the greeley guide to physician employment...

The Greeley Guide to

Physician Employment andContracting

William K. Cors, MD, MMM, FACPE, CMSL • Richard A. Sheff, MD, CMSL

The Greeley Guide to

Physician Employment andContracting

William K. Cors, MD, MMM, FACPE, CMSL Richard A. Sheff, MD, CMSL

The Greeley Guide to Physician Employment and Contracting is published by HCPro, Inc.

Copyright © 2010 HCPro, Inc.

All rights reserved. Printed in the United States of America. 5 4 3 2 1

ISBN: 978-1-60146-738-6

No part of this publication may be reproduced, in any form or by any means, without prior written consent of HCPro, Inc., or the Copyright Clearance Center (978/750-8400). Please notify us immediately if you have received an unauthorized copy.

HCPro, Inc., provides information resources for the healthcare industry. HCPro, Inc., is not affiliated in any way with The Joint Commission, which owns the JCAHO and Joint Com-mission trademarks.

Richard A. Sheff, MD, CMSL, AuthorWilliam K. Cors, MD, MMM, FACPE, CMSL, AuthorElizabeth Jones, Associate EditorErin Callahan, Associate PublisherMike Mirabello, Senior Graphic ArtistAmanda Donaldson, CopyeditorKarin Holmes, ProofreaderMatt Sharpe, Production SupervisorSusan Darbyshire, Art DirectorJean St. Pierre, Director of Operations

Advice given is general. Readers should consult professional counsel for specific legal, ethical, or clinical questions. Arrangements can be made for quantity discounts. For more information, contact:

HCPro, Inc.P.O. Box 1168Marblehead, MA 01945Telephone: 800/650-6787 or 781/639-1872Fax: 781/639-2982E-mail: [email protected]

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iiiThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

Figure List ..................................................................................... vii

About the Authors ........................................................................ ix

Introduction: Why Is Employing and Contracting with Physicians So Hard? ..............................................................xiii

Start by Changing Your Mind-Set ............................................................... xvi

The Power of the Pyramid ...........................................................................xix

Leadership Is the Key ..................................................................................xxi

Key Success Factor 1: Clearly Define Roles: Are You My Boss or My Partner? ................................................... 1

Finding the Middle Ground ...........................................................................3

Key Success Factor 2: Master Management Strategies: Finding the Right Balance Between Managing Tight and Managing Loose .................................................................... 11

Understand the Value of Managing Loose and Managing Tight .................. 13

Contents

iv The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

Contents

Key Success Factor 3: Balance the Scales: Which Is More Important, Individual Physician Success or Group Success? ......... 21

Which Came First, the Chicken or the Egg? .................................................23

Key Success Factor 4: Achieve Patient, Staff, and Physician Satisfaction Through an Employment Model ................ 25

Patient Satisfaction Challenges .....................................................................26

Nonphysician Staff Satisfaction Challenges .................................................. 27

Physician Satisfaction Challenges ................................................................. 28

Achieving the Patient-Physician-Hospital Partnership .................................. 32

Key Success Factor 5: Determine Who’s on the Bus and Who Isn’t ............................................................................... 43

Step 1: Recognize that Past Behavior Is the Best Predictor of Future Behavior ....................................................................................... 50

Step 2: Determine the Competencies that Your Organization Demands in a Physician Employee ............................................................................... 50

Step 3: Apply Credentialing Best Practices to the Application Process .......... 53

Step 4: Conduct Behavior-Based Interviews to Determine the Applicant’s Character, Communication Skills, and Ability to Collaborate ..................... 59

Step 5: Ensure a Good Cultural Fit .............................................................. 62

Key Success Factor 6: Set Clear Expectations: What Does It Mean to Be a Great Doctor? .................................. 67

Step 1: Articulate Your Organization’s Mission, Vision, Values, and Strategic Goals .......................................................................... 69

vThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

Contents

Step 2: Choose a Performance Framework ................................................... 71

Step 3: Articulate Expectations that Drive Performance ............................... 73

