Physician-Hospital Alignment: Meeting on What Matters

By Mary K. Totten

The evolving U.S. health care system will demand more standardization, reduced variation in outcomes and lower costs, necessitating new care delivery methods. A variety of models may emerge but physicians are the one constant to any emerging care paradigm, making hospital physician alignment imperative.

Frank Perez, retired chief executive officer of Kettering Health Network, Dayton, Ohio, had an early start in creating this alignment within his eight-hospital system, which began as a single institution. “When I came to Kettering Medical Center as CEO in 1994, there was considerable turbulence,” Perez remembers. “The market was rapidly changing and Dayton was one of the fastest-growing managed care markets in the nation.” A physician-owned and -operated health plan on which Kettering relied had “succumbed to market forces,” he says, and was acquired by UnitedHealthcare. The medical center lost 13.5 percent of its revenue on the controversial deal. “Everyone felt very unsettled; we wondered if we would survive these headwinds,” Perez says. “Our first objective was to reset the mission, vision and values of the organization and our chief priority was to not lose the support of the medical staff — engaging them in the turnaround was crucial.”

Perez began by ensuring that the turnaround team predominantly had medical leader participation. He also shifted the board’s composition to include one-third physician representation. “We identified physicians who were willing to collaborate, but who would also speak their minds,” he says. “We wanted their first commitment to be advocating for patients and delivering quality care.” Eventually, Kettering formed a physician-hospital organization, with two thirds physician board membership. Now, all eight hospitals may elect representation to the PHO board, which has laid significant groundwork for accountable care organizations, he adds.

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