Medical Group Strategy: Roadmap to Improve Performance

The added pressures for medical groups, coupled with the limited resources and high demands, require an intentional, strategic roadmap to success. On this episode of Value-Based Care Insights, we sit down with Jeff Peters to discuss the evolving healthcare landscape and what medical groups should be thinking about to position themselves for the future. Gain valuable insights into innovative strategies for aligning with providers, improving financial performance, and fostering a healthy, physician-driven culture.

KEY TAKEAWAYS: 

• Medical groups must creatively address access challenges since the demand for physicians significantly outpaces the supply.
• Striving to be a high-performing provider network while balancing primary care expansion with specialized care development with a strong focus on patient satisfaction is a critical strategy.
• A robust, healthy organizational culture, where physicians and staff feel valued and appreciated, drives success.

LISTEN TO THE EPISODE:

 

 Transcript:

Daniel J. Marino: 

Welcome to value based care insights. I am your host, Daniel Marino as well. Many of you have known and have listened in over the years. We do a lot of work working with medical groups, and whether they're independent medical groups or their employee medical groups, that's sort of a passion for me. In particular, I started my career managing a multi specialty group practice before I got into advisory services and working with physicians has always been something that has been near and dear to my heart. And certainly II do a lot of research around this, and think about. You know, different strategies to help the financial performance of medical groups. And frankly, I don't think there's enough ideas that that can come out that can support the direction or the insights that can be given to leaders to help them improve their performance. And it's and it's interesting how the industry, how the structure of medical groups have really changed, particularly since Covid over the last, say 3 or 4 years. For instance, one of the reports I look at on a regular basis is the Kaufman Hall physician, flash report. If you've not seen it, II think it's a it's a pretty well done report. It looks at a lot of great trending information and a couple of key things that have really resonated with me over the last couple of years is one from an employed physician group perspective, the medium subsidy per physician Fte has continued to grow. And it's actually about 12% higher than it was 

just over 2 and a half years ago. I mean, that's a major increase.  

The other thing that I find interesting. That that remains a challenge for medical group leaders is not only, you know, some of the things that are driving, that loss are the productivity. The productivity of our physicians is actually higher, and it's continued to grow when you look at the number of Rvs. But yet the net patient revenue per patient has actually decreased. Which means that we're not getting the reimbursement from our payers. No surprise to many folks who are doing the managed care contracting, but one of the other interesting elements of that is the expense per physician. Fte has continued to grow, to increase. So when you look at all of this the financial pressures put on medical groups continues to be a challenge continues to be a real strain for these hospitals, who are employing them, as well as the independent medical groups who are continuing to determine or consider ways of growing.

Well, I'm really excited today to have a great guest, somebody I've worked with for gosh, you know, close to 30 years he's been a great friend and a great mentor to me. Jeff Peters. Jeff is is kind of in the the next phase of of his career. He's going to be working with Lumina and driving a lot of the medical group strategy. Jeff, very excited to have you as part of the program today 

Jeffry Peters:

I am equally excited. Thank you for inviting me.

Daniel J. Marino: 

and a big congrats to you. You've you. You've now moved into this phase where you're semi-retired and doing the type of work that you really love, and from what you've said to me, really being aiming to you know, do the work that you're given back to the industry. So II love it.

Jeffry Peters:

Yeah, thanks. I'm excited.

Daniel J. Marino:

So, Jeff, you know, when you reflect back on where some of these independent medical groups are, these different hospitals? And you know through the through your career, you know, close to 40, some years you've been doing this. You've worked with over 500 organizations across the country. How have you seen these challenges evolve over the years?

Jeffry Peters:

Yeah, so I really thought about the fact that when I first created an employee physician group at Engels Hospital, which is now part of the University of Chicago health system, and the Financials are coming out to the board, and the board is just overwhelmingly perplexed as to how we could possibly run physician practices that are losing $30,000 per physician per primary care. And now, when you see the losses over a hundred $1,000. I'm sort of thinking. What were they worried about? That was great. And I mean, really, you're beating me up on this but we didn't have data on E own practices. And you know, it's very clear what the problem is. There's more need demand for physicians and advanced providers than there are supply. So you have to pay more to attract and retain physicians.

Daniel J. Marino:

and you also have to pay more for their support. Staff. Yeah, for their support staff. Yeah, II think the you know, when I refer, and as well as with you, II talked to many leaders all the time across the country. Access is the number one issue that they struggle with wage inflation. If it's not number one, it's a close number 2 and and retaining the staff is really key as well as then. Physician. Well, being so, so, let's talk a little bit about access, though, you know if you've got limited number of providers, you've got more demand than you do with supply. What are you seeing on some of these strategies? How are organizations. How? How are they dealing with some of this? 

