Finance case study – building the physician organization

Building the Physician Organization (a large, established medical group)

After some years experience with an integrated health system, you apply for a post as executive director of a new moderate-sized physician organization attached to one of the system’s hospitals. You will be interviewed by a panel of the governing board, including several physicians representing primary and referral specialties. About a week before the interview, the spokesperson for the search committee tells you:

We want to build a group that attracts the best doctors and makes quality a habit. We want a say in our destiny. And we want to make competitive incomes, and take paying patients from all forms of insurance. We’ve gotten everybody signed up, both legally and emotionally, on those ideas.

We think we have good doctors, and we have good malpractice records, thank heaven. But we haven’t really gotten into some important questions we know we’ll have to address, such as how big we should be, how we should control our referral specialist numbers, and what specialties we ought to include.

We copied the hospital’s credentialing system verbatim, and we’re not sure that’s all we need because it doesn’t do much for outpatient care. Some doctors think we should have specialty departments like the hospital, others want geographic directors or leaders, and frankly a lot would like total autonomy.

Now we are in the pay-for-performance era. The system is giving us HEDIS reports, a bunch of patient satisfaction data, and some process measures like scheduling delays. We’re doing okay on these, but the system says they want benchmark performance on a bunch of them within three years. They also give us cost reports that show we are a little over the system average for many common problems. They want overall costs down 15 percent in two years. Some of our doctors think these goals are impossible, but the system shows us data from other cities and competitive information where the goals have already been met. We think we’re going to have to meet those goals, but honestly I don’t have a clue how we’ll do it.

Tell us how we should organize to get all this done.

From your experience with the system, you know the search spokesperson outlined the right agenda. The market is demanding cost and quality improvement, and the system will not tolerate much failure on the goals. You decide to outline your response in detail, making sure you hit all the points and give answers that will get you the job as well as establish a basis for doing the work.