dmi transitions clinical institutes: the ultimate integration
TRANSCRIPT
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DMI Transitions
Clinical Institutes:The Ultimate Integration Strategy
Presented by:
Jerry Youkey, M.D.Vice President, Medical and Academic Services
Greenville Hospital System
and
Ken E. Mack, FACHEPresident, DMI Transitions
September 2003
Society for Healthcare Strategy and Marketing Development
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Jerry Youkey, M.D.
Jerry R. Youkey, M. D., is Vice President, Medical and Academic Services for Greenville Hospital System in Greenville, SC. Dr. Youkey received his Bachelor of Arts degree from Stanford University, Palo Alto, CA, and his medical degree from Medical College of Wisconsin, in Milwaukee WI. He served a rotating internship and general surgery residency at William Beaumont Army Medical Center, El Paso, Texas and a fellowship in peripheral vascular surgery at Walter Reed Army Medical Center, Washington, DC.
Dr. Youkey served in the United States Army, attaining the rank of Colonel, Medical Corps, and then served as Chief, Department of Surgery, and Director, Peripheral Vascular Surgery Fellowship program at Geisinger Medical Center, Danville, PA prior to coming to Greenville. Dr. Youkey is certified by the American Board of Surgery in general surgery and general vascular surgery, and is a member of numerous professional societies. He is widely published in his specialty field of general vascular surgery, having authored books, abstracts, and journal articles. In his current capacity he is the Director of Medical Education for the Greenville Hospital System, and the Chief Medical Officer for their 230-physician multi-specialty group practice.
Dr. Youkey holds the academic appointment of Professor and Associate Dean at the University of South Carolina, Columbia, SC, and the Medical University of South Carolina in Charleston. In addition to his administrative duties, Dr. Youkey has an active general vascular surgery practice at the Greenville Hospital System.
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Ken E. Mack, FACHE
Ken E. Mack, FACHE, is President of DMI Transitions (DMI). DMI has aided its health provider clients across the country in a wide range of revenue development and operations turnaround projects. Under Ken’s direction, DMI has, in the last seventeen years, assisted over five hundred healthcare providers in developing profitable business solutions. DMI’s client list includes hundreds of hospitals such as Stanford and Scripps Medical Centers in California, Baylor Medical Center in Dallas, The Cleveland Clinic, University of Maryland Medical System, and Northwestern Medical Center in Chicago. Prior to founding DMI, Ken Mack was Vice President of Business Development for Akron General Medical Center, (Akron, Ohio), a Strategic Planner and Product Manager for General Electric and National Marketing Director for the Stouffer Corporation. He has been a frequent faculty member for the American College of Healthcare Executives, HFMA, AMA and the American Hospital Association.
His achievements and professional honors include 1990 Who’s Who in America, Editorial Advisory Board for “Healthcare Competition Weekly,” board member Academy for Health Services Marketing, AMA Keynoters on Tour, Trendwatchers Panel AMA, JC’s Outstanding Young Men in America, Omicron Delta Kappa Leadership Fraternity, Review Board of the Journal of Health Care Marketing, as well as recognition awards by American Marketing Association and Ohio Hospital Association. Ken earned an MBA in marketing from Cleveland State University and a BS in management from Bowling Green State University and is a Fellow in the American College of Healthcare Executives.
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Who is DMI Transitions?
DMI Transitions, Inc. (DMI) was founded in 1985 to assist healthcare systems and their medical staffs to maximize their individual profitability. Our clients’ success has been achieved through revenue and operations solutions that have improved the working relationships between physicians and the administrative staff.
We are a consulting firm made up of experienced practitioners who are involved in practical and profitable programs, services and joint ventures and department turnarounds. Our team has serviced over 500 healthcare clients from Bangor, Maine to La Jolla, California.
DMI is widely recognized for its excellent “hands-on” client support. Over the last sixteen years we have assisted clients in developing successful physician group practices, joint ventures, primary care networks, business development programs, and the implementation of operations improvement solutions. We have also assisted our clients in fixing a wide range of revenue related problems. These include managed care contracting, employed physicians, department performance, specialty contracting and market share declines.
Tel: 440-838-8551
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Course Expectations
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How would you rate your organization’s overall effectiveness in aligning with its physicians?
1 Excellent
2 Good
3 Fair
4 Poor
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1 Excellent
2 Good
3 Fair
4 Poor
5 No PHO
If your organization presently has or has had in the past a PHO, how would you rate its effectiveness in aligning with physicians?
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If your organization employs or has employed PCP’s, how would you rate this alignment strategy?
1 Excellent
2 Good
3 Fair
4 Poor
5 No Employed PCP’s
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1 Yes
2 No
Does your organization have joint ventures with physicians?
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1 Excellent
2 Good
3 Fair
4 Poor
If your answer was yes, how would you rate the joint venture(s)’ effectiveness?
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1 Yes
2 No
Do you believe your physicians are trying to capture a share of “your” technical revenues?
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Industry State of the Union
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National Healthcare Expenditures
0
500
1000
1500
2000
2500
3000
Bill
ions
1995 1997 1999 2001 2003* 2005* 2007* 2009* 2011*
Year* ProjectedSource: Centers for Medicare and Medicaid Services
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National Per Capita Healthcare Expenditures
0100020003000400050006000700080009000
10000
Dol
lars
1995 1997 1999 2001 2003* 2005* 2007* 2009* 2011*
Year* ProjectedSource: Centers for Medicare and Medicaid Services
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Economic
Skyrocketing supply, pharmaceutical, and personnel costs
Escalating liability premiums Rising numbers of uninsured Shrinking state and federal reimbursement Increasing contractual discounts Balanced Budget Act-97 and beyond Impact of rising healthcare costs on business
community Shift of healthcare costs to consumer
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Regulatory
HIPPA State agencies JCAHO CMS/OIG Compliance Patient safety Work hour limitations
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Social
Shortage of physicians, nurses, and allied health care professionals
Geriatric baby boomers+AARP Medicare demonstration projects Leap Frog Consumerism Focus on medical errors Evidence based medicine Internet based health care report cards
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Overall Trends
Physician
Income
Hospital
Margins
Competition
Between
Physicians
and Hospitals
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Pay For Performance
CMS Payers Employers
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“One day you are sipping the wine,the next day you are picking the grapes.”
- Lou Holtz
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Hospitals Want
Patients Medical staff to bring patients Cost control Contracting leverage Medical leadership Market differentiation
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Physicians Want
Income preservation– Indirect compensation– Access to patients– Access to ancillaries– Improvement in efficiency– Reduction in overhead
Access to capital Contracting leverage Participation in decision making Market differentiation
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The Spectrum of Physician/Hospital Relationships Employment
Institute model
Joint venture arrangement
Mutual project development including medical staff procedures and governance
Neutral medical staff participation (membership)
Competitive position
Aligned with or employed by a competing hospital
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A Wide Range of Options
Neutral medical staff participation
Competitive position
Institute model
Mutual project development including medical staff procedures and governance
Employment
Joint venture arrangement
$ R
isk
Potential ROI
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Hospital Needs
Physician specialty-specific:
Input into strategic planning
Collaborative involvement in operations
Integrated involvement in quality of care initiatives
Participation in medical education, research initiatives, and CME activities
Referral network development for third party contracting
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The Bottom Line
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You are either building bridges…
…or putting up walls
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Definitions
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Clinical Program
A coordinated, but limited scope of diagnostic and therapeutic services designed to deliver clinical care to a defined group of like patients, i.e., an endovascular program, a complex spine program, etc.
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Center
A comprehensive and expanded group of clinical services delivered at a single site and designed to provide care to a subgroup of patients within a service line, i.e., cancer center, dialysis center, etc.
