Thought leadership

Boards Support Provider Engagement

Boards Support Provider Engagement

Effective board leaders now realize that demands for improved outcomes, more convenient access to care, and greater cost efficiency will be impossible to meet without the active participation of physicians and the appropriate alignment of their recognition and reward incentives across the system. Alignment is optimized when physician engagement is supported to flourish from the intersection of these three factors:

  • Physician Engagement
  • Physician Leadership
  • Physician Compensation


Physician Alignment Demands Physician Engagement

The Triple Aim of improved quality and patient satisfaction, improved population health and reduced costs requires a team approach, a new way of looking at relationships in health care. It requires a concerted effort that involves administrators, clinicians, communities and patients. A key ingredient for the success of these efforts is physician engagement.[1]

But engagement will vary by type of physician. An Advisory Board study of physician engagement defines seven key strategies for success, with variations between Millennials and older physicians. Millennial physicians, more so than their older colleagues, value their organization’s responsiveness to input and feedback, economic support for their individual practice, and organizational support for work-life balance. By contrast, non-Millennial providers value autonomy more than their Millennial peers. [2]

A landmark study by the Health Financial Management Association (HFMA) provides several insights into the strategies for successful physician engagement and alignment.[3] Their probes of case studies concluded that several common themes shape the new care management models:

  • The need to ensure that a managed population has access to a full range of services
  • The need to better understand specific population segments and their care requirements, and then bundle services or implement new services to make meeting those requirements more convenient
  • The need to alleviate pressures on primary care physicians by deploying care teams and technologies that can free up time to care for patients most in need of the physician’s attention.

Addressing these three themes has been found to require five key strategies:

  1. Determining the best alignment models for physician practices in the market. For hospitals and health systems, the trend is clearly toward employment of physicians; but this is not always appropriate for, or desired by, every specialty. To achieve scale, large independent medical groups may rely on Clinically Integrated Networks (CINs) and ACOs to secure alignment and collaboration among hospitals and health systems, independent medical groups and physician practices, and other provider organizations.
  2. Building a sufficient primary care base to support specialty services. The proper balance between primary care and specialty services is a moving target, especially as new population management techniques intended to reduce utilization of specialty and acute care services take hold. A solid primary care base will help to ensure adequate referrals to specialists today while laying the foundation for tomorrow’s population health management.
  3. Communicating the need for flexibility and change in physician compensation agreements. As public and private payers introduce new payment models designed to reward improved quality and cost efficiency, physician compensation agreements will need to change accordingly. Many organizations have begun to experiment with new compensation models, but everyone should understand that these new models are a work in progress and will continue to evolve. Communication is essential here, as is collaboration with physicians on the development of new models and metrics.
  4. Developing physician leadership and governance structures. Change in physician culture and practice patterns requires trusted and strong physician leadership. Boards will need to ensure that physicians have meaningful forums in which to share their ideas and concerns with both clinical and administrative leadership and that mechanisms are in place to identify, cultivate, and promote physician leaders within the organization.
  5. Ensuring that the contributions of physicians are accurately valued and described. Looking at the system as a whole, boards must find an acceptable level of expense to generate sufficient revenues (or, increasingly, avoid negative financial risk) to maintain the system’s financial health. What other services do physicians provide to the organization to enhance reputation that generates better payer contracts, enhanced philanthropy, stronger employee pride, and improved HCAHP scores?

Board members can also find value in exploring 67 characteristics of high performing physician networks by Hill and Ullum.[4]

As health systems expand their investments in the development of these aligned physician networks, new network governance issues will also need to be mastered by the system board and its various medical staff leadership and governance structures and processes. A recent study by the American Hospital Association highlights three key actions for success in these physician governance challenges:[5]

  1. Wrap all network governance in strategies and stories that focus on doing what’s best for patients and communities.   
  2. The evolution of physician organizations indicates a need to adapt creative new governance model designs and good practices from those considered most appropriate for today’s hospitals and health systems.
  3. Education, tools and other resources should be developed for physicians and physician organizations to close governance gaps and support their capability to lead change in health care.


Physician Leadership Encourages and Enables Engagement

As physicians continue to assume leadership roles and serve as drivers of the future health care enterprise, they will need to think long term; understand and be able to see the larger issues; promote collaboration; cultivate a team-based environment; and possess excellent communication and listening skills. On the journey from practice to leadership, physician leaders often receive little formal training in these skills. As the field continues to embrace leadership development of physicians, education on nonclinical areas such as visioning, managing people and finances, and population health management must and are being implemented at all levels of learning.[6] Our recent study of 10 physician leadership academies outline key competencies and design features for successful physician leadership development programming across the US.[7]

Physician leaders will need to be supported to cultivate the sixty-seven characteristics of strong physician networks have been described by Hill and Ullum.


Physician Compensation Enhances Engagement:

Compensation plans for physicians will shift to better align incentives with value-based care that will reward a combination of physician production, resource management, and health outcomes.  Aligning payments to hospital employees (e.g., physicians) in the same manner by which the hospital is being reimbursed is key in ensuring the long-term financial viability of the organization.[8] 

Managing this transition, however, to new compensation models, and anticipating their impact on physician behavior, is a challenge increasingly faced by integrated health systems.  It is a challenge because many physicians are presented with mixed messages about the need to: manage the care of patients; improve quality outcomes; control costs; have open access but avoid unnecessary use of clinics or hospitals; and still to be productive and generate fee-for-service income. This tension creates frustrations for physicians and their hospital partners.

While productivity will remain a component of most physician compensation plans for the near future, other components will feed attention to engagement, such as clinical quality, patient satisfaction, efficiency outcomes, adherence to best practices and proven clinical protocols, utilization of the electronic health record, and health system collaboration and citizenship. It will be imperative that organizations analyze and understand a new balance of engagement and alignment incentive pay with productivity (e.g., work RVUs) factors must be built into their compensation models.


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William F. Jessee

William F. Jessee, MD, FACMPE joined Integrated Healthcare Strategies, now a part of the Gallagher Human Resources & Compensation Consulting practice in October, 2011, after serving for more than 12 years as President and Chief Executive Officer of the Medical Group Management Association (MGMA). He also holds an academic appointment as Clinical Professor of Health Systems Management and Policy at the University of Colorado School of Public Health.

Dr. Jessee is one of the nation’s leading ...

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James A. Rice

Jim Rice, PhD, FACHE is the Managing Director & Practice Leader with the Governance & Leadership service line of Gallagher’s Human Resources & Compensation Consulting practice. He focuses his consulting work on strategic governance structures and systems for high performing, tax-exempt nonprofit, credit union and health sector organizations and integrated care systems; visioning for large and small not-for-profit organizations; and leadership development for Boards and C-Suite Senior Leaders. 

Dr. Rice holds masters and doctoral degrees in ...

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