by Andrew Mancuso
Principal, Sg2, a Vizient company


Health care reform can be as befuddling as quantum physics. But it has one aspect that’s as easy to understand as a first-grade arithmetic problem: The transition to value-based payments means that hospitals, health systems and physicians must work together as a cohesive team. Or, as Ben Franklin put it to his fellow patriots, “We must all hang together or assuredly we will hang separately.”

Hospitals and physicians have been moving toward alignment and integration for nearly two decades. In 2000, two-thirds of doctors were independent, but now about two-thirds of physicians are affiliated with a hospital or health system. Given this significant shift, what are the key components needed by hospitals and health systems to implement an effective physician alignment strategy?

As I discussed in a recent webinar on optimizing partnership strategies, the foundation is having the right physician alignment model. Generally speaking, most hospitals are choosing a tight alignment with physicians because they can hardwire direct incentives for cost and quality into their compensation models.

It’s important to understand that any partnership causes an extreme cultural shift for physician practices. Clinicians need to be educated on the “why” behind the alignment and the changes being made in their day-to-day practices and working relationship with hospitals.

Other common practices that contribute to successful partnerships include:

  • Providing physicians with sufficient data to help them manage patients’ lives
  • Offering a transparent governance structure that gives physicians control of clinical leadership and responsibilities for performance metrics and compensation
  • Maintaining open lines of communication, monitoring performance metrics and consistently providing physicians with ongoing feedback
  • Changing incentive structures to align with the metrics compensated for in risk-based agreements (for example, outcome measures such as readmissions, unanticipated admissions and ED revisits)
  • Understanding that changes take time and that incremental wins are big achievements

CMS’ Quality Payment Program accelerates need for alignment

As more payers transition to risk-based payment models, physicians will find it even more difficult to remain independent. For example, those who participate in the Quality Payment Program (QPP), the linchpin of CMS’ plans to link 90 percent of Medicare reimbursement to value by 2018, will need to choose between two primary payment models:

  • The Merit-based Incentive Payment System, (MIPS), under which physicians will receive bonuses or penalties based on their performance in four categories: quality, cost, improvement activities and advancing care information
  • The Advanced Alternative Payment Model (APM), in which physicians will not be required to submit MIPS reports but instead take on significant financial risk in exchange for 5 percent incentive payments

Both tracks require sophisticated information technology and infrastructure capabilities that most practices can attain only through hospital partnerships.

Hospitals also can encourage affiliated physicians and clinicians to take advantage of the Transforming Clinical Practice Initiative (TCPI), which CMS developed to help them successfully transition to QPP reimbursement models. The TCPI has identified three key transformation imperatives:  

  • Setting practice goals for quality improvement, patient safety, practice efficiency
  • Improving the collection, reporting and everyday use of data, including REAL (race, ethnicity and language) data
  • Developing care processes such as case management, risk stratification and team-based care

The Vizient Practice Transformation Network is the largest PTN within TCPI and includes nearly 24,000 clinicians, primarily specialty physicians. We work with them to move practices through the phases of transformation, especially on how to improve access to primary care and its impact on ED revisits and readmissions.

Based on our experiences, we’ve found the two biggest opportunities for immediate improvement are chronic condition management and care coordination. Related opportunities and some of the strategies and tactics used to improve performance include:

  • Improving access and continuity of care through such activities as remote visits, telehealth and shared medical visits
  • Risk-stratified care management using multiple chronic conditions and socioeconomic criteria to stratify the panel 
  • Planned care for chronic conditions and preventive care by using MAs and RNs for education, counseling and referral to community-based organizations
  • Patient and caregiver engagement; many organizations have Patient and Family Advisory Councils for hospital inpatients but not for practices or ambulatory care
  • Better alignment between clinician compensation models and organizational goals such as quality and the use of resources and EMRs

Hospitals and physicians are becoming as intertwined as a braided rope. High quality, low-cost hospitals that offer robust analytics to enable physicians to meet QPP and other reporting requirements will gain a competitive market edge critical to future success.

For more information on leading strategies and practices in forming physician partnerships, click here to read a recent white paper. To register for related upcoming webinars, click here.

About the author. As a member of the Sg2 consulting team, Andrew Mancuso works on the deployment of Comprehensive Care for Joint Replacement Model services. Previously, he was a part of TRG Healthcare Solutions, a leading national consultancy that specialized in the development of physician-to-hospital alignment models, such as service line co-management, professional services agreements, direct employment, joint ventures, gainsharing and bundled payments. Prior to joining the TRG team, Andrew was an orthopedic service line consultant for MedAssets Advisory Solutions, directly responsible for improving financial, operational and quality performance for orthopedic services at hospitals across the country.

Published: July 10, 2017