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Clinical Institute
A clinical and business structure designed to integrate the efforts of a hospital with a group of variously aligned physicians in order to:
Develop market differentiating excellence of care
Increase market share through a broad scope of high quality services for patients with related clinical needs, i.e., a women’s institute, a cardiovascular institute, etc.
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Institute Model
Clinical InstituteGovernance
Physician Hospital/Members Health System
Clinical quality benchmarking and improvement Revenue generation
– Clinical trials– Gain sharing– Medical management
Membership exclusivity– Benefits of membership
Fund raising Promotional and public relations support Research Employer/Payer links
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Institute Model
Very proactive and flexible physician integration and alignment vehicle Institutes can be constructed to reflect the unique needs of the
Hospital/Health System, its physicians and the market place Components can include:
– Independent and employed physicians
– Clinical management contracts (medical directorships)
– Clinical drug trials
– Gain sharing
– Joint ventures
– Clinical protocols
– Preferred privileges including scheduling and block OR time
– Clinical benchmarking and quality improvement
– Preferred local and regional access to referrals
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Avoiding “Turf” Wars
Nationally, approximately 12,000 procedural specialists are competing for vascular patients– 2,500 Vascular Surgeons
– 4,000 Interventional Cardiologists
– 5,500 Interventional Radiologists
Technology advances in non-invasive techniques have
fueled the war, but success requires collaboration
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Peripheral Vascular Disease (PVD)
300,000 patients diagnosed each year 8-10 million affected 2-5 times more common in men Those affected have a 6 times higher death rate from
cardiovascular disease 15% chance of dying within 5 years when
symptomatic 50% chance of dying within 10 years from initial
diagnosis Disease should be treated as a systemic disease
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Vascular Market Growth
0
20000
40000
60000
80000
100000
120000
PTA/Atherectomy/ Noncoronary Vessel
1998 1999 2000 2005 (est.)
Estimated Number of Procedures
Source: 2003 The Advisory Board Company
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Growing the Pie – Skyview Health System
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Utilization Increases - 2001
Patient Volume Growth
Total Patie nt Vis its Vascular Surge rie s
Vascular Ultrasounds
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Operating and Downstream Revenue
Resulting Downstream Revenue
Vascular Center Operating Income
Downstream Inpatient Revenue
Downstream Inpatient Contribution Income
Source: 2003 The Advisory Board Company
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Physician Integration Options
IPA PHO Joint Venture Institute Employment
Hospital Risk Physician Risk Clinical Quality Improvement Payer Contracting Hospital Financial Improvement Physician Financial Improvement Market Share Physician Integration Hospital Control Physician Autonomy
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Components of a Clinical Institute
Clinical activities: – Comprehensive, coordinated clinical care– Individual professional services, programs and centers– Laboratory services– Imaging services
Business structure– Closed staff including selected physicians from any practice
setting– Flexible to include employment, joint ventures, contractual
affiliation, etc.– Many physicians may spend only a portion of their work
time providing specific clinical services under the auspices of the Institute
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Components of a Clinical Institute
Academic initiatives
– Clinical trials
– CME programs
– Subspecialty post-CME training programs e.g. new technology training
– Applied basic science research
Foundation strategy
– Philanthropy
– Grants and endowment to help pay for activities not funded by traditional professional or technical revenue
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Pros:– Benchmarks and improves quality outcomes– Provides a vehicle to develop comprehensive clinical pathways– Provides revenue opportunities for physician members
» Joint ventures» Medical management fees» Gain-sharing» Clinical trials
– Non-revenue physician benefits» Preferred scheduling» Medical equipment purchases» Office links» CME’s» Promotional and speaking options» Priority referrals
– Branding– Fund Raising– Clinical research– Non-compete qualifications– Enhanced ability to recruit physicians
Institute Model
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Cons:– Not all physicians on staff would be Institute members
– Physician “control” of Institute activities
– Long-term commitment required
– Pressure to create additional institutes
– Potential to limit capital expenditure flexibility
Institute Model
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Example: A Cardiovascular Institute
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Cardiovascular Institute
Screening
Education/ Prevention
Self Referral/
Call Center
Primary Care Physician
Emergency Department
Diagnostic Testing
and/or Sub-specialist Referral
Non-Invasive
Treatment
Invasive Treatment
HHC
PCP /Specialist
Rehab
Disease Identified
?