Key Success Factor 7: Establish the Right Compensation Plan .... 81

Three Steps to an Employed Physician Compensation Plan .......................... 81

Physicians Employed by Separate Subsidiary Corporations and Captive Professional Corporations ........................................................ 97

Key Success Factor 8: Make the Contract Worth More than the Paper It Is Written On ........................................ 101

Set Clear Expectations ............................................................................... 102

Assess Overarching Considerations ............................................................ 103

Define Specific Contract Terms .................................................................. 108

Key Success Factor 9: Measure Physician Performance: It’s Not What You Expect but What You Inspect that Gets Attention .................................................................... 123

Normative Data .........................................................................................125

Perception Data .......................................................................................... 130

Key Success Factor 10: Master the Art of Providing Feedback .................................................................... 135

Components of a Performance Appraisal System ........................................ 136

How to Conduct a One-On-One Performance Appraisal Interview ........... 138

What to Do During the One-On-One Interview ........................................ 140

vi The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

Contents

What to Avoid During the One-On-One Interview .................................... 141

Be a Coach ................................................................................................. 142

Key Success Factor 11: Manage Poor Performance: Do I Need to Get in Their Face on This One? ............................. 143

Step 1: Design the Intervention ................................................................... 146

Step 2: Plan and Practice the Intervention .................................................. 151

Step 3: Carry Out the Intervention ............................................................. 163

Key Success Factor 12: Know When to Mentor and When to Draw the Line: Terminating Physician Employment Agreements and Contracts ................................... 165

Put the Pyramid to Work ............................................................................ 166

Due Process Rights ..................................................................................... 169

Key Success Factor 13: Create a Vision and Achieve Buy-In ....... 171

Key Success Factor 14: Develop and Support Physician Leaders ....................................................................... 175

Select Strong Physician Leaders .................................................................. 177

Prime Potential Leaders for the Future ....................................................... 178

Develop a Leadership Curriculum .............................................................. 179

Plan for Succession ..................................................................................... 181

viiThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

Figure 1: The Power of the Pyramid .............................................................xx

Figure 5.1: The Power of the Pyramid: Appoint Excellent Physicians ...........44

Figure 5.2: SMART Decision Tree Framework ............................................. 65

Figure 5.3: SMART Decision Number Line ................................................. 66

Figure 6.1: The Power of the Pyramid: Set Expectations .............................. 68

Figure 6.2: Crosswalk Between the ACPE/Pyramid and The Joint Commission/ACGME Competency Frameworks ..........................72

Figure 6.3: Performance Expectations for Employed Physicians Using the ACGME/The Joint Commission Framework (Online only)

Figure 6.4: Service Excellence Contract ........................................................ 74

Figure 8.1: Physician Employment Agreement (Online only)

Figure 9.1: The Power of the Pyramid: Measure Performance Against Expectations ................................................................................. 124

Figure 10.1: The Power of the Pyramid: Provide Feedback ......................... 136

Figure 14.1: The Power of the Pyramid: Applying the Pyramid to Leaders ............................................................... 176

Figure 14.2: Required Curriculum for Medical Staff Leadership Certification ............................................................................. 180

Figure List

ixThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

Richard A. Sheff, MD, CMSL

Richard A. Sheff, MD, CMSL, is the chair and executive director of The Greeley

Company, a division of HCPro, Inc., in Marblehead, MA. He brings more than

25 years of healthcare management and leadership experience to his work with

physicians, hospitals, and healthcare systems across the country.

With his distinctive combination of medical, healthcare, and management acumen,

Sheff develops tailored solutions to the unique needs of physicians and hos pitals.

He consults, authors, and presents on a wide range of healthcare manage ment and

leadership issues, including governance, physician-hospital alignment, medical staff

leadership development, ED call, peer review, hospital performance improvement,

disruptive physician management, conflict resolution, physician em ployment and

contracting, healthcare systems, service line management, hospitalist program

optimization, patient safety and error reduction, credentialing, strategic planning,

regulatory compliance, and helping physicians rediscover the joy of medicine.

