Leading Physician Networks

Building Physician Groups that are Strategic Assets to the Health System

INTRODUCTION:

You’re listening to Tiller-Hewitt’s Leadership Lens Podcast. If you’re a leader - or an aspiring leader - who wants to stay relevant and impactful… YOU’RE IN THE RIGHT PLACE.

At Tiller-Hewitt we believe it’s faster, smarter -- and less painful -- to learn from leaders who have walked before us. That’s why we invite top leaders to be our guests on the Leadership Lens.

Your host is Tammy Tiller-Hewitt – Founder of Tiller-Hewitt HealthCare Strategies. Let’s jump into the podcast.

TAMMY:
My guest today is Dave Miller, founding partner of HSG Advisors the leader in Employed Physician Networks and Physician Alignment. You don’t have to take my word for it, because of their expertise, Dave and his team consistently publish for ACHE, MGMA, AMGMA, and provide case studies from health systems across the country that organizations are using to improve their physician networks every day. Prior to HSG, Dave was a 15-year C-suite leader for Norton Healthcare.

In our interview, Dave shares great insights on board relations and how easy it is for your board to forget – even when they gave the directive – about the costs and perhaps losses months or years down the road.

And - Everyone wants to know the warning signs of when a physician network is going off the rails or maybe has already derailed. Dave starts with the warning signs but ends with a few innovative solutions – including some real soul-searching questions for leaders and physicians.

TAMMY:
Dave Miller, accomplished author and founding partner of HSG Advisors, welcome to the Leadership Lens Podcast.

DAVE:
Thank you very much.

TAMMY:
I didn't mention all of your outdoorsy interests and accomplishments like hunting, boating, fishing, golfing, and traveling, and what else do you do? What don't you do?

DAVE:
I think that's about it actually.

TAMMY:
The question is, when do you find time to work with all those outdoor interests?

DAVE:
With phones and computers having the work get its way to me isn’t a problem. It's harder to get away from it than it is just be engaged so that's not really been a problem.

TAMMY:
Well, given HSG is the leader in employed physician networks and physician alignment, of all my guests, I may have the most questions for you probably because I have yet to meet a health system that doesn't need your expertise. I'll try not to interrogate you for too long.

DAVE:
Alrighty.

TAMMY:
So, if our mantra at Tiller-Hewitt is, “we saved the healthcare industry, one hospital at a time” is yours, ”we save the healthcare industry, one medical group or one physician network at a time”?

DAVE:
Our mantra really is but to be successful in the future your health systems are going to have to have a great cadre of employed physicians if they're going to be able to respond to new incentives and be able to manage value-based indicators and that sort of stuff. Hard to figure out how you're going to do that without a great group of doctors. So we see what we're working on as being pretty key to most health systems, trying to help them figure out how to make those groups more efficient and more effective as our key focus.

TAMMY:
Awesome. Well, I know that you are an avid and published writer, but a couple of years ago you published your first book, Employed Physician Networks: A Guide to Building Strategic Advantage, Value and Financial Sustainability. And last night, as I was thumbing through my signed copy, I thought how ironic that in chapter one’s introduction, you quote Albert Einstein, “In the middle of difficulty lies opportunity.” So, from an insider's perspective, how would you describe the current state of the US Healthcare System and perhaps the opportunities you see?

DAVE:
I think I'm seeing the same thing everybody's seeing right now which is havoc, and stress, and people being distracted by the problems of the day and maybe potentially losing sight of the long-term strategy that needs to be in place. I think I would just describe it as stress which is not totally new, but it's especially acute right now with the situation with Covid, with staffing, with clients paying nurses $180 an hour to cover shifts and some craziness like that. I don't know what you're seeing that's different, but that's what I perceive.

TAMMY:
We're seeing the same things. The question is, what are we going to do about? How do we handle it? Knowing that you're seeing that across the country what are you seeing on the physician side of the house, anything different with employed physicians vs. independent? Has either group found better answers than the other?

