Using an effective business model for group practice management - Group Practice Management - physician groups

Healthcare Financial Management, Nov, 1999 by Richard Hoerl

Group practices that have been run as something of a cottage industry would benefit from adopting a more effective approach. Business issues that practice management should consider include whether the group can continue to meet market challenges without changing the practice's makeup or services and whether it needs a partner. If the latter, the practice can partner with other physicians in an IPA, a limited liability company, or another group practice, or with nonphysician partners in an integrated delivery system or hospital, a physician practice management company, or an insurance company.

If a group practice is inclined to pursue a merger with another group practice as a partnering strategy, it first should ensure that the corporate cultures of both parties are compatible, identify any potential deal breakers, select the merger model, and have a clear vision of how the new group will operate in the future. Practice managers should determine how patients and patient care will be affected by the merger, how income will be distributed, and what role individual physicians will play in the new practice's governance. These determinations can be accomplished using a business model that identifies decision-making processes and governance structures.

Effective Business Model

An effective business model contains several components that should be adopted by group practices.

Culture. Group practices need to move from an individual focus to a team focus. Groups therefore need to develop a culture of commitment whereby participating physicians work together for the success of the practice as a whole.

Values. Group practices should commit to a value system that puts patient care first, the good of the organization second, and individual physicians' needs third. Commitment to this value system will help make decisions, such as agreeing to offer evening hours, easier to implement.

Governance. Group practices are the only organizational type whose shareholders determine board policy and also are employees of the entity. Practices with more than 15 physicians should form an executive committee that is empowered to make operational decisions. Strategic planning and policy decisions should be decided at general shareholder meetings.

Role definition. Group practices should define explicitly the roles of their president, medical director, and administrator. If these roles are not clearly delineated, other businesses, such as hospitals and insurance companies, will not know who is in charge of what. The elected president of the group practice's board of directors should represent the entity to the public and run the corporate meetings. The medical director should be responsible for internal clinical management, and the administrator or CEO should be responsible for nonclinical management.

Expectations. Physicians should stipulate what they want and need from each other to make the practice successful. Expectations should be communicated to group practice leaders and individual physicians.

Decision making. In most group practices, decisions are made by consensus. This implies that the group practice's physicians are committed to the organization's goals and have fairly good conflict-resolution skills. It is important for group practices to define their decision-making process so that a minority of shareholders does not control the group.

Meetings. Meetings are communication tools that are necessary to the management of group practices. Meeting ground rules should be established and communicated to facilitate a smooth flow of information. Some group practices appoint a meeting leader and an internal facilitator. The facilitator should ensure that the meetings allow for a balanced discussion of tasks and people's concerns. Otherwise, tasks will be approved without adequate attention to the issues involved or a few people will dominate the discussion. Meeting agendas should indicate whether each topic is being raised for information, input, or decision-making purposes. Minutes of the meeting should be published the next day and distributed to all shareholders.

Efficiency and teamwork. Group practice shareholders should meet at least monthly to discuss ways to improve efficiency and teamwork. A physician team leader should be assigned to follow through on the top three to five ideas.

Service. Group practice physicians and employees should discuss ways to improve services, such as handling phone inquiries, patient intake, and billing.

Conflict resolution. Group practices should have a conflict-resolution procedure in place. Conflicts that affect the entire group practice, such as disagreement over whether to sign a managed care contract, should be addressed by the executive committee or the entire group. Conflicts among physicians should be dealt with individually by the president first. If an individual physician's problem behavior persists, the medical director should discuss the behavior with the physician. Then, if the behavior does not change, the executive committee should meet with the physician to discuss the problem. Finally, if the problem still is not resolved, all the physicians in the group practice should vote on whether to retain the problem physician.