Physician Leaders Take Measures to Adapt in Uncertain Financial Times

Organizations look to boost revenue through mergers, ergonomics, technology and other endeavors.

As many health care organizations across the country encounter declining revenues, some physician leaders have been finding ways to turn the tide.

“We’re all facing the same challenge,” says Alan S. Kaplan, MD, chief executive officer at UW Health, the academic medical center for the University of Wisconsin at Madison.

To boost operating margins while enhancing patient-centered care, UW Health has entered into a joint operating agreement with UnityPoint Health-Meriter, also in Madison.

The agreement represents one of many avenues physician leaders can take in adapting to uncertain financial times. Other measures include scaling back low-volume service lines, seeking consolidation opportunities, upgrading facility design, building more robust information systems, curbing wasteful expenditures, and addressing physician-driven pharmaceutical and supply utilization.

In Madison, the joint venture is expected to save UW Health $100 million in capital costs over the next three to five years, Kaplan says. While University Hospital has reached capacity and needs additional beds to serve more patients, Meriter Hospital already has the space to accommodate them, he says.

Merging resources becomes a win-win for both entities, says Kaplan, who trained in emergency medicine.

Instead of competing for patients, “it’s complete revenue sharing and expense sharing,” he explained. “It becomes agnostic as to where patients go, which allows us to focus on the right care in the right place at the right time.”

Space is an important factor for hospitals as well as medical practices to consider. If a primary care physician feels cramped with only one exam room, the practice may suffer, says David N. Gans, MSHA, FACMPE, senior fellow of industry affairs at the Medical Group Management Association in Englewood, Colorado.

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In some practices, Gans noted, flaws in facility design such as long and narrow corridors hinder physicians from seeing patients as efficiently as possible. A proper assessment of office quarters would help determine meaningful changes. Moving to a new facility may be the best option to improve work flow.

“It takes time and effort to step back and evaluate the environment,” Gans says. “The leader needs to look at those things because the doctors are busy.”

Practices also may benefit from scheduling software packages that allow patients to arrange routine visits and follow-up appointments via self-portals, freeing up receptionists for more complex cases, he says.

Shifting from a paper-based system to one that is fully electronic also could improve efficiency over the long run, even though users are likely to experience “some bumps along the way,” says Fredric Blavin, PhD, a senior research associate at the Urban Institute, a Washington, D.C.-based think tank that conducts economic and social policy analysis.

Physician leaders can evaluate scaling back or eliminating low-line services, but it’s also important to focus on reimbursement relative to cost as a factor in deciding which services to continue offering, Blavin says. As for consolidation opportunities, becoming part of a larger system or practice can enable patients to access a broader network while potentially boosting economics of scale, he says.

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Training in sound business strategies is typically unavailable in medical school or residency. Physicians often confront wasteful expenditures on the job, as they deal with lost laboratory test results, patient misidentification and medical errors, says David Nash, MD, MBA, an internist and founding dean of the Jefferson College of Population Health in Philadelphia.

However, physicians can ramp up their knowledge in key areas through continuing education, Nash says.

“High-quality care costs less. When doctors are given an opportunity to train and understand this and then teach it to their colleagues, everybody benefits,” says Nash, whose college is among a dozen institutions nationwide to offer online master’s programs in health care quality and safety.

Physicians’ selections of supplies, diagnostics and therapeutics have a major impact on the finances at health systems and medical groups, says Kaplan, the CEO at UW Health.

“Almost everything we do is at the discretion of a physician,” Kaplan says. “To the extent that we can engage physicians in the solution is where we’re going to get to the next level of decreasing cost.”

Susan Kreimer is a freelance health care journalist based in New York.