Setting the record straight: physician networking is an effective strategy.

Case studies of 11 leading integrated delivery systems (IDSs) disclose that, despite the widespread perception that integrated health care--and particularly the acquisition of physician networks--is a failed strategy, integration can be a vibrant and effective strategy if approached properly. The successful case-study IDSs have certain attributes in common: many were founded by multispecialty clinics; they involve physicians in a partnership role with administrators; and the primary purpose of their physician networks is to offer patients convenience and broader access to the system, rather than simply to increase referrals to the hospital or to compete for capitation contracts. Moreover, all of the IDSs are actively pursuing measures to improve the financial performance of their physician networks, including closing marginal clinics, improving economies of scale, adding ancillary and specialty services, seeking administrative procedures, and enhancing information technology capabilities.

The right strategy and perseverance can make an IDS profitable.

Results of a recent study of 11 leading integrated delivery systems (IDSs) belie the common perception that IDSs are incapable of turning a profit. The study determined that the primary factors driving the poor financial performance of IDSs are organizational complexity, payment reductions mandated by the Balanced Budget Act of 1997, and a general lack of foresight regarding financial problems when embarking on an integration strategy. By implementing a wide range of initiatives to stem losses and improve financial performance, several of the case-study IDSs have accomplished dramatic financial turnarounds over the past three years, and all have achieved consistently stronger financial performance.

Capital and medical groups. Key issues facing physicians and practice administrators.

More and more physician groups are considering taking a capital partner, whether a physician practice management company, a hospital or other organization. But physicians have questions about how partnership will affect their salary in the short and long run, whether it will affect practice overhead, quality of care and physician control. They also want to know what to do if the relationship doesn't work out. This article answers those questions and recommends that groups do a careful self-evaluation and scrutinize any potential partners before making a move.

Providing capital for physician group practices: new opportunities for hospitals.

As physician group practices grow and consolidate, they have an increasing interest in developing close capital partnerships to ensure access to capital. Yet as many healthcare organizations have sought to divest poorly performing acquired physician practices, physicians have seen their pool of potential capital partners shrink. Under these conditions, hospitals have a new opportunity to present themselves to physician group practices as attractive capital partners. To understand the nature of this opportunity, one needs to know why group practices seek capital, how groups approach their investment strategies, and what criteria they use to compare prospective capital partners. To build stronger relationships with physicians, hospitals should focus on turning around their poorly performing acquired physician practices and pursue strategies such as collaborating with physician practice management companies and developing new models for partnering with physicians (e.g., special purchase agreements and more advanced management services organizations).

Integrated health care: passing fad or lasting legacy?

The breakup of several integrated delivery systems (IDSs), and a continuing focus on the failures of many of these organizations to live up to expectations, suggests that integration may be a passing trend. Nonetheless, some systems, particularly those driven by multispecialty clinics, are achieving considerable marketplace success. Integrated systems that base their strategies on delivering value-added services to patients and healthcare purchasers still appear viable. Strategies typically used by IDSs include developing primary care networks, gainsharing with or owning health plans, reducing clinical variation, demonstrating high quality, cutting costs, and developing a seamless system of care. Primary care strategies are especially controversial given the fact that most hospital-affiliated primary care practices are losing money. However, research indicates that primary network development is one of the strategies that adds the most value for consumers and, thus, may be assumed to be of particular benefit to IDSs. Strategies aimed at reducing clinical variation can be expected to reap huge long-term benefits.

Physician leaders in integrated delivery.

It's common to hear the analogy comparing organizing physicians to "herding cats." Actual practice proves the adage false. Physicians are taking leadership roles in the formation of integrated systems across the country. Their input is proving invaluable. Based on case studies of integrated systems, the authors answer commonly asked questions about physician leaders, including: Should physician leaders be specilists? Should they continue to practice? and What will expensive physicians do to our administrative overhead?

Ambulatory care heads for the 21st century.

There is increasing market pressure to deliver ambulatory care in a most traditional manner, that is, with a high level of service and personal touch. The ambulatory care providers of the future will meet this demand. However, they will do so with approaches and support systems that are anything but traditional. Care is increasingly being delivered in large, integrated systems. Extraordinary service levels are being made feasible again--this time through a combination of new support systems, including total quality management task forces, patterns of care software, consolidated phone centers that can provide access from anywhere anytime, electronic data interfaces, and the Internet.

Optimizing primary care services.

One of the most recent and pervasive trends in healthcare is the restructuring of primary care. In many markets, the solo family practice physicians increasingly family practice physician is a thing of the past. Primary care physicians increasingly are aligning themselves with larger players such as multispecialty groups, hospitals, health plans, or practice management companies. This article draws on the authors' research into 20 healthcare systems in various stages of development as well as their own consulting experience to answer several questions: Why is the establishment or purchase of primary care physician practices an exploding national trend? What are the pros and cons of this approach? Is it better to purchase existing practices or establish new ones from the ground up? What are the pros and cons of virtual integration (affiliation without purchase) versus other forms of integration?