the “must haves” and “won’t do’s” and write those into the contract.
The reimbursement plan, governance structure, conflict resolution protocol, and practice pattern expectations should all be thoroughly discussed on the front end and clearly outlined in the final agreement. Equally, the repercussions for both parties of not living up to the agreement should be spelled out.
Once the Honeymoon is Over
Although it might seem like the heavy lifting happens in the planning stage, anyone who has been married long knows that once the honeymoon is over, the real work begins. “Each party has to put in one hundred percent. It is the only way this works,” Hertz said.
For physicians used to making snap decisions and having their orders carried out, following the maze of corporate protocols that are inherent in most health systems and large practices can be frustrating. For hospitals shifting from a volume-based to an outcomes-based reimbursement model, it can be equally difficult to understand how less truly can mean more.
The best antidote for frustrations that build up and fester over time is open communication. Hertz pointed out, Communication is broadcasting, but it’s also receiving. The notion of two-way communication is critical.”
Not only does there have to be communication, but it must also be meaningful. “Most of the physicians I know were absent the day they taught mind-reading in their training programs,” he said. It does no one any good to have an administrator walk into a physician’s office at the end of the month, tersely tell the doctor the numbers aren’t where they ought to be, and walk out, which Hertz has witnessed. Instead, he said, the two need to work together to figure out where the problem lies and what steps could be taken to fix it.
Open to Different Viewpoints
Being open to different viewpoints allows both physicians and administrators to see care delivery issues in a new light. It’s one reason why physician governance is critical to the health of the overall organization. Having physicians involved in planning for the future keeps them engaged in the mission and shared vision.
Having a voice, however, doesn’t always mean one party gets their way. Hertz noted, it’s better to hear an honest “no” than a sugar-coated answer that is meaningless. Trust and transparency, he said, are the cornerstones of any good relationship.
“Do what you say you’re going to do when you say you are going to do it,” he stated, noting the axiom is equally true for physicians as it is for administrators.
Hertz continued, “If I’m a system, and I’m going to pay you based on work RVUs or based on charges or visits or collections or whatever, I need to make sure I can do a really good job of collecting that information; that it is accurate; that it’s timely; and that you trust it. If we don’t trust each other, it doesn’t work so well.”
Ultimately, those who have realistic expectations and are willing to put in the work to achieve the shared vision enjoy the strongest partnerships. “You’ve got to know what is going on in the world around you. You’ve got to be informed. You must do your due diligence. You must know yourself, and you’ve got to do this with your eyes open — wide open — and never assume. Those are the top five things,” Hertz said.
“The bottom line is none of this is brain surgery, but there is no silver bullet, no magical answer. It’s darn hard work,” he concluded.
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