About the Authors

x The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

About the Authors

Prior to joining The Greeley Company, Sheff served as VPMA, president of an

independent practice association, medical director of a physician-hospital organi-

zation, president of a corporation that owned and operated physician practices,

and a group practice medical director. He has taught at Tufts University School of

Medicine and served as chair of the Massachusetts Academy of Family Practice

Research Committee.

Sheff is one of The Greeley Company’s leading national speakers and is the author

or coauthor of many HCPro/Greeley books, including:

• CorePrivilegesforPhysicians:APracticalApproachtoDevelopingand

ImplementingCriteria-BasedPrivileges, Fifth Edition (2010)

• TheTop40MedicalStaffPoliciesandProcedures, Fourth Edition (2010)

• EmergencyDepartmentOn-CallStrategies:SolutionsforPhysician-Hospital

Alignment, Second Edition (2009)

• TheGreeleyGuidetoNewMedicalStaffModels:SolutionsforChanging

Physician-HospitalRelations (2008)

Sheff is a graduate of the University of Pennsylvania School of Medicine and the

Brown University residency program in family medicine. He was an undergraduate

at Cornell University and recipient of the Keasbey Scholarship for the study of

politics and philosophy at Oxford University.

xiThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

About the Authors

William K. Cors, MD, MMM, FACPE, CMSL

William K. Cors, MD, MMM, FACPE, CMSL, is an experienced physician exec-

utive with a background that includes 15 years of clinical practice and more than

12 years of executive hospital/health system management.

Cors has extensive experience in all facets of medical staff affairs, operations, and

development. His primary area of expertise is working with physicians and hos-

pitals to implement strategic medical staff development planning. He also works

with hospitals and medical staffs to integrate new medical staff models to help

ensure both physician and hospital success.

Other areas of expertise include leading change; improving physician-hospital

relations; credentialing, privileging, and peer review; clinical resource manage -

ment; improvement of quality of care and patient safety; public accountability

prepared ness; and management of medical staff conflicts, change, and disruptive

behavior. In addition, he has broad experience in medical staff documentation

and regulatory accreditation.

Cors is a Fellow of the American College of Physician Executives (FACPE) and has

served on the ACPE board since April 2007. He is board-certified in neurology

and medical management. In addition, he has achieved recognition as a Certified

Medical Staff Leader (CMSL).

In addition to working with medical staffs, hospitals, and boards across the

country, Cors has authored numerous white papers and articles and coauthored

xii The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

About the Authors

the following HCPro/Greeley books: TheGreeleyGuidetoPhysicianEmployment

andContracting (2010), TheGreeleyGuidetoNewMedicalStaffModels:Solutions

forChangingPhysician-HospitalRelations (2008), and TheMedicalStaffLeader’s

PracticalGuide,Sixth Edition (2007).

Cors holds a bachelor’s degree from the College of the Holy Cross, an MD from

the University of Medicine and Dentistry of New Jersey, and a Master of Medical

Management (MMM) from Tulane University.

xiiiThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

RichardA.Sheff,MD,CMSL

I recently worked with a hospital that had quite the mountain to climb: The medi-

cal staff had just taken a vote of no confidence in senior management. As a con-

sultant, the first step for me was to listen to each party’s grievances to understand

what had brought them to this confrontational peak. The physicians shared with

me a long list of grievances against hospital administration that had been growing

for years. Most recently, several incidents led the employed physicians to feel that

they had been treated in a top-down, heavy-handed manner.

When I asked the senior management team about these alleged incidents, several

members replied, “The doctors are employees and shouldn’t be treated any differ-

ently than other employees.” I didn’t have to look much further to find out why this

medi cal staff had taken a vote of no confidence. Hospital management didn’t get it.

There is something about physicians that makes employing them unlike employing

most other hospital staff. If management treats physicians like all other employees,

bad things are bound to happen. Examples of how hospital management risks

treating physicians like other employees include:

Introduction: Why Is Employing and Contracting

with Physicians So Hard?

