OHA Annual Conference 2012
DAVID ANDRICKDIRECTOR PHYSICIAN RECRUITMENT
ADRIAN R. BYRNEPRESIDENTLUND-BYRNE ASSOCIATES
Every organization requires the right people to make it work. Ensuring the right-fit with physicians is an essential task of the physician services department that is best accomplished with a formal “due diligence” process.
Building an employed physician group practice that meets the needs of the community while supporting hospital business objectives is sensitive work.
Some local physicians are feeling the reimbursement and cost pinch and are intent on hedging their situation. They will leverage past relationships with the local hospital.
This includes exploring direct employment or some form of joint management arrangement.
James Thurber, an American cartoonist and writer best known for Walter Mitty, wrote:
"Let us not look back in anger or forward in fear, but around in awareness."
Healthcare delivery models are changing (again)
New players are entering the market to provide care (Insurers/Pharmacy’s)
New choices exist for physicians and allied health providers (Walmart, CVS, Corporate Health)
National Physician contract groups (Team) Follow the money………………..
Independent Physicians look at: “Obama Care” confusion
Perception v Reality
Belief that things are changing anyway
Independent practice is more complicated
Real erosion of practice revenues Operating costs continue to increase
Cost of technology (purchase and implementation)
Look for expert help with new reimbursement models
Do not want to be left out of new provider networks
Consumer expectations are changing
Hospitals are moving to gain economies of scale:
Increasing M&A activity Better control of costs and quality Hospitals need greater control over service area
referrals and.. larger service areas Hospital performance criteria requires active
physician support and input Harder to recruit physicians into independent
practice
A recent Merritt-Hawkins study of Residents showed:
32% of first-year Residents surveyed in 2011 said they prefer to be employed by a hospital, up from 22% in 2008.
48 % said that they feel increasingly unprepared to handle the business side of medicine.
70% of national hospitals and health systems plan to employ more physicians in the next one to three years.
Source: HealthLeaders Media Study
1. Establish a clear process for decision making
2. Conduct a preliminary due diligence
3. In depth practice and business assessment
4. Preparation of contract and making the offer
5. Acceptance or refusal - next steps
Physicians who approach the hospital to be employed will probably fall into 5 categories
1. Low volume - struggling practices
2. Those not wishing to invest in technology and/or close to retirement
3. High volume specialties seeing major income reductions (Cards/Onc/Ortho)
4. Groups and individuals wanting to leverage their current dominant role
5. Groups that are falling apart anyway
Create a check list and a decision flow chart Gets everyone on the same page Creates an evaluation process that is
supportable to and by the Board Allows for quicker decision making Process helps physician to understand future
expectations on the front end Deals with sensitive issues early
What does it mean to be an employee
Objective approach to decision
Who needs to be involved and why
Confidentiality to be managed/need to know
Physician demographics
Strategic fit definition
Options/packages for recruitment
Who makes decisions and how
Preferred time line for process
Who approached who:• If strategically important determine who is best to make first
approach to physician or work with physician(s)
• What is the strategic fit – competitive / expansion of services
• Do you understand physicians request (fishing or firm)
• Has physician approached others?
• Does the physician need to get more information (from who and by when)• Explain the process and evaluation flow chart to physician as a Board requirement
• Explain who is involved with decision process
• Agree on confidential approach
• Stand still agreement
• Provide time line (and keep to it)
Talk with dept. management.
Nurses etc
What do we know about this physician
Begin Due Diligence
VP Medical Affairs Input
Strategic or business need
for specialty
Hospital UR/QA Data
Medical RecordsCredentials
SleuthingInformation subjective
Local recruitment flow chart (sample)
- Med Staff Plan- Practice volumes- Service Lines
Who approached
Who?
Define data to be collected
Strategic Need
Physician Decision
Prepare Preliminary decision Report.
Yes/No
Objective/specific information
Issues to be addressed in a discussion with Physician: What expectations are there for an employment
agreement?
What will happen to the existing practice?
What about employees?
Are there assets that may be purchased?
Describe the process for dealing with these issues.
Use a standardized approach for a confidential report - prepare:
• Physician name, specialty, privileges, # years, practice location, community served, other hospital affiliations, practice partners.
• Physician stated interest and reason for interest in employment
• Current volumes of referrals IP/OP, practice, individual physicians
• Internal UR/QA information trends
• Observations of CMO or VP Medical Affairs, others
• Credentials review
• Is there a cultural “fit” with existing practices
• Strategic need reasoning (if required)
• Recommendations for next steps (Pursue or Not)
Use of preliminary due diligence: Obtain Senior Management input / Board approvals
to proceed
Note any limitations/issue needed to be addressed
Meet with physician Communicate issues
Reconfirm process
Confirm interest
If interest still good, get a formal confidentiality agreement and “stand still” agreement in order to get more information from the practice.
Prepare Confidentiality Agreement
Decision and
meeting
IF YES or Need More Info IF NO
Plan meeting with Physician/s
Explain Conditions that must occur to move aheadPractice
AssessmentEmployment Projections
Proposal and Negotiation Prepare Preliminary decision support.
Yes/No
Full assessment - preparation
Decision to Proceed with Step 3Full assessment
Decision NOT to proceed
You must know what the business status is now:
Request a more detailed assessment of the practice to include: (explain why needed) Full operating statements
Bank statements
Patient volumes by service
Review of patient records
Payer contracts
Staffing, salaries and benefits
Retirement plans
IT capability
What are the expectations Discuss a check list for asset types and
preferred actions
Lay out a typical employment package that conforms to existing criteria for income / salary / incentives
Suggest physician adds any additional thoughts to be presented to the Board/Senior Management.
Direct employment Hospital
Subsidiary (foundation model)
Aligned group - Multi Specialty /Single Specialty
Practice/employee acquisition-physician contractor
Joint venture on a Service Line
Most anything that is legal
Senior Management (or Board sub-Committee) should approve any formal offers.
Present this decision authority with: Physicians wish list
Current practice performance data and projected impact if hired
Overview of plan for practice assets and personnel
Cost assessment with proposed salary, incentives, benefits
Proposed contract of employment
Timeline for action
Plan for the Normal
Manage the Exceptions
Challenges will include: FMV for assets FMV for income Non competes Hours and coverage There will be System/Operational changes Collaboration New reporting Avoiding impressions of favoritism
Productivity
Payer Mix
Billing/Collections
Practice Expenses
Hospital Performan
ce
Fixed Salary
W/RVU’s
Net Collections
Net Income
Income Construction and Limitations
Physician has incentive to manage
Physician has NO incentive to manage
Meet with physician to discuss the offer: Employment/Services agreement:
Terms and conditions
Salary / incentives
Acquiring Business: Description of assets to be acquired
Formal valuation
Liquidation of other assets
Consideration of staff
Timeline for decision and action
If Acceptance: Move quickly to signature
Employment agreement Sale/transfer of assets
Agree and prepare a time table for action Schedule announcements (eg: to practice
staff) Change provider numbers/notify payors Close books on original practice Rehire staff with new contracts
If Rejection: Communicate reasons and possible issues
Is a counter proposal required/appropriate
Is there flexibility in the package without Board input?
Agree to disagree ?
Be sure to part on good terms if no deal
It’s just business
Be open but confidential (emotions may come into play)
Explain how decisions are made
Use an objective and supportable approach
Understand the physicians reasoning
Collect both objective quantifiable data and subjective (confidential) peer commentary
When agreement is reached move quickly to get contracts and make the changes
If no agreement there must be clarity and part friends.