Improved Medical Group Performance Aids Health System Growth

This is the second article in a series examining how health systems can improve the performance of their medical groups. The first article detailed how to overcome some sizeable financial constraints.

It sounds good in theory: build up your system-owned medical group to produce more coordinated and integrated care. It would stand to reason that with 77% of physicians now employed by hospitals or other corporate entities, achieving that goal would be well within reach. But theory and reality are different things. As we highlighted in the first article of this series, most system-based medical groups lose money and appear to be a drain on system operating margins. They have also struggled do deliver on the promise of vastly improved clinical performance and better patient experience.

Our view is that substantial value can be created through more intentional and thorough medical group strategies. Beyond mitigating losses through greater operational rigor, medical groups should be seen as a vital driver of system performance and growth. Based on our work with leading health systems, getting this right can add at least 15% to a system’s top-line revenue and vastly expand operating income.

While acknowledging that medical groups face ever-shifting market realities, they can reach meaningful performance improvements by focusing on three key tactics:

Key 1: Balancing Capacity

At times, the consolidation of medical practices that played out over the past 10-plus years has been an opportunistic land grab. Systems sought to obtain key local practices, often for fear of being left behind in a particular geography or service line. As a result, it has been difficult to get the right balance of primary care, specialists, and sub-specialists which, in turn, causes problems in being able to fully and appropriately service patient needs.

Part of the solution is to reevaluate capacity at each point in the continuum to then rebalance clinical assets — both human and facility. In the simplest example, medical group leaders can actively model capacity and performance expectations, starting with primary care, but tying that to key service lines like cardiology. Then, for cardiology, model capacity across all related services and sites of care. While execution is complicated, this level of tuning allows groups to retain balance, avoid distraction, and improve overall patient care and throughput. Higher-performing systems plan capacity across medical groups and facility operations, via a service line management structure and/or joint ambulatory-acute planning. A busy cardiology service is great, but harder to sustain if key services like cath labs are constrained.

Key 2: Creating Clinical Chemistry

A key factor in achieving balance across a group is getting all the components to actively collaborate and coordinate care. As many groups have been formed of previously independent practices, there are often closely held, legacy ways of providing care that do connect easily across specialties or sites of care. This current state is very costly, as it suboptimizes productivity in individual units and across the enterprise. And that’s on top of upheaval it causes patients.

Standardization is often pointed to as an answer. In practice, however, it is hard to come by, especially as newly acquired practices and physicians are added to the mix. The resulting variability in processes makes efficient transitions across the continuum difficult. Unnecessary referrals happen. Or patients are referred to a specialist, but never follow up with their primary care doctor. Or they are confused about who ultimately is managing their care journey.

Developing, measuring, and maintaining clinical compacts is essential — and it’s not rocket science. It’s all about engagement and change management, followed by measurement and tracking. By bringing clinical leaders together to discuss the needs and headaches of each party, solutions quickly emerge. For example, primary care physicians often suffer from lack of transparency and follow through when referring patients to specialists, while specialists often complain that primary care doctors send them cases that should be managed by a PCP. Fixing this environment requires trust — in one another, and in the group overall. As trust builds, substantial gains can be made in sharing data and improving patient flow. This gets the medical group closer to delivering the right care, in the right place, at the right time – which can be tracked and measured. And that leads to higher patient and provider satisfaction.

Key 3: (Re)Aligning Care Models

The last step lies in transforming the care model. Medical groups must prepare for and embrace the migration of care from acute inpatient settings to outpatient and beyond. Team-based and top-of-license care will be key elements here, as creating leverage and expanding capacity is essential. Two primary ingredients to facilitating team-based care include:

1. A mindset focused on pushing care out, not pulling patients in: Primary care, urgent care, and immediate care should all help address patients’ needs in accessible, low-cost settings. Further, providers should work to sustain appropriate care in these primary care settings, elevating to specialist referrals only when needed as dictated via clear and agreed upon protocols. This will ensure that primary care providers are positioned to safely and effectively support patients in managing conditions, and that specialists’ time is put to the highest and best use.

2. Embracing and leveraging opportunities to shift site care to the home: An estimated 60% of primary care visits could be handled at patient’s homes. Likewise, many chronic conditions can be managed virtually with well-established remote patient monitoring protocols and technology. While this clears revenue producing visits, it can improve patient satisfaction and will create capacity for clinical resources to address the country’s much-lamented access issues. For providers shifting into value-based contracts, this can help reduce total cost of care.

Shifting the care model is incredibly hard. Physicians and care givers typically perceive it as an existential threat — despite their agreement that current models are unsustainable. Groups that have made the transition attest to both the difficulty in dismantling what they have mastered under the current paradigm, and the outsized, measurable gains for both patients and providers that come from realigning care.

Balancing volume and value

The levers described above are all accretive in a volume-based context. This leads many system leaders to wonder if this will clash with other strategies that are pushing into value-based care. In other words, are the moves required to unlock volume destructive to our efforts to improve performance on value-based contracts?

Good news: the shifts described here can generate value in both fee-for-service and value-based care environments. Both volume and value require access. We’ve seen significant strides in health systems that have put primary care in the driver’s seat. They’ve expanded access — a huge patient satisfier — improved continuity of care, seen higher provider satisfaction, and driven toward breakeven financial performance.

Importantly, volume and value are both needed to help fund this better care model. Professional fee schedules have not kept pace with inflation, and higher functioning groups can tap into expanded earnings opportunities. Groups that have shifted the care model have observed several financial “unlocks” – more accurate coding, better care management engagement (reducing total cost of care), more effective billing for transitional support, and more. In other words, a more robust and effective team approach is not only better for patients and providers, but it can materially improve financial performance, too.

Being a more intentional and rigorous approach to medical group strategy and optimization should be seen as a key driver of system growth, but in a manner that is aligned with both better community health and a sustainable clinical profession.

The next installment in this series will be a discussion with healthcare leaders who have gone down this path before. We will cover the lessons learned on enacting this change.