Introduction: Why Is Employing and Contracting with Physicians So Hard?

xiv The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

• Management single-handedly selects and implements an electronic medical

record (EMR) rather than involving physicians in the decision to adopt an

EMR and in the selection and implementation processes

• Management forces physicians into a particular work flow for patient care

rather than developing that work flow collaboratively with physicians

• Management dictates how physicians can use continuing medical education

(CME) funds rather than allowing physicians to choose CME activities that fit

their learning styles and schedules

In the 1990s, many hospitals began employing physicians. At the time, it seemed

like an ideal strategy to align physician and organization interests and, in some

cases, to prepare for more disciplined managed care contracts, including capitation.

The majority of those hospitals soon discovered that they were not good at employ-

ing physicians. They bought profitable physician practices and then watched in

dismay as money began flying out the window. The rule of thumb became that if an

organization lost only $50,000–$75,000 per employed physician, it was doing well.

Hospital administrators thought that employing physicians would suddenly cause

physicians to eagerly align with hospital interests. After all, wasn’t it in the

physicians’ best interests for their employers to succeed? Sadly, employment was not

the magic bullet they were looking for. As capitation failed to become the dominant

form of reimbursement that many had predicted, the tide of red ink for employed-

physician practices rose, and so did conflict between organizations and their

employed physicians. The conflict became so heated that many hospitals divested


xvThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

themselves of the practices they had paid handsomely to purchase only a few years

earlier. Most hospital administrators who lived through that experience swore

never to get back into the business of employing physicians.

Fast-forward to today, and many hospitals again find themselves drawn into em-

ploying physicians. The reasons are different this time: Many young physicians

shun private practice in favor of the steady pay and regular hours of employment,

and those who are in private practice are finding it harder to succeed thanks to

growing overhead and decreased reimbursement.

Regardless of the reasons for this shift, anyone with enough gray hair to remember

the experience of employing physicians in the 1990s knows that hospitals must do

it differently this time. They’ve learned to anticipate that physicians who were hard

drivers in private practice are at risk of slacking off once they become employees

if they aren’t offered the right incentives. They’ve become reasonably adept at

designing incentive compensation plans for physicians based on an “eat what

you kill” formula that holds physicians accountable for productivity.

If organizations are getting better at financially managing employed physician

practices (although not all are), then why does the field need another book on

physician employment and contracting? The answer is that making the numbers

work is only the beginning of sustained success with employing physicians. This

book is designed to help leaders responsible for managing physician practices go

beyond simply designing incentive compensation formulas. This book is designed to

help them truly understand what makes employing physicians different and how to

craft creative and more effective approaches to physician employment.


xvi The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

Contracting with physicians isn’t much easier than employing them, at least if you

want the contracts and the relationships they memorialize to drive physician success,

organization success, and high-quality patient care. Paradoxically, the most common

reason organizations’ contracts with physicians are ineffective is the exact opposite

of why employing physicians is so difficult. Employing physicians is difficult be-

cause most organizations fail to treat physicians differently than other employees.

Contracting with physicians is difficult because most organizations fail to treat

physicians the same way they treat other contracted entities or individuals. Standard

business contracts clearly delineate:

• The duties of each party involved in the contract

• A means of determining to what extent the duties are fulfilled

• The consequences when these duties aren’t fulfilled

Most physician contracts typically include few, if any, well-designed performance

expectations beyond rudimentary requirements, such as showing up to work and

documenting time on the job. They also include weak (or nonexistent) mechanisms

for holding contracted physicians accountable for meeting performance expectations.

Start by Changing Your Mind-Set

This book is based on the key success factors that the authors have found to be

most effective for employing and contracting with physicians. The first four success

factors are based on a common insight: Some of the challenges that arise when


xviiThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

employing and contracting with physicians are solvable problems, and some are

inherently unsolvable.

Examples of solvable problems include whether to hire a particular physician,

which EMR to purchase for your employed physician practices, and whether to fire

the office manager of a practice that is doing poorly. Each of these problems has an

answer that is either right or wrong.

But what if the problem you face is inherently unsolvable? Examples of unsolvable

problems related to employing and contracting with physicians are:

• Should the organization’s management approach to employing physicians come

from the top down, or should it enable the organization to empower or partner

with employed physicians?

• How detailed should performance expectations be?

• How strictly should the organization hold its contracted physicians accountable

for meeting performance expectations?

• Should the organization expect employed physicians to automatically support

its interests or to focus on their own interests?

At either end of each challenge are two options, which may be referred to as poles.

These poles have a continuum running between them. Let’s take the first challenge

mentioned above: Should management’s approach to employing physicians come

from the top down, or should it enable the organization to empower or partner


xviii The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

with employed physicians? There is value in each of the poles, but focusing too

much on one to the neglect of the other will undermine your success when it comes

to employing or contracting with physicians. When an unsolvable problem involves

two poles, it is sometimes referred to as a polarity. When it involves three or more

poles (such as physician success, group success, and good patient care), it is referred

to as a multarity. Polarity ManagementTM has developed an approach to help us

better identify and manage such unsolvable problems. Barry Johnson, PhD, the

initial developer of Polarity Management, says that many of our most important

and difficult chal lenges are inherently unsolvable and that an unsolvable problem is

also inde struc tible. Whether your organization manages a polarity well or poorly, it

will still be around the next day to be managed. You can never get away from it.

Recog nizing that the solution to these types of problems requires organizations to

strike a dynamic, ever-moving balance between the two poles will make your

organization more effective at employing and contracting with physicians.

Albert Einstein once said, “No problem can be solved from the same level of

consciousness that created it.” Rather, you have to take a step back and view the

situation from a different perspective. To help you see employing and contracting in

a new way, the first four chapters will focus on key success factors that address the

unsolvable problems that lie at the core of why organizations flounder when

employing or contracting with physicians. The following are the four keys to

success that each organization must master:

1. Clearly define roles: Are you my boss or my partner?

2. Master management strategies: Finding the right balance between managing

tight and managing loose


xixThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

3. Balance the scales: Which is more important, individual physician success or

group success?

4. Achieve patient, staff, and physician satisfaction through an employment model

The Power of the Pyramid

All companies and organizations want to draw the best performance out of in di-

viduals they employ or contract with. Once you’ve understood and implemented

the first four key success factors, employing and contracting with physicians

becomes a mere hill rather than a mountain. The Greeley Company, a division of

HCPro, Inc., in Marblehead, MA, has found that the Pyramid approach is the most

effective way to apply HR best practices to physician employment and contracting.

This approach, pioneered by the late Howard Kirz, MD, MBA, FACPE, former

medical director for Group Health Cooperative of Puget Sound,1 is applicable to

volunteer medical staffs, employed physicians, and physician partnerships. As you

can see from Figure 1, the Pyramid consists of layers, with each layer representing

an HR best practice.


xx The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

Each layer is a step that organizations that employ or contract with physicians

should take to optimize physician performance. Each layer is composed of a

collection of best practices for carrying out that step. This model is designed as a

pyramid because the more time you spend on the base layers, the less time you will

have to spend on the upper layers. This will make sense as we build the Pyramid

layer by layer throughout the rest of the book by exploring the additional key

success factors:

1FIGURE The Power of the Pyramid

Appoint excellent physicians

Set, communicate, and achievebuy-in to expectations

Contract toreinforce expectations

Measure performanceagainst expectations

Provide periodic feedback

Manage poor performanceTake corrective action

Source: © The Greeley Company, a division of HCPro, Inc., in Marblehead, MA.