Continued Treatment
Yes
No
Care Management
Physician
Care Management
Physician
Benchmarking – Clinical PathwaysMeasurableClinicalOutcomes
MeasurableClinicalOutcomes
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Integrated services providing cardiology, cardiac surgery, vascular medicine, vascular surgery, and endovascular diagnostic and therapeutic cares
In addition to their traditional professional services:
– Cardiologists could be involved in leadership initiatives and strategically develop the geographic catchment area for the Institute
– Cardiac surgeons can be involved in the development of a new clinical program, i.e., off-pump bypass surgery, arrhythmia surgery, etc.
– Vascular surgeons lead academic endeavors to include development of a post-GME subspecialty training program in vascular surgery and a multi-specialty annual cardiovascular CME program
Cardiovascular Institute Features
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The vascular medicine specialists developed a multispecialty vascular interventional service (with vascular surgeons, cardiologists, and interventional radiologists) that is the primary driver of a PVD clinical trials program.
Various diagnostic/therapeutic services such as a non-invasive cardiovascular laboratory or MRA will be included in the Institute.
The Institute is collaboratively managed, subject to a single strategic planning process and marketed under the banner of the Cardiovascular Institute.
Cardiovascular Institute Features
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Responsibilities of Physician Members of Institute Development of and participation in standardized
clinical protocols
Development of and participation in utilization initiatives
Assistance with outcomes data collection and reporting
Participation in peer review activities
Contribution to patient satisfaction goals
Compliance with professional behavior standards
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Responsibilities of Physician Members of Institute Involvement in medical education and research
activities as appropriate Participation in research activities as appropriate Contribution to program development as
appropriate Participation in philanthropic efforts as needed Assistance in negotiations with vendors as
requested by management Performance of a predetermined portion of their
patient care activity within Institute facilities in order to assure ability to track quality outcomes
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1 Excellent
2 Good
3 Fair
4 Poor
How would you rate your organization’s effectiveness in improving clinical outcomes through the use of Centers of Excellence and/or service lines?
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1 Less Than 5%
2 5-10%
3 10-20%
4 More Than 20%
What percentage of your costs could be improved if your physicians and the hospital were economically aligned?
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1 Trust
2 Power
3 Money
4 Control
What is the primary reason you have not achieved optimal alignment with your physicians?
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1 Yes
2 No
Do you believe that clinically we are still in the era of “piecework medicine?”
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Physician Alignment
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Rank Specialty Revenue generated per year
1 Cardiac surgeon $3.1 million
2 Neurosurgeon $2.3 million
3 Vascular surgery $2.2 million
4 Cardiologist $1.8 million
5 Orthopedic surgeon $1.8 million
6 General surgeon $1.8 million
7 Hematologist/oncologist $1.8 million
8 Nephrologist $1.7 million
9 Obstetrician/gynecologist $1.6 million
10 General internist $1.5 million
The Physician Specialist“Customer” Value!
