Establishing The Platform of Trust…

Susan D. DouglassPresident, Susan Douglass & Associates LLC

Frank J. PerezCEO Emeritus, Kettering Health Network

Board Member, West Virginia United Health System

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Session Overview

Perspectives on Taming Chaos… Each of us are on a unique path with our strategy and our physician engagement

A Call For Action Key Opportunities Exist Seven Key Building Blocks For Creating A Platform of Trust.

Three are Very Visible : Compensation, Performance Goals & Learning. Four Are Silent Accelerators: Culture, Selection/Recruitment/Retention,

Communication and Satisfaction Perspectives on Getting Started… Questions…

Taming Chaos…

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Dealing With Relentless Change Often Feels Like This…

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Taming Chaos...

Each of us is on our own unique path to achieving high quality, affordable care.

We are operating on different timelines in different markets with different strengths and challenges.

We have different histories and current relationships with primary care and specialists in our markets.

We have the burning platform of federal and market reform as the key catalyst to get stakeholders involved and do the hard work.

We realize that strong leadership is essential to get us through this time of deep uncertainty and tumultuous change.

We realize now more than ever that the administrative and clinical side of healthcare must be engaged to get this work done.

We recognize the trust level between these groups historically has been a struggle.

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Taming Chaos...

We know we can’t be successful without cultivating a durable and meaningful administrative/physician partnership built on trust.

For many, this will require stepping back and taking a fresh look at their employment and affiliation strategies used to date.

Many CEO’s still struggle with the kinds of relationships that drive positive, economical clinical outcomes.

The development of those relationships will be monumental in taming chaos. Unfortunately, the affiliation and employment approaches of physicians for

many healthcare organizations, large and small, to date have been driven by the haste to hire. Resulting in hiring physicians driven by the deal. Versus the proactive, savvy and visionary physician business partner.

A Call For Action…

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A Call For Action…

The time is now to attract the physician talent to meet the demands of this volatile and fast paced environment.

By attracting these physicians, you will unlock the organization’s potential to flourish in these challenging circumstances.

The goal is to build a functional, mutually beneficial relationship; provide opportunities to build the competencies necessary to be successful; engage proactively with each other and reward fairly for the goals achieved.

Whereby creating a platform of trust to sustain positive energy to move forward and succeed.

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These Past Behaviors Must Change…

The haste to hire. A focus on protecting one’s income. The inability to listen to feedback without getting defensive. The lack of physician involvement at the strategy table. The lack of physician involvement within the governance structure. A black box approach to physician performance expectations, compensation

and professional development. The existence of the “secret deal” The haste to implement accountabilities and performance expectations

without an appropriate amount of time spent on the design, modeling and buy in phases.

A Fresh Look…

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A Functionally, Mutually BeneficialRelationship Involves…

Mutual Respect A Shared Mission, Vision and Business Strategy Physician involvement in governance, strategic planning, governance and

leadership. Strong, prepared physician leadership at all levels (administration, service lines

and the “front lines” providing patient care.) Aligned performance goals with administration A market driven total compensation program designed with shared goals. An approach for effective communication between executives and physicians. Access to capital and an agreement in principle for risk/joint contracting.

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Key Opportunities Exist For Most Which Include…

Developing a link between business and human resources strategies (HR) strategies.

Agreement on the roles we want to fill and the types of values and competencies required. Transition support to employment in place.

Streamlining of many business and HR practices Contracts Recruiting and Retention Financial aspects of practice management Communication Compensation

Developing a physician focused learning initiative . Focused on building competencies in a way that is inspiring to physicians

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The Journey Begins With A Different Business Model...

PHYSICIAN SPECIFIC HR STRATEGIC PLAN

OPERATING PLAN EXECUTIONSTRATEGIC

PLANOPERATING PLANVISION MEASURESMISSION/

VALUES

PHYSICIAN HR STRATEGY

CULTURE –ORG &PHYSICIAN

PHYSICIAN FOCUSED HR PRACTICES

Key Building Blocks…

Where To Begin…

While All of These Are Important…

Culture/ HR

Strategy

Compensation: Employed & Independent

Retention,Recruitment &

Selection

Communication & Information

Feedback

Leadership Development &

Learning

Employed & Independent Satisfaction

Performance & Career Enhancement

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These Are The Most Visible & Attention Getting…

Culture/ HR

Strategy

1. Compensation: Employed & Independent

Retention,Recruitment &

Selection

Communication &Information

Feedback

2. Leadership Development &Learning

Employee & Independent Satisfaction

3. Performance & Career Enhancement

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While These Are The Silent Accelerators Of Trust

1.Culture/ HR

Strategy

Compensation: Employed & Independent

2. Retention,Recruitment &

Selection

4. Communication &Information Feedback

Leadership Development & Learning

3. Employee & Independent Satisfaction

Performance & Career Enhancement

Compensation

Marketplace Competitive &Specialty Driven…

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Four Key Design Elements...