Jeffry Peters:

Well, I think the first thing is that you've got to assemble teams to manage a group of patients. It's not only physicians, it's advanced practice providers and in more quaternary tertiary practices, nurses, and you need to allow the advanced practice provider to see the patients that they're qualified to see. And you need to reserve the physician's time for the more complex patience. So the idea that we're always going to see a physician. It's just not going to happen. I mean, recently I had a annual skin exam. I called my dermatologist. I was scheduled with an advance practice provider. I thought she did a fabulous job. She was thorough and personable and identified things. So we've gotta be creative in terms of our workforce, and we've gotta save physicians time when I go to my ent with a sinus infection. There's a medical assistant who's assisting him with the scope and just getting everything ready, and he has a scribe and he's dictating as he's seeing me what's going on. and he's able to really make efficient use of his time. So we've gotta be creative and really innovative.

Daniel J. Marino:

Right? These in what you just described are these innovative care models around team-based care around helping the physician succeed and innovation in the care models. I fully agree with you. That's how we're gonna help to kind of work through some of these access challenges. I think, without doing that the traditional model is not sustainable.

Jeffry Peters:

No. And physicians like the team model a lot of the work that the team is doing is work that physicians don't like to do the charting and the things like this. I mean, you hear physicians complaining about the fact, at the end of the day they're spending one or 2 h on the Emr. Getting caught up with their documentation to save them an hour or 2 a day phenomenal. And the other thing is just handling the telephone and the patient calls that come in. And the emails that go to the physician. We've got to be creative in identifying What work can we take away from the physicians that gives our patients the care that they need and deserve, yet doesn't burden our high cost providers.

Daniel J. Marino:

I absolutely agree, II think, is we're thinking about the future strategy of medical groups, whether you're independent or employed these innovations that you spoke about this way of kind, of making the physicians more efficient spot on, II absolutely see that as a necessity of performance. Let's talk a little bit about growth, though. You know a obviously everybody's concerned about growth, and especially if your expenses are increasing, you can't necessarily cut services you cut can't cut staff. I think we're probably as lean as we've ever been. You have to focus on increasing the patient volume. You have to focus on increasing revenue. in your opinion. Where? What? Where? Are some of those key growth initiatives that help to kind of drive the financial performance.

Jeffry Peters:

Yeah. And and I think there's been models in the market for a very long time. Multi specialty groups are very profitable and they tend to attract and retain providers and single specialty groups like urology, where you're able to get all the urologists in a market to come together so that they not only share practice overhead, but then it supports pathology. It supports imaging and treatment, for it makes sense. So what the growth has to focus on is getting a large enough group of providers that drives ancillary revenue. You're not going to make your money on the profitability of a physician practice where you're gonna make your money, particularly for academic medical centers or hospital practices in establishing integrated ambulatory campuses where there's urgent aid to take care of the patients that don't have a primary care, or don't want to wait that primary care surrounded by specialists.

So the urgent age for the patient that doesn't have a physician can refer that patient to the primary care. So there's an ongoing relationship as that. Primary care picks up a heart murmur. There's a cardiologist in the building that they can refer them to. And there's a spectrum of diagnostics and treatment. What we're seeing is and the University of Chicago has been masterful at this, creating these integrated campuses with urgent aid, primary care. Secondary care. 

Daniel J. Marino:

so it's all sort of integrated. And it's right there for the patient and for the physicians. So you can actually have create more of a longitudinal care model getting the results that you need.

Jeffry Peters:

And the patients like it, cause they're getting care close to home location. And it's those high margin ancillaries, your infusion centers, your linear accelerator, your Asc that is actually gonna drive the profitability of those campuses. 

Daniel J. Marino:

If you're just tuning in, I am Daniel Moreno, and you're listening to value based care insights. I'm here today with Jeff Peters and we are fascinating discussion on strategies to help medical groups improve their financial performance. So Jeff, kind of building on your comments when you think about growth. it is, should the growth be more focused on primary care growth? Should the growth be more focused on specialty care growth? Or is it really an integrated growth strategy where you're thinking about how those 2 domains, so to speak, can really complement each other to drive even more value. 

Jeffry Peters:

Yeah, I mean, I think you answered your own question increasingly. I think it's an integrated strategy where it's primary and secondary care. That's how multi specialty groups has succeeded in the market and patients like it because they're going to one organization to get all of their health care needs met. And it it's integrated. There's a level of understanding and comfort. So I think that's what you need to focus on integrated systems.

Daniel J. Marino:

But what about those organizations that have really invested in certain clinical service signs like cardiovascular like, you know, oncology and cancer. you know, orthopedics continues to do well. ent gesture neurology, some of the others. How does that growth strategy fit into the either the integrated model or ways to really enhance the financial performance of the of the full group and even of the whole organization.

Jeffry Peters:

Yeah, so your primary care platform is going to support specialties, particularly like a comprehensive cardiac program or things like that. And you want your comprehensive specialty programs to really have a depth of specialist in them. You know your general cardiologist? The the rhythm, the electric.

Daniel J. Marino:

But then, probably having the sub specialists, too. Right? So you're keeping everybody in that network. III love it. II agree with you. I think the more comprehensive that you can be around that specialty fee. Certainly everything in there. You're really driving the value.