DAVE:
I don't know that at its core, the stresses are that different right now. There's one thing that's clearly different which has to do with compensation, which I'll address in a second. I think whether you're employed by a health system or in private practice, there's a lot of stress, a lot of burnout, a lot of anxiety about what's going to happen. We're trying to help health systems deal with that by keeping the physicians engaged and giving them some feeling that they have some control of their future and the feeling that they're trying to create something bigger than just themselves and their practice. They're trying to create a group that can help improve the health system be successful, that sort of thing.

I guess the one difference we're seeing is a lot of the health systems that are employing doctors are struggling with compensation issues right now. A lot of it relates to the way compensation systems have been built and using MGMA data, and that sort of stuff and the MGMA data that's coming out now is not very good, because during in the pandemic, a lot of volumes dropped and so the compensation per work RVU’s are up radically and how to deal with that and how to explain that to the doctors is the one challenge we're seeing that, I guess is pretty unique to the employment situation. If you're in private practice, it just affects your revenue, not inconsequential, but those doctors have a better understanding of how the dollars flow.

TAMMY:
So, have you had to help just revamp comp plans because of the pandemic and what it's done?

DAVE:
Yes, a little bit to our surprise. Although, I guess if we were more insightful, it wouldn't be. We've had a lot of health systems contact us about redoing their comp plans and trying to rationalize those and trying to work with their physicians so the physicians understand why the changes are being made. CMS changed some of the RVU values for a lot of what the physicians do, especially on repeat patients, giving them more credit, more RVU’s for the work they're doing. At the same time, CMS lowered the value for work RVU and the pandemic pushed volume down pretty dramatically in some specialties. But they're a lot of moving parts, which health systems have figured out that they need some outside help to help think through. They need somebody who's got some credibility to come in and talk to their doctors about it. So, we're doing a reasonable amount of that work these days.

TAMMY:
I know you provide a ton of education through papers that you are constantly sending out, webinars, but you can only do so much in telling them, what's coming or what has come, but in terms of really getting in there and helping them, what would your value-prop be to a client on why they need to bring you in versus just reading the regs and then trying to implement something new is the tricky part.

DAVE:
On the compensation, that's our experience. I work with other clients, our understanding of what we can explain to physicians and what they will understand and buy into. So really, it's the collective experience we can give our clients that's the key value we bring to those engagements.

TAMMY:
I like what you said earlier that there's havoc and stress and, distraction every day, but I think you hit the big picture, losing sight of the long-term strategy. It's hard to think about the future when you're in the war zone. At that point, how are you helping to redirect to that long-term strategy?

DAVE:
My first reaction is that the health system executives are figuring it out on their own. When we went through the first three or four months of the pandemic and they were doing nothing but trying to figure out how to get protective equipment and keep their patients safe, and get tests, and deal with the basic blocking and tackling of caring for these patients, and caring for the staff; they couldn't do much else. At one point, they kind of flipped a switch. It seems like most executives figured out, well, this is going to be with us a while. We're going to deal with it, but we can't let the long-term view of what we're trying to create fade into the background.

So, I don't know that we're helping them that much. I think a lot of them are figuring it out themselves; and we are offering some services that have been popular during the pandemic things like helping health system work their doctors to figure out what their longer-term vision needs to be, helping them with referral data, and understanding where leakage is happening. Those are kind of at opposite ends of the spectrum, in some way they’re very strategic. The leakage is pretty tactical but critical to financial success. In our education, we try to convince people that they need to focus on some of the bigger picture issues. But we also try to give them tactical solutions that are helpful day-to-day.

TAMMY:
In addition to your book, you've published tons of material for the American Hospital Association, MGMA, ACHE, you name it. I'm curious about an article that you wrote for the American Hospital Association, not that long ago, Understanding Your Physician Employment Strategy. Can you talk about that? And do you feel that organizations fall short in that area more often than not?

DAVE:
As I recall that article was published in Trustee Magazine?

TAMMY:
Yes!

DAVE:
For the AHA. It really came out of my interaction with boards who, in my experience lose track of why the hospitals do some of what it's doing, and why employment of physicians is a trend that is probably going to be with us for the long term. I have two experiences with specific boards that I laugh about when I think about it. One is one board that was quizzing a CEO as to why he was employing and subsidizing a neurosurgery group as a tertiary facility, with a pretty high level of care and why did we do this? Why are we subsidizing them? He had to go back to the minutes where the board had directed him to do everything he could to not let this group fall apart and to maintain them as part of the medical staff and he was simultaneously annoyed and laughing because you know, we're doing it because you guys directed us to, that's why we're doing it.

But then I find the boards, have some specific examples, but lose track of why some of the decisions were made whether it's to provide coverage and consults in the ER, or whether it's to secure market share, or whether it's because the board and management felt like a specific specialty was needed to ensure that quality care could be delivered. Over time all boards see is the losses and the numbers, and they lose track of some of the rationale. We've actually done a couple of projects with clients where that was the purpose of the project was to go back to the board, look at everybody we were employing, have them again understand why we were employing them and what the purpose of that employment was, and then have them revisit the decision and decide whether they thought it was a good decision based on how things were going. That's the genesis of that article.

TAMMY:
That's interesting. What do you think the warning signs are that a physician network is going off the rails or maybe even has already derailed?

DAVE:
I think they're probably three things that we focus on. One is, and this is in our book, and by the way we're in the process of writing a second book.

That's another discussion, but I can't help dropping that. We had a meeting on it yesterday. There are three things. One is the physicians are not engaged and there's not really physician engagement in the leadership. The rationale of what the network is doing and some of that sort of stuff is escaping the physicians and that's really setting up a problem.

The second thing we see is operational indicators that are out of control, which is really the symptom. The problem is there's not an adequate management infrastructure in place to manage the group. I mean, you've seen this too, I know but clients that have gone from employing no physicians to employing 120 and they added one FTE to do it. And then it's not going well and they’re wondering why. We look at that as a warning sign as well.

The third thing is related to the physician leadership, but it's really a separate issue, but it's the lack of a shared vision of what we're trying to create. You have a bunch of doctors and all that's really changed is their tax ID number. They're not engaged and trying to create a group that is going to be exceptional and able to manage quality and value based indicators. They're just kind of limping along.

In our diagnosis, we look at those things. There are other things we look at as well. Those are the three that repetitively end up being key issues that require priority attention.

TAMMY:
So, you can come in and help an organization by doing a formal assessment of their medical group and make recommendations on governance, leadership, compensation. You can do each one of those very important pieces, right?

DAVE:
Yes. Really our assessments involve two pieces.

One is a data assessment. What’s your AR days per physician? What’s your productivity of your physicians? How does the productivity and compensation align, and is it well-aligned? All sorts of metrics.

The other piece is lighter stuff. Do the physicians perceive they're engaged? Do they understand what we're trying to accomplish? Do the physicians and executives see the world in the same way? That's more collected by surveys and interviews, and the latter is more collected by a massive benchmarking project of operations.

TAMMY:
I love it. I always love seeing the result of here's what the same question asked to leaders, what would your physician say about this, and then ask questions to the physician's, what would you say about this? And to see the huge gap in some pretty important key indicators.

DAVE:
There are organizations where the executives, whether they be physician executives or lay executives, and the employed physicians see stuff the same. There aren't enough of those. More often than not, there's a gap in perception, and a gap in perception too from physicians who maybe are engaged with the health system versus people that are just out there practicing medicine, and don't have much information or engagement.

TAMMY:
Seeing the big losses all the time from medical groups, what's your response to that? It's a necessary evil? Is there a way we can fix this? Will employed physician enterprises always lose money? What's your take on that?

DAVE:
My take is, first of all, they're probably always going to lose money. There are always going to be specialties where the supply and demand is out of whack. They're always going to be specialties where you want to have a physician to provide coverage or to provide expertise, but there is just not enough volume to keep them busy. I think that's always going to be with us, to be honest.

What we try to focus people on is if you're performing well, what would the losses be? Some of that is benchmarking versus other organizations, some of it’s using MGMA or AMGA benchmarks to compare to. We can use that kind of data to say, here's what your losses are that maybe $20 million dollars. If you were hitting the midpoint on all these key indicators, it would be $16 million dollars. If your aspiration was to be in the top quartile, the losses might be $12 million dollars. So giving people some realistic expectations that’s probably not going to go away. But back to the management resources, I was talking about earlier, if you got competent management of the group, you can do better than when you don't have competent management.

TAMMY:
Right. What are some innovative solutions or opportunities that you guys are recommending around staffing, labor shortages, comp, governance that we've not talked about?

DAVE:
I guess in comp, we're seeing more people do team metrics and having a group of doctors and a group of advanced practitioners together have some shared goals and some shared metrics, which then gets to where it focuses on, how they as a team are working together, as opposed to how the individual was doing, which we think is positive. A physician leadership council, I'm not sure that's something I'd call Innovative at this point, but it's pretty key to having some success.

TAMMY:
Let’s talk about it and how do you do that?

DAVE:
The key is to begin to educate the physicians on what the health system needs out of the group, but also take into account what the physicians need out of the health system. We always say to physicians, describe the group that you'd be proud to be associated with. If you were at the point where your career was over and you were thinking about your legacy, what does that group look like that you've been involved with?

How do you go about being a part of the group that makes that happen? Every once in a while when doctors are complaining about what the hospital has done to them, we also say to them, why do you let him do that? We try to get a little bit more assertive, not that we want the doctors to be haranguing administration continuously, but they need to be heard. They have some special rights because they're the ones taking care of the patients.

We're also doing, and you've seen some of this with mutual clients, we’re doing some innovative things with referral data that we think are giving people insights and leakage weaknesses within their own system, that's kind of driving that leakage. We don’t want the leakage to be let's beat the physicians around the head and neck and tell them to refer internally, but let's figure out what we can do to earn those referrals. And so, we've got some Innovative things going on there as well.

TAMMY:
We actually love working with you and your team on the data pulls because we can get it by physician, it’s timely, it's relevant. We can make decisions. The client doesn't have to marry you for life, they can get data pulls as they need it. They love it so much that they want more and more and more, which is great. You guys have provided a vehicle that they can get it in spoon size until they start using it. So many organizations spend hundreds of thousands of dollars for this big dump of data, they never even use it. You guys have figured out a way that it’s usable today to make decisions and I love that.

DAVE:
Yeah, we got into that line of business because we were doing strategic planning for organizations and they would go in, and I won't name names, but they'd have a flat solution that gave them market data and they couldn't get any data out of it. We'd ask them to give us information about X, Y and Z, and they couldn’t. So, you paid half a million dollars for this database, and you're doing nothing with it. Maybe there's a better solution. I have not done any of this work, we've got people way smarter than me that do it, but we worked with executives to say, what questions can you not get answered? And let's look at the data and see if we can extract the answers to those questions. It's been well received by clients.

TAMMY:
I love it. Speaking about your company and your people that are so smart, how do you recruit and retain such great talent on your team?

DAVE:
We are very open and transparent as a company. Everybody sees the financial statements every month. We have a meeting on Monday morning, where we talked about every prospect, every lead, every opportunity we have that's not a closed sale, and employees are exposed all of that so they understand what makes the business go. We allow people to do innovative things. I think that's probably the retention is probably the easier part. We pay decently as well. Recruitment has been a struggle for us, like it has been for everybody. The job market is so tight, especially of late, we’ve been looking for people with data analytics experience because the data product we were just talking about. We may look at a hundred resumes. We may see three people that we think can do what we need to do, and then by the time we get to the second interview a week and a half later, they've all taking jobs elsewhere. We've been struggling. We're having a little more luck. We've actually hired a recruiting firm. We use them under contract and they're helping us identify candidates for some of the positions. We don't really have a tremendous HR function. It's underdeveloped and so we've gone outside and contracted with people who could help us with key issue like recruiting.

TAMMY:
I think your team is awesome. Anytime we've called to get help in any way, they are so responsive and just, so frankly, smart. They're like, okay, yes. There's the answer. I love that.

DAVE:
They are smart.

TAMMY:
Yep. Good job. Congratulations. Before we wrap up, I do want to ask about your second book.

DAVE:
It's really a continuation and deeper dive from the first one. It's going to be about employed physician network. The transformation that they need to make to be successful, over the long term and is going to add concepts and ideas that we've learned about since the first book. Travis Ansel and Terry McWilliams MD, who were my co-authors on the first book, are actually going to be the principal authors. They're just asking me for occasional advice. We have an arrangement with MGMA to publish this. We thought that we’d try a different publishing arm. ACHE was the first one.

TAMMY:
That's awesome.

We like to end each of our podcasts with the fast-five, rapid-fire questions.

What are you currently reading or is there a book that was a game-changer for you that you would like to recommend to other leaders?

DAVE:
I can't think of a book that was a game-changer. I get a little bit out of all of them. I've currently got four books, I'm reading.

One is on the lighter side, All About Me, which is an autobiography of Mel Brooks.

I am reading, An Imperfect God, which is a study of George Washington and why he decided in his last will and testament to free the slaves that he owned and what led him to that conclusion.

I'm readingA Promised Land, which is Barack Obama's book about his campaign and his first term as president.

And I'm reading The Jefferson Bible. He reorganized the four gospels in the sequence that he thought they happened, based on his reading of history and the sequence of events, and he published a book that was really in his personal library. Nobody discovered for about 60 or 70 years. At some point Congress got a hold of it and made copies for every new member of Congress in the 1800’s and the Smithsonian now owns the original.

TAMMY:
I love it. Question number two, how do you start your day?

DAVE:
I started my day by feeding the dog and the cat.

TAMMY:
Taking care of the animals.

TAMMY:
What’s one word or Mantra you live by?

DAVE:
If I had to pick one, it would be growth – growth in my knowledge, growth in capabilities, growth in our company, growth in what we do and can provide the clients.

I was in the hospital business for a while, and the thing that drove me crazy about it is we were always cutting, always trying to fit budgets into limits. Having my own consulting company gave me a chance to focus on growing something, instead of managing something. And so, if I had to pick one thing that would be it.

TAMMY:
That’s good, that's really good. What's the most important characteristic of a great leader?

DAVE:
I had two that I that I was thinking about. One is empathy understanding what is going on with people and understanding how to manage individuals. On the other end of the spectrum, having uniformly high expectations, which is maybe the opposite of having empathy. It's like, here are our standards, here's what we expect. Those two things were what I saw in the first boss I've ever had when I got out of graduate school and started working at Norton Healthcare. A fellow named Jim Petersdorf who was the Executive Vice President and Chief Operating Officer at the time. He was the master of both of those. He understood what you were trying to achieve and had empathy for what was going on with people. But he also didn't take any crap.

TAMMY:
I think those are nice bookends.

What advice would you give your younger self?

DAVE:
I have two things again. One, loosen up and don't take things so seriously, they'll work out. As you get older, you get that perspective because you know things are going to work out.

I would sit out and have a serious discussion about whether I really wanted to run a hospital and that's what I wanted to do with my career, which is what I thought I wanted when I was 22. And certainly, my time in the hospital industry was very educational and very helpful to me but, that was a bad idea for my perspective in retrospect.

TAMMY:
If you could go any other direction today, knowing what you know, do you have anything that comes to mind?

DAVE:
No, my next aspiration, but I don't really think I would have substituted it for what I've been doing. My next aspiration is to be an author but of books that are not business-oriented. I've got some things I’m working on. I don't think I could have done that when I was 35. I can do it at this age a little better I think, so we'll see.

TAMMY:
You're wiser now. You have a lot of stuff to write about and a lot of things to share with people to help other people. I think that's great.

Well, Dave has been a pleasure having you on the Leadership Lens. I hope you'll come back again and share more of your wisdom and insight with your colleagues from across the country. Thank you so much.

DAVE:
Thank you. I appreciate the opportunity.

CLOSING::
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