This list of the top 10 specialties bringing in the most revenues for acute care hospitals includes all the major specialties investing in surgery hospitals
Source: Merritt, Hawkins & Associates, based on 2002 survey of 4.000 hospital CFOs
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58DMI Transitions
Institute Concierge Club
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Privileges of Physician Institute Members Inclusion in Institute mediated third-party
contracting negotiations
Marketing
– Channeled referrals through Institute physician referral system
– Participation in patient care promotional activities
– Indirect marketing through Institute promotional activities
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Privileges of Physician Institute Members
Recruitment assistance
Access to Institute based clinical trials
Appropriate house staff coverage through teaching activities
Gainsharing
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DMI Transitions
Screening ExampleTarget Population
for High Cholesterol
Store 1 Store 2 Store 3 Store 4 Store 5 Store 6
100 Screenings
100 Screenings
100 Screenings
100 Screenings
100 Screenings
100 Screenings
600 Screenings80% learn about
sponsors55% at Risk
40% seek MD Referral57% seek MD w/in 1 mo. MD Referral Other Services
Retail or Institute Physicians’ Offices
66
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Assumptions
Number of pieces mailed Inactive 1200 Active 8800
Revenue Office Visit $175 Downstream $ w/in 12 mos $1,214 Contribution Margin & Profit 17%
Response/use rates Inactive 24% Active 5% % w/ downstream activity 55%
Mailing cost Set up $3,500.00 Per piece w/postage $1.20
Return MD Office Downstream Total Rev Margin Mail Costs ROI:1 Inactive $50,400 $192,297.60 $242,698 ######## $3,190 13 Active $77,000 $293,788 $370,788 ######## $12,310 5
$127,400 $486,086 $613,486 $104,293 $15,500 7
Financial Proforma: Physician Reminder Program/Margin based
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Operational infrastructure to support Institute programs
Access to otherwise exclusive joint ventures Appropriate reward for leadership in medical
management initiatives Participation in Institute strategic planning initiatives Differential access to hospital resources through the
Institute (e.g. scheduling, block time) Input into Institute related capital acquisition
decisions
Privileges of Physician Institute Members
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Assistance with individual physician practice development and practice management to the extent that it contributes to Institute success
Participation in Institute CME activities Participation in Institute Foundation strategy Institute sponsored physician training opportunities Access to Institute patient education materials Staff RN and technician training programs Inpatient physician extender support
Privileges of Physician Institute Members
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Preferred lease rates
Input into who are the Institute Fellows (physician members)
Provider outreach assistance
Participation in visiting clinician programs
Privileges of Physician Institute Members
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Legal Opinion Letter
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Institutes
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Example: Cole Eye Institute
Cleveland Clinic Foundation
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Cole Eye Institute
Opened in 1999, state-of-the-art institute that handles over 140,000 patient visits a year
Ranked nationally by U.S. News & World report and is ranked the best in Ohio
Provided an ideal environment for research and top quality patient care, comfort and convenience
Established a strategy to capture market share in surrounding suburbs of Cleveland, Ohio– Extended its ophthalmic care to six locations around
Northeastern Ohio
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Cole Eye Institute
Philanthropy – donations from patients and civic leaders played an essential role in its development and continuing delivery of high-quality care and research
Includes a team of vision researchers committed to understanding genetic-based eye diseases
Created to support ophthalmologists:– Treating a wide range of eye problems
– Conducting research
– Teaching
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Review of Expectations
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Institutes Benefits
Clinical synergies
Patient Care
Brand identity
Physician commitment
Market share
Preferred contracting
Long-term life cycle
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Institute Development – Hospital Role
Although a clinical Institute can be conceived as a corporate strategy, it cannot be developed top down. It is highly dependent upon physicians to develop the array of high quality clinical activities upon which it is built.
As a proactive strategy, a hospital can facilitate building of these individual physician-dependent programs and practices, but it cannot create them. The same is true of the academic endeavors.
Once the clinical and academic components are sufficiently established, the hospital may best play a lead role in definition and implementation of the business structure, development of necessary infrastructure, and provision of appropriate corporate support services.
Development of an institute will result in:
• A true business partnership between the physicians and the hospital
• Alignment and integration of the physician members
• Recognition that the Institute is a differentiating factor in the market
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Veni
Vidi
Vici