A widely communicated compensation philosophy for both employed physicians and all other arrangements oriented toward a target percentile to model pay ( i.e. 50th, 75th percentile)

Creating employed and special arrangements using credible survey sources (i.e. on call, medical director stipends) based on specialty, valuing clinical and non-clinical time.

Engaging physicians in dialogue so they understand how pay arrangements are developed, based on marketplace facts for their specialty.

Articulating the link between pay and performance with the development of performance goals.

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The Legal Landscape Is Thorny!

Legal and Regulatory Environment Stark Personal Services Exception

Compensation set in advance Fair market value compensation No compensation for referrals of

designated health services (lab, radiology, etc.)

Arms-length

Internal Revenue Code Purpose of compensation arrangement must

be consistent with tax exempt mission Compensation must be reasonable and

consistent with fair market value Section 4958, Intermediate Sanctions

Federal Health Care Programs OIG Compliance Guidance

Remuneration flowing between hospitals and physicians At fair market value For necessary services Negotiated at arms-length

Anti-Kickback Safe harbor for (a) personal services and

management contracts and (b) employment arrangements Written agreement Aggregate compensation must be set in

advance Consistent with fair market value Arms-length transaction

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Most Compensation Programs Are Likely To Contain One or More of these Five Common Pitfalls

Using an ad hoc, decentralized approach to administration of pay Providing pay guarantees without performance expectations and role

definition; Negotiating contracts for physicians without completing a specialty focused

market analysis; Using multiple approaches to contracts; Failing to document work efforts – both clinical and non-clinical

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Ensure Compensation Is Market & Specialty Driven

Market Analysis – Total CompensationMedical Specialty: Orthopedic Surgery (National Survey Data)

EffectiveSurvey Scope Date n= 25 50 75 90

HHCS National Jan 12 276 $191,809 $239,775 $414,000 $570,402

MGMA National Jan 12 1035 $321,497 $411,675 $552,665 $706,998

AMGA National Jan 12 559 $330,245 $409,242 $522,456 $643,750

Hay Group National Jan 12 260 $292,643 $396,156 $446,950 $606,522

Total Cash Annual TCC: $284,049 $364,212 $484,018 $631,918Hourly Rate: $142.02 $182.11 $242.01 $315.96

Benefits (13%) Annual: $36,926 $47,348 $62,922 $82,149Hourly: $18.46 $23.67 $31.46 $41.07

Total Compensation Annual: $320,975 $411,560 $546,940 $714,067Hourly: $160.49 $205.78 $273.47 $357.03

Total Cash Compensation Percentiles

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Evaluate compensation by component (e.g., clinical pay; administrative pay; and benefits)

A B C D E F G

DATA ELEMENTS Current Est. Mkt ObservationsCompensation Percentile 50th 75th 90th

COMPENSATION DATA

1 Total Cash Compensation $535,850 P85 $375,088 $446,377 $580,587 Upper end of market

2 -- Clinical Pay $479,450 P79 $375,088 $446,377 $580,587 Upper-end of market

3 -- Administrative Stipend (300 hrs/yr) $56,400 -- -- -- --

4 --- Administrative Stipend - Hrly Rate $188 P50 $188 $223 $290 Reasonable

5 Benefits Costs $80,000 P50 $79,500 $105,173 $114,093 Reasonable

6 Total Compensation (Cash + Benefits) $615,850 P85 $454,588 $551,550 $694,680 Upper-end of market

PercentilesMARKET DATADR. X

Each of these components vary as to level of market competitiveness

Don’t Push The Envelope!

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Non-Clinical Pay Issues…

Compensation for administrative roles On-call compensation Compensation for co-management services Pay for supervision of mid-level providers Other payments

Recruitment or hiring bonus Relocation reimbursement Repayment of medical school loans

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Total Cash Compensation

The goal areas and specific performance expectations create the foundation for the: Job Description/ Base Salary Annual or Short Term Incentive Plan Goal

The base salary is provided for a “meets expectations” performance based on the job description with a typical increase ranging from 0-3% annually.

The intent of an annual incentive plan is to reward key members of management and physicians for those things critical to strategic success above and beyond day to day responsibilities.

The incentive opportunity typically ranges between 0-20% of base salary and includes objective, measurable goals.

Leadership Development & Learning

Linking Learning To Work

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Leadership Development & Learning

Developing leadership competencies and learning opportunities for your employed and closely affiliated physicians will create a sustainable competitive advantage.