Jeffry Peters:

Yeah, that's where you're driving value in physicians like that because they can give better care to their patient they can stay a generalist or specialist if they want to. But the other thing that a large group does is, it reduces the call burden, and it creates the lifestyle of the physician to be more acceptable, balanced, so it gives a greater level of care to the patient. But at the same time we're establishing mechanisms where we're addressing some of the lifestyle issues which are a detraction for many providers. 

Daniel J. Marino:

Well, II think that's one of the top issues, right? I mean, there's been. You talk to physicians. We were. I was just in a in a in a meeting the other day where this integrated medical group was talking about. How they're still managing physician Burnout, the physician well, being challenges for their group. Just post Covid, right? And again, we're a couple of years into it. We're still feeling those effects. So let's talk a little bit about culture. Right? You. You've touched on this a couple of times. In your opinion. How do we need to evolve the culture of either our medical group leadership or our physicians.

Jeffry Peters:

Yeah. So I think you've hit on it. The key to success is having a healthy culture where physicians feel valued and appreciated because they've gotten a lot of education to get to where they are, and they sacrificed a lot, and they work hard, and they want people to recognize it. So part of it is having a governance body where physicians are able to make the decisions to affect their practice. What irritates physicians is when changes are made and it's mandated from above. By people like you and I, who are business folks that think we understand the practice of medicine. Physicians understand the practice of medicine. Everybody understands that we can't have losses. so rather than imposing solutions to reduce losses, let's just give it to the governance body, saying, we need to get our loss per provider down 25% in the next 12 months.

Daniel J. Marino:

we'd like you to come up with a plan and implement it right? So it's position led right? It's physician driven. And I think, where we've often. And we saw this a lot of times in Covid. If you're losing a lot of money administrators will typically kind of jump in inside and sort of right size of ship. And I am and what you're saying, and II fully agree. I think we have to engage our physician leaders and our physician governance body to really turn this around, I think, in order to not only achieve the goals, but to make sure that the culture continues to grow.

Jeffry Peters:

Yeah. And I think the second component is aligning physician compensation with the organizational incentives paying physicians based upon the profitability of their practice. And if it's a specialty, that's not going to be profitable, you can reward them based upon reducing the loss. But, I was at a very successful oncology practice this week. It dominates oncology in this Mid Western City, and the oncologist is able to decide whether they want to be supported by a nurse, whether they want to be supported by an MA. Whether they want more than one nurse or more than a ma, whether they want advanced practice provider, and then their compensation is based upon the profitability of of his individual practice. The revenue that he generates and his team re generates minus the cost. I was with one system where the board mandated that the loss per physician within this group be reduced by $50,000 a physician within the next 2 years. So what they did is, they established an incentive pool, where people were rewarded on their profitability and their productivity, but they shared 50%. Of the reduction of the loss with the providers. And that's great way to share the incentive love that. And the reduction was based upon your percentage of the group's productivity. So if you generated 10% of the revenue, and the incentive pool was a million dollars.

Daniel J. Marino:

You got an extra $100,000, and it just aligns with where we're going with with value based performance. So you, you're clearly working with a lot of organizations around the country on their medical and their medical group strategy. And and they're improving their strategic performance as leaders are thinking about the strategy for their organization. And 

you know, thinking about how they need to improve that that performance deal with the culture deal with access issues. All the top of mind issues that you know that you had brought up. What would be the piece of advice that you'd give to these leaders. Where should they start?

Jeffry Peters:

I think the way you start is by bringing your physicians together and saying. we want to make this an organization that provides the best care to our patients, and part of the way that we do it is to make our physicians feel valued and appreciated. What are the things that are important to you that we look at changing? And what we wanna do is develop a plan that the physicians help to shape and help to execute it. because what we've gotta do is give the practices back to the physicians, so they feel personally attached to the health of their patients and the health of their practice. Yeah, great point. And I agree, II think, instead of having the administrators to find the plan.

Daniel J. Marino:

including the physician leaders, engaging the physician leaders, having the physician, as you mentioned, sharing in the performance outcomes right? Cause. Then then there, there's ownership. They're bought into it great points. II couldn't. I couldn't agree with you more. But, Jeff, this has been. This has been great. I'm sure there's a number of our listeners who are physician leaders who are practice leaders. If they have questions, you know if they want to connect with you or find out a little bit more. can you share your information with them?

Jeffry Peters:

Yeah, I mean, feel free to email me at J. peters@luminahp.com luminus spelled LUMI NAHP. N. You know. Call me. It's fine. (312) 330-6800, Dan. It's always a pleasure.

Daniel J. Marino:

I'll tell you, Jeff, I'm very excited for this, and I'm particularly excited to leverage a lot of your experiences and insights as we work with organizations around the country on their on their medical group strategy. So thanks again for being here, and a special thanks to all of our listeners, until the next insight. I am Daniel Moreno, bringing you 30 minutes of value to your day. Take care.

About Value-Based Care Insights Podcast

Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners