The medical director as educator: an interview with Elizabeth M. Gallup, MD, JD, MBA - The Evolving Role of the Physician Executive - Interview

Physician Executive, Sept-Oct, 1999 by Richard L. Reece

Gallup: PhyCor really has two aspects to it. One, practice acquisition and management, is their equity side. The other is IPA management, which involves no ownership, just plain old management contracts. The mere fact that PhyCor is still around and had a large infusion of capital recently demonstrates that at least it was managing physician practices better then its competitors, who are no longer around. Also, PhyCor had the foresight to move Into the IPA management business and is deriving a higher and higher percentage of its total revenues from It because we do a good job.

Anytime you try to manage physician practices, there are inherent problems. The medical director has to work hard to get the different practices to start thinking and acting like a group. You'll have to do that whether the physicians are employed by a hospital, an insurance company, or a practice management entity. PhyCor helps with that.

On the other hand, PhyCor is helpful in having the systems that allow me as a medical director for this IPA to provide the physicians on an individual and a small group level with data on how they are managing their patients on a day-today basis. I provide the physicians with their referral rate to specialists, their hospital admits and avoidable hospital stays, their use of resources, other educational information.

New Century Health Quality Alliance, Inc. has been in existence only five months. We're already showing these physicians comparative data about their practices that they :have never seen before, even though some of them have been in managed care for ten or 15 years.

Q. Do doctors respond positively to those comparisons and usually swing toward the mean once they realize where they stand?

Gallup: I'm too new at this IPA to say that that's going to happen, but we're hoping it will. Certainly in the organizations that I visited throughout the country, that is what happens. Again, it's an educational piece. We went over some data today, and I know that the physicians that were on the bottom of the heap probably won't be there next time because physicians are inherently competitive. They don't like to be on the bottom. That is what causes behavioral change. I think that after one year we'll be able to demonstrate some dramatic improvements in quality, while significantly reining in costs.

Q. The managed care industry is fermenting. Staff model HMOs are collapsing. Kaiser withdrew from the Northeast and Dallas. There's a decrease in profitability of the for-profit HMOs. HMOs are withdrawing from Medicare markets. What does all this portend for the future of medical directors in these managed care organizations?

Gallup: The medical director of an HMO is too far removed from the day-to-day practice of the physicians to really have much of an influence, That's one of the reasons HMOs haven't been able to manage the medical loss ratios as well as IPAs, which are more decentralized and can more directly affect the medical loss ratio. HMOs need to learn how to do a better job at managing costs, not just reimbursement. Most are really putting forth this effort now.