The approach must be viewed as a long term investment and not a short term cost.

These efforts will also enhance an organization’s ability to recruit new physicians as well as retain and prepare existing physicians for the future.

Many future competencies were not taught in medical schools and have not been required as part of the day to day practice of medicine.

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Effective Techniques To EngageYour Physicians In Learning…

Traditional Executive Classroom Learning Approaches Have Not Proven To Be Successful…

Just In Time, Web based Approaches Are More In Keeping With Physician Preferences.

And Have Been More Successful…

The Most Successful Approach Focuses on Tailoring The Evolving Needs Of The Individual to a Powerful

Clinical-Leadership Initiative..

High Performing Organization’s Executive Teams Often Use The Teachable Moments Approach as they work side by side with physicians

This approach focuses on taking time to illustrate the management principle/approach selected to tackle a challenge and why this approach has the opportunity to position for

the most successful outcome…

Thus, Creating Even A Stronger Link To Real Work.

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A Wide Array Of New Competencies will be helpful…

Business Essentials In Healthcare: major trends and implications Business Operations and Drivers of Financial Success: Knowing the basics of

operations and revenue including budgeting, prospective payment and physician influence on revenue cycle.

Strategic Visioning and Planning: Understanding marketplace drivers, prioritizing opportunities and decision making.

Quality and Process Improvement: Effective use of process review. Service Line Management: Understanding success drivers, organization

design, project and group management. Interpersonal Effectiveness: Developing listening and communication skills

for coaching, mentoring, managing disruptive behavior and driving corrective action.

Leadership Situational Styles: Having versatility and ability to adapt. Succession planning and preparing for the future.

Performance Management

Moving Away From Volume To Values

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Performance Management

Outside of clinical performance, physicians have traditionally balked at job descriptions and performance indicators set by administration.

Their lack of involvement in the goal setting process has also been a source of irritation.

Today, as more and more physicians become employed, it is important that physicians become involved in developing performance expectations for both their base salary and any incentive opportunities available to them.

To that end, a unique goal setting approach that engages physicians and executives has been most effective.

The end result is a jointly agreed to performance compact. Each group has separate and distinct goals focused on what needs to be

done to accomplish the overall strategic goals of the organization.

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Performance Compact

XYZ’S PLEDGE TO PHYSICIANS PHYSICIAN’S PLEDGE TO XYZHealth Care Leadership

• Lead with integrity and accountability • Participate actively in organization initiatives

• Share information openly regarding business plans • Embrace innovation and improvement

• Create effective two way communication with physicians

• Adopt advances in technology and practice management

Compassionate Care• Respect the integrity of the patient-physician

relationship• Reflect the core XYZ values in treating patients,

coworkers and employees

• Support physician wellness • Comply with Ethical and Religious directives of the mission

• Support compassionate care • Provide care without discrimination

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Performance Compact

XYZ’S PLEDGE TO PHYSICIANS PHYSICIAN’S PLEDGE TO XYZExcellent Customer Service

• Create and maintain a customer centered service culture

• Involve patients and families in care decisions

• Provide the processes to achieve service excellence • Maintain excellent patient satisfaction

• Put patients first in all efforts

Superior Clinical Quality• Manage to accurate and useful industry-leading

benchmarks• Practice “state of the art” evidence-based

medicine• Support the practice of “state of the art”

evidenced-based medicine • Demonstrate quality care

• Provide the work environment and necessary tools to provide quality care • Improve Outcomes

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XYZ Physician Compact

XYZ’S PLEDGE TO PHYSICIANS PHYSICIAN’S PLEDGE TO XYZPartnership

• Treat everyone with respect • Actively support organizational goals

• Acknowledge physician’s contribution to the organization and patient care • Provide and accept feedback

• Provide written clear expectations, regular evaluation

Finest Health Care Professionals

• Recruit and retain superior physicians and staff • Demonstrate highest levels of professional and ethical conduct/ maintain clinical superiority

• Provide learning opportunities for physicians to be successful in today’s environment • Participate actively in learning initiatives

• Provide competitive market compensation • Be good stewards of resources

• Commitment to integrity/trustworthiness • Commitment to integrity/trustworthiness

Recruitment, Selection & Retention

Search Until The Right Fit Is Found!

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Recruitment, Selection & Retention

To date, most approaches have been reactionary. They have focused mainly on recruitment with concern about retention only

when a key physician is threatening to leave. The silo approach to these strategies has fallen short in many areas. Linking physician recruiting, retention & selection strategies is critical to

realizing success. In addition, developing a systematic, transparent approach to employment

contracts streamlines the process and discourages the creation of any secret deals.

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Recruitment, Selection & Retention

The all encompassing physician employee value proposition that focused on why a bright, ambitious and energetic person would want to work here is much less relevant.