xxiThe Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

5. Determine who is on the bus and who isn’t

6. Set clear expectations: What does it mean to be a great doctor?

7. Establish the right compensation plan

8. Make the contract worth more than the paper it is written on

9. Measure physician performance: It’s not what you expect but what you

inspect that gets attention

10. Master the art of providing feedback

11. Manage poor performance: Do I need to get in their face on this one?

12. Know when to mentor and when to draw the line: Terminating physician

employment agreements and contracts

Leadership Is the Key

All the key success factors already identified are better implemented in settings in

which physician leadership is effective and more difficult in settings in which

physician leadership is weak. That’s why the final two success factors focus on

leadership. The first is articulating and achieving buy-in to a vision of what the

organization and physicians are trying to accomplish together for healthcare in

your community. Making that vision a reality only comes with a struggle. That’s

why we’ve entitled this key to success:


xxii The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

13. Create a vision and achieve buy-in

The final key success factor is investing in physician leadership development and

succession planning. We’ve entitled this key to success:

14. Develop and support physician leaders

Organizations that implement all these key success factors will outperform those

that do not when it comes to employing and contracting with physicians. Let’s now

tackle each of the key success factors one at a time.

Reference

1. We were first introduced to a version of this Pyramid approach by Howard Kirz through the course he taught for the American College of Physician Executives entitled “Managing Physi-cian Performance in Organizations.” We’ve made some modifications to the model, but the fundamental principles are the same as those initially developed by Kirz.

1The Greeley Guide to Physician Employment and Contracting © 2010 HCPro, Inc.

When it comes to employing physicians, organization and administrative leaders

must understand that being a physician’s boss does not automatically grant them

authority to tell that physician what to do. Try this some time and see how quickly

your employed physicians dig in their heels.

Clearly Define Roles: Are You My Boss or My Partner?1

key success factor

ED call conundrum

The private practice general surgeons at Hospital X were unsatisfied with the organi

zation’s emergency department (ED) call schedule. The surgeons made it clear that

they would not mind if the hospital hired new surgeons, as long as those surgeons took

the bulk of the ED call. This would have worked fine if the new surgeons were willing

to cover one night out of three. Unfortunately, the hospital couldn’t find any general

surgeons willing to take a job that required them to take call one night out of three—or

even four or five. Eventually, in an attempt to attract general surgery candidates, Hos

pital X re arranged its ED call schedule so that newcomers would only have to cover

one night in seven. As a result, it was able to hire several new general surgeons. Thus,

although the hospital was able to hire several new employed physicians, the employed

physicians were the ones to set the bar on ED call.

S A M P l e S C e n A R i o

Key Success Factor 1

2 The Greeley Guide to Physician Employment and Contracting© 2010 HCPro, Inc.

Organizations that employ or contract with hospitalists face similar challenges to

the one presented above. The organization starts by either establishing an exclusive

contract with a hospitalist group or directly employing hospitalists. Over time, the

hospitalists develop favorites among the consultants on the medical staff. These

favorites may offer more timely responses, a stronger collegial relationship, or pro

vide higherquality care. As the program grows (and they almost always do), the

hospitalists direct more referrals to their few favorite consultants. Physicians who

aren’t in the group of hospitalist favorites may perceive that the organization is

behind the drop in referrals and eventually confront the CEO, demanding that he

or she require the hospitalists to distribute referrals to specialists on a rotating

basis. Surprised and appropriately concerned, the CEO meets with the hospitalist

program medical director with what he or she feels is a reasonable and politically

sensitive request that the hospitalists distribute their referrals more evenly among

ED call conundrum (cont.)

The fallout from this situation was predictable. The private practice surgeons com

plained bitterly that they had trouble maintaining their incomes because hospital

management had recruited so many surgeons that it diluted the pool of available

patients. In addition, these wellestablished physicians witnessed the hospital sub

sidizing the income of all the newly hired surgeons at a level they could no longer

achieve, and they became resentful. What began as Hospital X’s effort to alleviate the

independent surgeon’s ED call burden ended with the surgeons feeling betrayed.


Clearly Define Roles: Are You My Boss or My Partner?


the specialists. The medical director may respond by accusing the CEO of telling

hospitalists how to practice and refusing to cooperate.

The above example regarding ED call demonstrates that what the organization

thinks it can expect from employed physicians must be tempered by the competi

tiveness of the market. The second example regarding hospitalists demonstrates

how strongly physicians feel about the organization’s attempts to infringe on the

clinical decisions they make during the course of practicing medicine.

