O r g a n i zat i o n a l G o ve r n a n c e
DEFINING YOUR
PROFESSION
Principles, expertise and service
that bind us together
Creating success with IDS
O nce you make the difficult decision
to sell your practice, it’s easy to
focus solely or disproportionately, on the
size of the check. Physicians want to get the
most value from a practice they worked
hard to create and cultivate, and there is
also often an “I built this with my bare
hands” sentiment, which tends to drive
perceived worth higher than fair market
value.
With the current state of healthcare and
uncertainty in physician reimbursement
trends, there may be urgency behind a sale.
However, payment represents a moment in
time. The integrated company lives on in
perpetuity.
Given the dynamic state of healthcare
and the speed at which dramatic changes
are happening, hospitals and health sys-
tems may be compelled to act quickly and
acquire physician groups to build an inte-
grated delivery system (IDS) in reaction to a
competitor. While this is a noble goal and
could be the health vehicle of the future,
an IDS will not magically appear when you
buy group practices. To create an effective
IDS, you need a strong vision and strategy
with success metrics that answer questions,
such as, “Why is this structure better?” and
“How will we know when we’ve achieved
our goal?”
Identify priorities
Most physicians want to provide good
care. Therefore, models that demonstrate
an ability to improve patient experience
and clinical outcomes are powerful moti-
vators to ink a deal and endure the pain of
process change. This type of clear vision
will also “sell” the model to additional
physicians, who are essential components
of a full-spectrum IDS.
©2011 Medical Group Management Association. All rights reserved.
From a pure dollars and cents standpoint,
particularly for physicians with 10 or more
years of practice ahead of them, future com-
pensation will most likely eclipse the sale
price for personal value. It is important for
physicians and hospital leaders to think
carefully about the plan and properly reward
activities and behaviors that make these
models successful. For instance, models that
reward clinical work will tend to get clinical
work exclusively. If building market share or
decreasing operating costs is important,
compensation plans should recognize work
and success in these areas.
As a general rule, experts say the more
compensation is guaranteed, the less control By Joel Sauer, LLC, New Haven,
Ind., joelsauerllc@gmail.com
physicians have over daily life. Likewise, the
more compensation at risk, the more
authority physicians retain over hours,
scheduling and staffing.
Yet employment doesn’t have to mean
loss of all control. During negotiations,
spend time on specific elements that doctors
can control. It may sound like a daunting
task, but if you approach these things logi-
cally, it is quite manageable.
What aspects of daily life are most impor-
tant? Some doctors may care less about the
color of the waiting room carpeting than
being told what office hours to keep. Iden-
tify what matters and be willing to concede
on issues that don’t make the list. Even a
sensitive area like clinical staffing levels can
be delegated to physician authority with the
right checks and balances. The time to nego-
tiate such details is prior to signing the deal.
mgma.com
Implementation • mgma.com/store: Integrated
Delivery Systems: Ensuring
Integration is a critical aspect of IDS success, Successful Physician-Hospital
but it costs money. Implementing an EHR, Partnerships, Item 9010
• mgma.com/IDS
see Defining your profession, page 24
MGMA Connexion • February 2011 • p a g e 2 3
This Web version may be reproduced for individual use.
from page 23

DEFINING YOUR
PROFESSION

installing a common practice manage-
ment system, standardizing schedul-
ing, creating consistent diagnostic tests
and results and making hospital sys-
tems talk with practice systems are a
few of the structures that require dra-
matic change. Make sure the buyer
demonstrates a willingness to commit
capital resources to create the desired
model in a meaningful timeframe.
Perhaps the most overlooked, and
under funded aspect of practice acqui-
sition is the melding of cultures, which
can be described as the two organiza-
tions’ personalities. Regardless of how
closely two groups appear in terms of
values and mission, there will be in-
evitable differences, which can delay or
scuttle integration. In a depressed
economy rife with downsizing, em-
ployees will be paranoid of job loss or
reassignment. This is rational given the
magnitude of change an acquisition
brings and the ubiquitous rumors that
seem two steps ahead of reality. Truth
and information are powerful tools to
keep anxiety in check and avoid
disruption of operations. Although ne-
gotiations are confidential, there is
always some information that can be
shared with employees. It may be as
simple as telling them you are consid-
ering a new integrated model with
another health partner. Regular up-
dates on progress are also valuable. The
worst strategy is to say nothing or to
deny that discussions are occurring.
When the truth comes out – and it will
come out – credibility on both sides is
damaged.
Recognizing that employees want to
be part of a good product, an overview
on why your group is pursuing an inte-
grated model can be extremely helpful.
Articulating the coherent strategy be-
hind potential integration, which has
the ability to improve patient experi-
ence and enhance quality, will go a
long way toward quelling fears. More
importantly, it will align a powerful
contingency behind your integration.
There is typically an inherent lag
between the approval of an acquisition
and the actual close date. This is an
ideal time to start bringing the two
parties together at a management level
to meld cultures.
The sale of a group can be an excit-
ing first step in the creation of a new
healthcare delivery system. And the
current state of the industry may put
physician practices at the apex of their
financial value. It is critical to look be-
yond the dollar value and understand
the strategy behind integration.
join the discussion: Has your board started
talking about IDS? We want to hear your story at
mgma.com/connexion or mgma@connexion.com.

Make decisions…
Resolve conflict…
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p a g e 2 4 • MGMA Connexion • February 2011 ©2011 Medical Group Management Association. All rights reserved.

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