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Key Strategies to Build Aligned, High-Performing Physician Networks

Steven T. Valentine, March 1, 2018

The competitive healthcare landscape is rapidly shifting, pushing providers to partner with physicians to form coordinated, high-value healthcare entities with aligned payment models, care delivery practices and financing capabilities. However, achieving true physician alignment remains a challenge for many hospitals and health systems.

Physician-hospital alignment is becoming more important as hospitals seek to lower costs, improve care and prepare themselves for payment models that reward collaboration.

Current market pressures, combined with favorable payment policies, are once again forcing this issue to the top of the pile. Mega-mergers and acquisitions like CVS and Aetna, and Humana and Kindred, are organizing clinicians into large-scale mega groups and introducing fierce competition to attract and retain top clinicians and patients. Payments policies and programs like Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the Medicare Shared Savings Program (MSSP) further intensify the market and require physician alignment in order to realize success. At the same time, commercial payers are getting into the game and increasingly awarding value-based contracts to health systems with aligned physician networks.

While the current climate is auspicious for physician alignment, the reality of aligning providers is an immense undertaking. Building a high-value, low cost provider network often requires a complete organizational and operational overhaul—not to mention, significant culture change.

Since 2012, Premier has advised health systems on how to build aligned, high-performing physician networks. Based on this experience, Premier experts have identified the following strategies to increase likelihood for success:

Know the goals. Goals for physician alignment need to be clear – both for the health system organizing the providers and the physicians that will work to achieve them. Health systems are generally looking to recruit physicians who can help them grow and expand market share, reduce overall healthcare spending through standardization and improve clinical quality through common clinical protocols. Physicians, on the other hand, are generally looking for more and better paying patients, improved quality and satisfaction outcomes, more income and a balanced work environment. These goals can work together, but health systems must be clear that the alignment strategy will meet physicians’ needs to avoid conflicts and a perception of having requirements foisted upon them.

Know the alignment model. Once the goals are agreed to, health systems and physicians should jointly examine the range of new models that can incent greater alignment. The choices are manifold, from a full-fledged accountable care organization to a clinically integrated network, co-management agreement or joint ownership opportunities. If, for instance, both the physicians and the health system agree that growing the patient base is the primary goal for the organization, then it may be advisable to organize a clinically integrated network that can pursue large risk-based contracts directly with employers, as well as public payers like Medicare and Medicaid. If there’s opportunity to collaborate and partner with specialists, then co-management or bundled payment contracts may make more sense.   

Know the partners. Above all, the alignment strategy is predicated on partnering with a narrowed network of highest-quality, lowest-cost providers that offer differentiated outcomes that can be used to attract patients, payers and employers. To identify these physicians, health systems should leverage all available data sources such as star ratings, readmission rates and patient satisfaction scores to identify and recruit top talent. Once done, physicians should be evaluated to ensure cultural fit and commitment to the goals and alignment strategy before being invited in. Once incorporated into an aligned network, physicians need incentives to prevent out-of-network utilization and outmigration. For instance, they may need education on how to direct patient traffic to appropriate in-network services to minimize costs. Even one missed referral opportunity represents lost margin.

Know the measures. To track performance and achievement of shared goals, aligned networks need a streamlined set of standardized performance measures. To the degree possible, measures should have evidence to support their use and be standardized to fulfill the many reporting requirements that both physicians and health systems share, such as private payer contract requirements and federal and state quality reporting, as well as professional society and credentialing requirements. To accomplish this, the health system may need to invest in measure tracking and reporting infrastructure, as well as common network performance technologies.

Success in the new world of healthcare demands effective physician alignment. Given the current environment, many providers are expediting plans to recruit and work at a deeper level with community physicians. But the graduation to a mature, high-functioning network requires deliberate and strategic investments in core capabilities and collaborative and prudent execution. As the market continues to evolve, health systems that prepare well and early will be ready to take advantage of contracts with higher stakes and higher potential for rewards. 

To learn more about building aligned, high-value networks contact Steven T. Valentine, Vice President, Strategy and Advisory Consulting Practice, Premier.

Steven T. Valentine

Vice President, Strategy and Advisory Consulting Practice, Premier

With more than 35 years of health care consulting experience, Steven Valentine is a nationally recognized author and speaker and is frequently quoted on NPR, Modern Healthcare, and many other publications for his expertise in business advisory services, strategy, transactions, mergers, physician partnerships and financial impact analysis. Valentine has authored the annual “Top Ten Trends in Health care” for Trustee magazine and for the Governance Institute. He has an extensive background with the facilitation of retreats for boards, management and physicians. He has worked with and advised numerous clients throughout the United States and recently has moved organizations in the direction of population health and value based care.  Valentine serves as the Chair of both the Board at Orthopaedic Institute for Children (a UCLA affiliate) and the Strategy and Finance Committee. He also served on the Program Advisory Board at the USC School of Policy, Planning and Development.

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