Finding the Middle Ground

What is an organization’s leader to do in the face of these challenges? As mentioned

in the introduction to this book, the key is to frame such challenges as unsolvable

problems, with each problem consisting of two or more poles. In terms of physician

employment, on one end of the spectrum is the economic and legal reality that the

organization, by virtue of employing a physician, is technically the physician’s boss

and therefore has the right to expect him or her to comply with organizational

policies, adhere to ethical billing practices, submit requests for vacation time in ad

vance, and take ED call one night out of three. These are standard account abilities

one would expect to see in any relationship between an employer and employee.

There is a value to this hierarchical relationship. It allows the organization to

manage the practice to achieve specific strategic goals, including highquality pa

tient care, financial strength, regulatory compliance, and patient satisfaction.

However, as with any polarity, focusing too much on the hierarchy pole and



attempting to micromanage what physicians do may cause physicians to feel

controlled and dig in their heels, causing nothing but drama for administration.

On the other end of the spectrum is partnership, whereby the relationship between

the organization and the physician is one of equality. At this end of the spectrum,

physicians expect to remain autonomous regarding patient care decisions (more

on this in Key Success Factor 2) and the ED call schedule. When the organization’s

management and physicians engage in a true partnership, management treats physi

cians as equals in regard to decisions involving staffing, scheduling, and equipment.

But this end of the spectrum is no utopia. If administration does not set the dir

ection of the organization and establish strategic goals, physicians may make deci

sions that drive up practice costs, create excessive burdens on nonphysician staff

members, and reduce patients’ access to care. They may also refuse to provide ED

call unless the organization compensates them handsomely.

Organizations that fail to establish a balance between hierarchy and partnership

may inflame conflicts between management and employed physicians and lead the

medical staff to take a vote of no confidence in management, as illustrated in the

introduction. Why? Because management may become frustrated if the organiza

tion’s employedphysician practices lose money, if employed physicians fail to

support the organization’s strategic goals, or if it feels that employed physicians’

decisions are disloyal to the organization. Physicians may perceive that management

is insensitive at best and invasive and controlling at worst. They may dig in their

heels, feeling that they are fighting to maintain their autonomy.



The problem is that when a physician and an organization are arguing over whether

the CEO is the physician’s boss with the authority to control the physician’s practice,

each party only sees its own side of the argument. Physicians may feel a range of

emotions including resentment, anger, and fear if they perceive that the organiza

tion is trying to take away the autonomy they believe is rightfully theirs by virtue of

being physicians. They believe this autonomy should not be sacrificed just because

they receive a paycheck from the organization. At the same time, organizational

leaders expect loyalty and compliance from employed physicians every bit as much

as they do from other employees and may feel angry if it is not forthcoming.

If you find yourself in this kind of tugofwar, the best practice approach is to

reframe the issue at hand as one that needs an appropriate balance between

hierarchy and partnership. In his book The Dynamics of Conflict Resolution,1

Bernard Mayer explains reframing in the following way:

Framing refers to the way a conflict is described or a proposal is worded;

reframing is the process of changing the way a thought is presented so that it

maintains its fundamental meaning but is more likely to support resolution

efforts. … The art of reframing is to maintain the conflict in all its richness but

to help people look at it in a more open-minded and hopeful way.1

By reframing the specific conflict as the challenge of striking the right balance

between hierarchy and partnership, both sides are more able to find common

ground (see the sample scenario at the end of this chapter to learn more about

reframing). If management clearly communicates to physicians that they are valued



partners and treats them as equals rather than subordinates, physicians are more

likely to accept the conditions, limitations, and topdown guidance inherent in any

employeremployee relationship.

The hierarchy/partner framework is also helpful when contracting with physicians

and/or physician groups. As noted in the introduction, contracted physicians are

often not treated like others with whom the organization contracts, such as ven

dors. For example, many organizations draft contracts with physician groups that

simply provide exclusivity to the group and fail to address performance expecta

tions (performance expectations will be addressed in Key Success Factor 6).

