Medical Staff

CEO Perspectives & the Future of Doctor-Hospital Relations

Medical Staff Affairs Monthly, December 28, 2005

Dear Colleague,

I hope the end of the year finds you in good spirits, good health, and energized for the new year ahead! One voice we will not have to guide us in 2006 is that of Peter Drucker, who passed away this November at the age of 95. His voluminous writings on management have shaped our tactics in healthcare as well as those in many other industries. The Wall Street Journal noted in his obituary that it was the special perspective of Drucker that "innovation, constant change, and turmoil were the true constants of a progressing economy." Of course, we have all three in spades in healthcare.

As I reflect at year end on the state of our hospital medical staffs, there is little doubt that in many institutions they are undergoing significant turmoil. The historic medical staff community is fracturing as the locus of care increasingly moves out of the hospital, financially pressured physicians demand money for activities that were traditionally treated as community service (ED or clinic call), participation in medical staff meetings falls and leaders become scarce, competition between physicians and hospitals escalates, negligence suits against medical staffs and hospitals grow, and physicians push back on a regulatory onslaught ranging from JCAHO standards to CMS core measures.

There is no question that as we move into 2006 "innovation" and "constant change" will have to characterize the morphing relationship between hospitals and physicians. In this regard, a biennial survey of hospital CEOs has some interesting findings for those trying to predict the topography of this unfolding landscape.

The survey performed by the consulting firm Deloitte, The Future of Health Care: An Outlook from the Perspective of Hospital CEOs, found that 29% of CEOs believe their hospital could fail financially in the next five years. Most believe that financial success will hinge much more on creating additional revenue than on utilization and cost control. The study also revealed the product lines that CEOs see as profitable: radiology services, laboratory work, ambulatory surgery, outpatient treatment, orthopedics, cardiac care, and rehabilitation medicine. These areas then are likely to be the friction points between doctors and hospitals as players maneuver for economic advantage in a highly competitive environment.

Today I find many hospital boards considering the imposition of 'conflict of interest policies' that apply to members of the medical staff. Most of these policies are focused on stopping physician investment in competing niche hospitals. Specialty hospitals pose a unique threat to most community hospitals and the latter are becoming more preemptive in efforts to keep physicians from investing in these potentially lucrative ventures.

Boards that value ongoing, strong relationships with physicians will have to make sure these policies aren't wielded too broadly to disadvantage more traditional physician ambulatory practices. Boards may be tempted to do so because in the Deloitte survey, 85% of CEOs believe that technology will continue to shift care to outpatient settings. We should certainly expect hospital strategic plans to emphasize tactics which will gain increasing market share and revenues in the outpatient arena. However, hospitals should be cautious that they don't unnecessarily win the enmity of physicians in the process.

Most CEOs surveyed by Deloitte acknowledged that they will have little ability to invest in approaches to quality improvement that don't yield a direct financial benefit. This reality reveals one truly valuable benefit the organized medical staff can bring to a hospital. Significant improvement in the quality of hospital care can be achieved if physicians will do a better job of collaborating and integrating care more seamlessly. A robust medical staff performance improvement program can assure that more and more doctors practice the evidence based medicine that we know makes a difference for patients.

Perhaps the most notable find in the survey is the fact that while most CEOs readily acknowledge the importance of good physician relations to their hospital's future, few had any new or creative ideas for strengthening their bond with doctors. The typical approaches were to put doctors on the board of directors, offer computer linkages with hospital information systems, offer medical directorships, and invite doctors to retreats and educational sessions.

The lack of a vigorous game plan for physician relations continues to be a significant weakness of most hospitals. However, as I travel across the country speaking on building strong hospital-physician alliances I am encouraged by the keen interest that hospital board members and senior managers have in the subject. This is an area ripe for the "innovation" and "constant change" which Drucker believed was so essential to progress.

Perhaps as we assemble our New Year resolutions for 2006, we should all consider redoubling our efforts at strengthening the weakening bonds between doctors and hospitals. The future of quality healthcare may be at stake.

Warmest wishes for a wonderful New Year!

Todd Sagin, MD, JD
National Medical Director
The Greeley Company

The survey referenced above can be accessed by clicking here.

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