While, the top performers or “highfliers” are still a critically valued commodity, the “ meets expectations”, steady performer is also extremely valued.

The future physician workforce landscape exacerbates the need for multiple strategies. Recruiting and retaining different ages, genders and nationalities are very

important. (i.e. .Gogo 80’s, Baby boomers etc) So is targeting segments with different values, ambitions and

expectations. (i.e. Gen X, Gen Y, Millennium Generation etc.)

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Recruitment, Selection & Retention

Being mindful of key values and ensure values are shared from the beginning. Although 54% within the first five years leave, the decision to leave is often

made within months of arrival. Underscoring the importance of on-boarding and co-mentoring.

The average time to fill a vacancy is estimated at 16 months, longer for scarce specialties.

According to the 2011 AMGA survey, recruiting a new physician averages $270,000 ( this is a conservative assumption for start up costs) The cost to replace that physician is $1.2 m ( when simply adding lost

revenues to the recruiting investment) This does not factor in any non financial considerations for the loss of a

well liked physician.

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Recruitment, Selection & Retention

Working hard to get it right the first time is key. Design a recruitment program with retention in mind:

Interview for cultural fit Assign a co-mentor who shares values and interests Identify and meet spouse/family needs; making it easy for the family to

connect to those with similar backgrounds and interests. Support the transition to employment

Specify performance expectations Transition support of practice assets and personnel Stress work/life balance considerations.

Physician Satisfaction & Communication

Be Aware Of Issues & Move Quickly

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Physician Satisfaction & Communication

On an annual basis, conduct a physician satisfaction survey to connect with your doctors. Employed Affiliated

Visibly act upon issues that surface as appropriate. Communicate results of surveys in a timely fashion and an action plan. Develop a rapid response team to deal with issues which are urgent. Ensure communications remain confidential with individual physicians Communicate, Communicate, Communicate!

Perspectives On Getting Started…

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Perspectives On Getting Started…

There is no silver bullet…… Managing the people side of this very thorny equation will be the difference

between achieving mediocre versus outstanding results. It is worth the effort; be proactive.

For those who believe a piecemeal, fragmented approach will carry them through, think again. Especially when financial penalties are levied and unproductive finger

pointing begins. It may take a variety of approaches to form effective relationships. Nurturing the next generation of physicians will be essential.. The journey begins with a single step and never ends…

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Questions?

If you have any questions following the webinar question and answer session,

please feel free to contact Ms. Douglass.Email: sdouglass@susandouglassandassociates.com

Direct Dial: 770.335.4383

Thank You!

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Susan D. Douglass

Susan Douglass has more than 20 years experience in working with healthcare organizations to overcome a myriad of workforce issues to help clients meet the challenges of keeping the workforces productive and focused. The speculation and concern around healthcare reform has Susan working with clients to develop strategies focused on critical aspects of future success. The need for focused talent management strategies and action plans backed by top management is higher than ever given several issues but principally two key healthcare reform realities driving talent management:The onset of bundled payments and team –oriented reimbursement mechanismsThis requires the C-suite and Physicians to effectively relate to each other and build the layers of physician managers required to meet the demands of the future or suffer the financial consequences. The ingrained mindsets of both parties need to be refocused and physicians need to be willing to gain the leadership competencies and people skills not taught in medical school and residency.The reversal of the traditional hierarchical importance of medical providers The answer to this issue could transform the traditional clinical workforce immeasurably as more and more physician extender roles emerge (i.e. physician assistants, nurse practitioners and midwives) and the traditional clinical paradigm shifts. Many are beginning this journey with a poorly trained, disengaged workforce with a “me” vs. “we” mentality.In addition, Ms. Douglass speaks extensively, author’s articles, leads workshops and consults on these topics: Creating Physician Leaders…Proven Strategies For Success Recruiting And Retaining Talent In Unprecedented Times The Power of Linking HR Business Processes (i.e. compensation, learning, work/life issues and performance management) To

Create Desired Workforce Behaviors. A Seven Step Approach For Effective Physician Compensation Plans Becoming The Physicians’ Organization of Choice Successful Physician Recruiting And Retention…Getting It Right The First Time.Susan is a member of the American College of Healthcare Executives (ACHE) and the founder of the HR leading practices awards within the American Society of Healthcare Human Resource Administration (ASHHRA). Prior to starting her own firm, Susan spent 15 years as a senior executive at Towers Perrin and Ernst & Young. She has a Bachelor of Arts degree in Business Administration and a Master of Business Administration with a concentration in Finance from Rollins College.

Susan Douglass & Associates, LLCsdouglass@susandouglassandassocites.comWeb: www.susandouglassandassociates.com