Physicians in the United States are dissatisfied as surveyed: forty percent (40%) of physicians said they had an interest in leaving their current organization within two years (American Medical Association (AMA) survey, 2022).There are multiple reasons for –this dissatisfaction, including more demands and burn out, an increase in administrative tasks, and decreased compensation. In examining over five hundred physician groups, it is reported that the underlying cause of physician unhappiness is the lack of solid leadership and culture. Leadership establishes the culture of the organization and if a culture does not make physicians feel valued and appreciated, then they become unhappy and leave. Physician retention has become a significant issue. Practices with a healthy culture consistently demonstrate high clinical, operational, and financial performance.
Case Study: Oncology Practices
There are two oncology practices in this mid-sized city serving a large rural population in the Midwest. One is a hospital-owned practice, and the other is physician owned.
PRACTICE 1: Hospital-Owned Practice
Scenario: The hospital practice recently experienced issues with physician retention, as well as recruitment. Contributing factors include the absence of physician involvement with decision-making. This results in physicians feeling like workers versus engaged participants and most often contributing to a financial practice operating loss. Physicians who do not feel valued or appreciated often leave.
PRACTICE 2: Physician-Owned Practice
Scenario: The physician-owned practice has a stable, respected board which drives the practice culture. Each physician has their own practice pod, and their compensation is based on the financial performance of their pod. Physicians can choose how they staff their pod with medical assistants, registered nurses, or advanced practice providers.
The practice has a very stable group of clinically competent physicians who are well-respected by their patients and the medical community.
The practice participates in multiple clinical trials and offers compassionate state-of-the-art oncology care to a challenging market.
Physicians feel valued and appreciated and drive the practices’ financial performance. The physicians work and are compensated beyond the 75th percentile.
Considerations
Nationally, the average a health system loses on its physician practices is approximately $250,000 per physician (American Medical Group Association, 2023). Hospitals should consider the following to improve the financial performance of their employed practices.
- Engage physicians in the governance model and decision-making process.
- Ensure physicians have a real voice in how the practice operates.
- Base physician compensation on revenue - charges, collections, Relative Value Units (RVUs), and/or value-based measures.
- Provide financial incentives to drive practice profitability.
- Review contract fee schedules annually.
If you want tolearn more about Lumina’s services to improve physician practice performance, see www.luminahp.com/medical-group-strategy. If you are interested in a complementary, practice cultural assessment, please contact me at jpeters@luminahp.com