Maria Shepherd, Data Decision Group11.13.13
Ten years ago, it would have been difficult to imagine the changes occurring between physician practice and hospital operations in the United States. In the 20th century, with rare exception, U.S. hospitals and physicians operated as separate organizations with distinctly different and sometimes conflicting strategies. While both parties worked in partnership with a focus on the patient, the partnership was disconnected and rarely considered the needs of the other party.
Why It’s Important: The Business Model is Changing & So Must We
What are the factors driving collaborative models to align hospitals and physicians?
Consolidation No Longer is a Trend: The New Status Quo
There have been so many changes—hospitals consolidating into networks, physician practices purchased by hospitals or insurance plans and device and pharmaceutical manufacturer fusing operations and sales forces to align with the new status quo. According to a report issued by Neptune Beach, Fla.-based MedAxiom, a service provider and information resource for cardiology practices, cardiologists are a critical component of the new status quo, and have led the way.2
How are Physicians Paid, and How Much?
The challenges in physician employment by hospitals do not end once the physician becomes an employee. According to MedAxiom, the majority of compensation plans use a compensation pool, instead of individually negotiated physician compensation plans.4 Funding the physician compensation pool is highly negotiated, and there are obligations that each individual physician meet fair market value. Physician groups with significant productivity variances sometimes can have difficulty meeting the requirements of fair market value, which is a challenge for all the parties when the formula splits the compensation pool equally.
Will This Result in Lower Cost for the Healthcare System?
Yes. Now that a majority of cardiologists are hospital employees, and still are being compensated at the rates they enjoyed before integration into the hospital, the shift from separate organizations with distinctly different and sometimes conflicting strategies to colleagues working (we hope) toward the same goals, can result in cost being driven out of the system. New best practices are emerging in the integrated environment as we pursue a better model for sustaining the U.S. healthcare system with greater collaboration between hospital and physicians.
How is your company planning to assist the healthcare system in improving efficiencies and lower costs? What systems can medical device specialties improve to meet the needs of this evolving collaboration between physicians and the hospital? There is profit in providing improved financial outcomes in healthcare. How will you identify those opportunities?
References:
Editor’s note: Readers are invited to submit market data and trend questions to Maria Shepherd. Periodically, selected questions will be presented in this column, with answers from Maria. Send your questions to mshepherd@ddecisiongroup.com.
Maria Shepherd has 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career—including her role as vice president of marketing for Oridion Medical, where she helped boost the company valuation prior to its acquisition by Covidien; director of marketing for Philips Medical; and senior management roles at Boston Scientific Inc.—she founded Data Decision Group. Data Decision Group (www.ddecisiongroup.com) provides whitespace research and critical data to support medical device product development. The firm performs market research, evaluates new technologies and provides marketing services and human factors usability testing. Shepherd has taught marketing and product development courses and recently was appointed to the board of the MSBiV Medtech Investment Committee. She can be reached at (617) 548-9892 or at mshepherd@ddecisiongroup.com.
Why It’s Important: The Business Model is Changing & So Must We
What are the factors driving collaborative models to align hospitals and physicians?
- Economic pressure on physician practices caused by reimbursement reductions.
- Recognition from politicians and leadership that the current healthcare modes (17.9 percent of U.S. gross domestic product) are unsustainable and that the root cause was the disjointed healthcare industry structure and the fee-for-service payment model.1
- The Patient Protection and Affordable Care Act, also commonly called “healthcare reform” or “Obamacare.”
Consolidation No Longer is a Trend: The New Status Quo
There have been so many changes—hospitals consolidating into networks, physician practices purchased by hospitals or insurance plans and device and pharmaceutical manufacturer fusing operations and sales forces to align with the new status quo. According to a report issued by Neptune Beach, Fla.-based MedAxiom, a service provider and information resource for cardiology practices, cardiologists are a critical component of the new status quo, and have led the way.2
How are Physicians Paid, and How Much?
The challenges in physician employment by hospitals do not end once the physician becomes an employee. According to MedAxiom, the majority of compensation plans use a compensation pool, instead of individually negotiated physician compensation plans.4 Funding the physician compensation pool is highly negotiated, and there are obligations that each individual physician meet fair market value. Physician groups with significant productivity variances sometimes can have difficulty meeting the requirements of fair market value, which is a challenge for all the parties when the formula splits the compensation pool equally.
Will This Result in Lower Cost for the Healthcare System?
Yes. Now that a majority of cardiologists are hospital employees, and still are being compensated at the rates they enjoyed before integration into the hospital, the shift from separate organizations with distinctly different and sometimes conflicting strategies to colleagues working (we hope) toward the same goals, can result in cost being driven out of the system. New best practices are emerging in the integrated environment as we pursue a better model for sustaining the U.S. healthcare system with greater collaboration between hospital and physicians.
How is your company planning to assist the healthcare system in improving efficiencies and lower costs? What systems can medical device specialties improve to meet the needs of this evolving collaboration between physicians and the hospital? There is profit in providing improved financial outcomes in healthcare. How will you identify those opportunities?
References:
- http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS
- MedAxiom 2013 Annual Hospital Integration Report
- Ibid
- Ibid
- www.medscape.com/features/slideshow/compensation/2013/cardiology
- MedAxiom 2013 Annual Hospital Integration Report
Editor’s note: Readers are invited to submit market data and trend questions to Maria Shepherd. Periodically, selected questions will be presented in this column, with answers from Maria. Send your questions to mshepherd@ddecisiongroup.com.
Maria Shepherd has 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career—including her role as vice president of marketing for Oridion Medical, where she helped boost the company valuation prior to its acquisition by Covidien; director of marketing for Philips Medical; and senior management roles at Boston Scientific Inc.—she founded Data Decision Group. Data Decision Group (www.ddecisiongroup.com) provides whitespace research and critical data to support medical device product development. The firm performs market research, evaluates new technologies and provides marketing services and human factors usability testing. Shepherd has taught marketing and product development courses and recently was appointed to the board of the MSBiV Medtech Investment Committee. She can be reached at (617) 548-9892 or at mshepherd@ddecisiongroup.com.