For the purposes of this chapter, it is enough to recognize that one of the best

practices when contracting with, for example, an anesthesia group is to seek a

partnership between the organization and the group that drives the success of both

the operating room and labor and delivery. The terms of the contract should be

designed to reflect the giveandtake of this partnership. (We will address important

elements of contracting with employed and contracted physicians in Key Success

Factor 7.)



Reframing a classic debate between hospitals and group practices

Hospital X employed six physicians in a family medicine group practice. The manager

of the practice was under pressure from senior hospital management because the

practice was losing money at the rate of $60,000 per year per physician. Some patient

surveys suggested that the group was losing market share because it did not offer

evening hours. In an attempt to grow market share and improve the practice’s financial

perfor mance, the manager asked the physicians to provide evening office hours. The

physi cians refused because they wanted to spend their evenings with their families.

Hospital management grew angry and impatient and reminded the physicians that the

hospital subsidized the group $360,000 more income per year than the practice would

have generated on its own, and that the least they could do to be loyal to the hospital

was provide evening office hours. The word “loyalty” created even greater animosity

among the physicians, who felt that their primary loyalties were to their patients, their

families, and their profession. Loyalty to the hospital was not on their radar screen.

Tension grew between the physicians and hospital management until the medical

director of the employed physician group offered to have a private meeting with just

the physicians.

During that meeting, the medical director reframed the issue. Rather than seeing it as

the hospital’s effort to control the physicians, he asked what it would take for the

physicians to partner with the hospital to provide the evening office hours. As they

discussed the issue, one of the physicians pointed out that a fulltime office schedule

was nine halfday sessions per week. If one day per week each physician worked a

morning, afternoon, and evening session, they could all fulfill their nine halfday session

and have a full day off each week. This suggestion appealed to the physicians’ interest

in having more time with their families.




Reframing a classic debate between hospitals and group practices (cont.)

They then tackled the issue of the call schedule. If Dr. Jones works the morning, afternoon,

and evening shifts on the same day he is on call, the office staff could offer patients who

called during the afternoon and evening urgent care slots the same day, reducing the

number of phone calls the physician on call had to handle while simultaneously improving

patient satisfaction. As the plan took shape, the physicians became excited about getting

a full day off each week and didn’t mind providing one evening a week in the office to

make that possible. To them, it seemed like a fair trade.

The medical director presented the physicians’ proposed arrangement to hospital

management. At first, several senior hospital managers felt that it might be unfair to

offer a fulltime employee a salary equivalent to what independent physicians earn

given how much time off the new schedule provided them. Hospital management

worried that private practicing physicians on the medical staff and other hospital

employees would think that the hospital was pampering the family physicians and not

holding them to the same standards as the rest of the physicians in the community who

worked longer hours.

Although there was some truth to these concerns, in the end, the hospital realized that

the physicians had shifted their approach from adversaries with their boss to partners in

joint problem solving. The benefits of the proposed solution had enough winwin

elements to overcome management’s concerns.

After the organization implemented the new schedule, patient volume grew, the loss

of revenue per physician shrank (although not to zero), and physician satisfaction im

proved. In fact, the onedayoffperweek arrangement became an attractive schedule

that helped the practice recruit three additional physicians. With the extra physicians,




Reference

1. Bernard Mayer, The Dynamics of Conflict Resolution: A Practitioner’s Guide (San Francisco: JosseyBass, Inc., Publishers, 2000).

Reframing a classic debate between hospitals and group practices (cont.)

it opened a satellite office in a community on the edge of the hospital’s traditional service

area, helping the hospital expand its primary market. The key to all these achieve ments

was the group’s and hospital’s ability to reframe the problem in a way that allowed them

to achieve a balance between the hierarchical employment rela tionship and the partner

relationship. Most of the physicians never became model loyal employees, but they found

that being treated as partners helped them accept the necessary hierarchical aspects of

having a boss.


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