Provider Realignment: How Well Is Your Physician Enterprise Functioning?

The COVID-19 pandemic has profoundly altered healthcare. Staffing shortages, soaring labor costs, discontented providers, and industry consolidation have changed the paradigm.

As health system leaders, you may be reevaluating your operations – questioning provider suitability, specialties, locations, and compensation. And you may be rethinking how to prioritize physician services in light of changing dynamics.

Evaluation of your physician enterprise is a strategic, cost-effective way to adapt to new market realities and minimize losses. In this article we will explore the anatomy of a provider realignment and how that affects your physician enterprise.

Strategic Positioning and Specialty Services

A crucial step in realignment is evaluating your physician enterprise strategy. Does your current outpatient operation suit your community’s needs, payer mix, and market share? Or are your services mismatched with community needs, lacking in-demand specialties, with outdated technology, inefficiencies, and administrative gaps?

Part of assessing your strategy involves assessing your specialty services. When have you last evaluated your service lines, like obstetrics and cardiology, to determine their viability and profitability? Although these services may not be lucrative by themselves, do they drive other profitable services?

If key physicians have relocated, leading to gaps in service and expertise, or if your outpatient practices were acquired along with their providers without thorough consideration of how they fit into your larger plan, you need to adjust your strategy to enhance your market relevance.

Managed Care Contracting and Incentives

Even if your organization has long-established payer contracts, you should reexamine these agreements regularly. Changes such as growth, reductions, or adding new practices can affect your value to the payer network, possibly justifying a rate increase.

Here are questions to keep in mind.

• Are you ensuring contract compliance in your revenue cycle? In other words, are payers adhering to contract terms and paying the agreed-upon fee schedule rates for services? If there are discrepancies, this needs to be addressed.
• How often are you reviewing your contracts? We recommend reviewing managed care agreements at least every two to three years so they remain relevant. Begin reviewing the physician component the year prior to contract renewal to adequately prepare and justify any rate increase. As always, coordinate with your managed care team to align objectives.
• Are you tracking and addressing denials? It is important to track denials from each payer in the revenue cycle. Identifying patterns in denials and eligibility issues – and resolving them promptly – can improve revenue and reduce unnecessary losses. Tracking denials by specialty is also a good practice.
• Is your provider documentation complete and accurate? A provider can challenge payer denials effectively if they have thorough records. Make sure you are prepared.
• Can you leverage better reimbursement? As larger groups and private equity firms increasingly employ physicians, they enjoy access to better managed care contracts, capital, and resources. Integrating your physician enterprise may give you more leverage in negotiating favorable terms with payers, which can lead to better reimbursement rates and financial stability.

Aligning Provider Compensation With Your Market

Modern compensation models are evolving to emphasize quality care over the volume of services provided, incorporating quality indicators and expectations of “good citizenship” in practice.

Therefore, your compensation structure should reflect providers’ overall contribution to patient outcomes and community health and should align with your managed care reimbursement and risk contracts.

As demand for primary care grows, you may need to adjust your compensation structures to ensure they are competitive and reflect the prevailing market conditions. Primary care providers and specialists’ compensation should be aligned with the value they bring to your system, both to maintain financial stability and to comply with fair market value and other regulatory requirements. This balance also contributes to care quality, financial sustainability, and provider satisfaction.

Physician compensation does not come cheaply, so it is important to manage these costs effectively. Utilizing Advanced Practice Providers (APPs), such as nurse practitioners and physician assistants, are a cost-effective expansion strategy. Given their training and expertise, APPs are especially valuable in primary care settings, where resources are limited, as well as for specialties outside of urban areas. APPs can also be extremely valuable in telehealth and other virtual service delivery models.

Collaborative, Efficient Leadership

To effectively run an aligned physician network, you need well-rounded decision-making that combines clinical expertise with operational acumen. We recommend the dyad model, which pairs a physician or APP with an executive leader, to effectively combine these skill sets.

As practices expand and you are handling large, diverse teams, management that worked well in small, two-person practices may not be as effective in larger groups.

As the physician network matures and consolidates, it is important for all managers to be accountable and measured against common expectations. Acquired practices often retain their legacy management to aid in continuity and physician support, but it is sometimes necessary to reevaluate performance and make difficult decisions.

Leaders should also keep succession planning in mind for key leadership roles, as the pandemic ushered in early retirements in greater numbers. Taking the extra time to proactively assemble and develop a management pipeline will save you time, money, and headaches in the long run.

Assessing Support Services’ Impact

Patients have more choices than ever, especially since the pandemic. Your success hinges on your attention to their needs and overall experience.

Delays or inefficiencies in services like scheduling appointments, responding to patient questions, ineffective call center operations, laboratory tests, radiology appointments, or billing can lead to dissatisfaction among both patients and providers. If lab results take too long, your physicians cannot diagnose and treat patients effectively. Billing errors can create frustration and administrative hassles.

Ensuring that all support services are interconnected and contribute to the overall patient experience and outcomes can directly impact satisfaction – and the bottom line.

Outpatient Clinical Support Workforce

In outpatient care, clinical staff members often perform administrative tasks outside their specialized training, which can lead to inefficiencies and can impact care quality. We recommend reviewing their duties to ensure clinical staff are working at the top of their license by providing the highest level of care they are licensed to provide. This would include utilization of APPs in the clinical support of care.

Standardizing operating procedures across clinics can also help. Systematizing your clinical guidelines, making your administrative processes dependable, integrating your electronic medical record (EMR) systems, and regular, consistent staff training can also help to improve both efficiency and care quality.

Experienced clinical staff should oversee high-quality registered nurses (RNs) in outpatient clinics and urgent care to ensure superior patient care. However, there may be a significant pay gap between hospital and clinic settings.

We have seen situations where clinic staff are paid substantially less than their hospital counterparts, making it harder to attract and retain skilled RNs in outpatient settings – especially for RNs who are expected to fully utilize their skills, like managing triage calls.

Equalizing pay helps, as does placing nurses in their desired work environments. Whether those areas are hospitals, intensive care units, or offices, this approach can boost their job satisfaction and directly improve patient care quality.

Patient Access to Providers

Your outpatient access has a direct impact on your market share.

But with overburdened providers, you must ensure that each medical professional, from nurses to specialists, is utilized efficiently.

To help your clinical staff do more with less and make more time for patients, consider the following:

• Standardizing appointment times and types
• Implementing provider time off and policies to reduce late changes to providers’ schedules
• Setting expectations on throughput or productivity to ensure providers are fully aware of how schedule management impacts compensation
• Discussing the division of labor and the importance of delegating appropriate tasks to the right clinical staff
• Embracing flexible scheduling options, such as online portals, phone calls, and text reminders, which make it easier for patients to schedule appointments
• Expanding telemedicine when appropriate

Ultimately, accessible, high-quality care leads to a healthy bottom line. These approaches can improve patient experience and streamline care delivery.

Conclusion and Next Steps

As you reassess your operations – including evaluating the fit of your providers, range of specialties, leadership, and compensation structures – reorganizing your physician enterprise is a strategic and cost-effective way to respond to the changing market.

Knowing where to start can be challenging, but it doesn’t have to be. By conducting a high-level financial desktop review, your organization can determine the overall health of your physician enterprise, identify potential trouble spots, and assess where further action is needed.

Our team of healthcare consultants can help. We work with system-owned and independent practices to help them assess their financial health, and we work to help them implement changes that will positively impact their margins and profits. Contact us today to learn more about how our team of experienced advisors can help.