Physician Clinical Alignment and Integration: A Community Academic Hospital Approach

Debbie Salas-Lopez, MD, chair, Department of Medicine, Lehigh Valley Health Network, Allentown, Pennsylvania; Sandra Jarva Weiss, JD, attorney, Norris, McLaughlin & Marcus, P.A., Allentown; and Brian Nester, DO, chief strategy officer, and Thomas Whalen, MD, chief medical officer, Lehigh Valley Health NetworkEXECUTIVE SUMMARYAn overwhelming need for change in the U.S. healthcare delivery system, coupled with the need to improve clinical and financial outcomes, has prompted hospitals to direct renewed efforts toward achieving high quality and cost-effectiveness. Additionally, with the dawn of accountable care organizations and increasing focus on patient expectations, hospitals have begun to seek physician partners through clinical alignment. Contrary to the unsuccessful alignment strategies of the 1990s, today's efforts are more mutually beneficial, driven by the need to achieve better care coordination, increased access to infrastructure, improved quality, and lower costs.In this article, we describe a large, academic, tertiary care hospital's approach to developing and implementing alignment and integration models with its collaborationready physicians and physician groups. We developed four models-short of physicians' employment with the organization-tailored to meet the needs of both the physician group and the hospital: (1) medical directorship (group physicians are appointed to serve as medical directors of a clinical area), (2) professional services agreement (specific clinical services, such as overnight admissions help, are contracted), (3) co-management services agreement (one specialty group co-manages all services within the specialty service lines), and (4) lease arrangement (closest in scope to employment in which the hospital pays all expenses and receives all revenue).Successful hospital-physician alignment requires careful planning and the early engagement of legal counsel to ensure compliance with federal statutes. Establishing an integrated system with mutually identified goals better positions hospitals to deliver cost-effective and high-quality care under the new paradigm of healthcare reform.For more information about the concepts in this article, contact Dr. Salas-Lopez at debbie.salas-lopez@lvhn.org.BACKGROUNDThere is an overwhelming need for change in the U.S. healthcare delivery system. Declining revenues and thinning operating margins are driving hospitals to further concentrate their focus on quality, costs, volume, and growth. Both hospitals and physicians are feeling the pressures of heightened patient expectations and the need to improve clinical and financial outcomes. To properly address these concerns, the way in which hospitals and physicians view each other must change.This pressure to change is nothing new. In the past, hospitals viewed physicians primarily as customers, providing unnecessary frills and unchecked autonomy. Then, in recent years, as more inpatient services shifted to the ambulatory setting, hospitals began to view physicians as competitors. Presently, with the dawn of accountable care organizations (ACOs) and an increasing focus on patient expectations, hospitals have begun to align with physicians as partners (HFMA, 2011). With the healthcare cost crisis looming, hospitals must seek methods of alignment that control costs without sacrificing quality of care (Kellis & Rumberger, 2010). An aligned physician medical staff committed to mutual goals and shared accountability helps ensure continued high-quality healthcare delivery in the ACO climate.The physician-hospital alignment model gaining the most momentum is the employment model, in which hospitals acquire physician practices and hire physicians in the community. This practice is similar to the large-scale physician employment and consolidation trend that hospitals experienced in the 1990s-a strategy designed to increase admissions in an attempt to protect themselves from the threat of reduced payments. …