Do you know what the most expensive item is in your hospital? If you guessed PET/CT scanner, MRI or surgical robot, those are all good answers, but they are also all incorrect.

The most expensive item in your hospital is the pen used by a physician.

The physician’s pen is the most costly item in the hospital because the tests and supplies doctors order for their patients with that pen can drive 60 to 80 percent of a health system’s costs*. Understanding the various angles of that dynamic is crucial for physicians and health system leaders as they work to align with the new payment models.

“The changes in reimbursement have altered the nature of the relationship between doctors and hospitals,” said Martin Lucenti, MD, PhD, senior vice president, advisory solutions for Vizient. “Health systems are no longer just responsible for providing services to physicians and their patients. Now they have responsibility for ensuring care is done well and it’s integrated into the larger community of care.”

These changes for hospitals also impact doctors and are underscoring the need for stronger physician alignment in a health system’s strategy discussions. “It’s crucial for health system leaders to understand that physicians aren’t ready to give up ownership of how patients are cared for in the hospital. Equally important, when hospital leaders are strategizing how to evolve and optimize their business model, they must factor in the fact that doctors also have a business model and their income is predominately based on productivity,” said Lucenti.

Lucenti, who practiced emergency medicine at Northwestern Memorial Hospital and also directed clinical operations for the Feinberg School of Medicine’s Emergency Department, offers a unique perspective to health care executives who want to increase physician engagement in the process of cost reduction and overall care delivery optimization, “Think like a physician.”      

Lucenti recently co-authored a white paper which details five ways for health care executives to engage physicians in value transformation. “Alignment starts with sharing the health system’s vision. The health care leader must have a clearly articulated vision that doctors understand and are able to see their part in,” said Lucenti. “Both sides want to do great things for their patients and they understand the need for better integration of care. Doctors are willing to participate, and make some change and sacrifice to get there, if they understand and believe in the health system’s plans for transformation,” said Lucenti.

Part of articulating the health system’s vision is demonstrating how it will align with the doctors’ business model. Lucenti encourages health system executives to invest the time to learn and understand the physician’s business model so that they know it as well as they know their own health system’s model.

“Health care executives can quickly change the dynamic by making sure the physicians understand what’s in it for them and their patients. If the health system can create a model to incentivize and compensate physicians for process improvement work, you are going to see them move from fighting change to championing change,” said Lucenti.

With a shared vision, the work to gain alignment around cost containment can begin.

“Remarkably, doctors get very little feedback when it comes to costs, quality of outcomes and patient satisfaction with their services. It’s hard to improve when no one has told you where you actually fit within those dimensions relative to your health system peers or with doctors at other institutions,” said Lucenti. “Health care executives must also move toward greater transparency. Sharing the cost and revenue numbers from the facility side with the physicians is crucial for them to assist in understanding which aspects of care delivery truly add value.” 

Health care leaders should also tap into the naturally competitive nature of physicians to spur change and sustain cost and quality improvements. “You show them where they fit when it comes to quality and outcomes, they will embark on improving. Continuing to provide that feedback will sustain change and even spur new ideas to improve,” said Lucenti.

Regardless of where your health system is on the volume-to-value spectrum, adding the perspective of physicians when formulating strategy will accelerate change. Start by factoring in the business model of your doctors and work to align yours with theirs, find the mutual wins and create additional places where you both benefit.

“If at any point it is perceived that you are trading off an improvement in your business model at the expense of the doctor, alignment will break down,” said Lucenti. “Find those transformational scenarios where the doctors, the patients and the health system can all win.”

Click here to download Lucenti’s white paper,“Thinking like a physician,” and learn more about engaging your physicians in the value transformation discussion.

*Goodman L, Norbeck T. “Who’s to blame for our rising healthcare costs?” Forbes. April 3, 2013.

Published: August 9, 2016