I was called in to a well-known, respected hospital system to conduct assessments of several practices it had acquired within the prior year. None of these practices had made the adjustment to hospital ownership that was expected. Performance and patient service suffered. Satisfaction was at an all-time low for physicians, staff, and patients.
Confusion about the relationship between the hospital and the practices resulted in deteriorating service and attitudes. The case studies presented in this article offer a perfect example of how the best intentions don’t always bring the best results and how cultural differences can be at the root of a healthcare organization’s most daunting problems.
Tri-City Hospital was concerned about the performance of three medical practices it recently acquired. My consulting assignment was to provide an objective analysis of these practices, clarify the primary issues of concern, and provide recommendations that would guide the hospital to:
Overcome obstacles causing poor performance, deteriorating morale, and poor patient satisfaction; and
Resolve conflicts between the hospital and these medical practices.
Case Study
Misery Is Contagious: Community Family Clinic
Community Family Clinic consisted of three internists, five family physicians, and two nurse practitioners. They were well-suited to practice together, sharing common values; they worked with a motivated staff; and the finances were solid. But over the past few years, they started feeling the demands of more regulatory requirements, flat reimbursement, and expectations that the impact of healthcare reform posed a threat to the practice’s finances and stability. The physicians began to question their future security. The privilege of owning the practice was beginning to feel like a burden. They didn’t believe they had the business expertise to deal with the unknown changes required with healthcare reform or the potential consequences it would bring to their practice. They began to question their future security.
The timing seemed ideal when the hospital approached the physicians about this primary care clinic joining the hospital and the physicians becoming hospital employees. Surely the hospital had far greater resources and business acumen to help them ride the waves of reform without economic disaster! The clinic already resided on the hospital’s campus, making the merger even more appealing. After a few discussions and deliberate planning and with the aid of lawyers and accountants, they joined forces. It wasn’t long before the practice was acquired and functioning under the Tri-City Hospital banner. The physicians breathed a sigh of relief, but not everyone was happy.
I met with Anthony Costello, the practice administrator, to begin the onsite engagement with a briefing of Community Family Clinic’s history and an overview of its current position. Anthony had been with the practice for seven years and was instrumental in the practice’s continual growth and financial stability during his tenure. When the hospital began courting the practice, he wasn’t terribly concerned, as the physicians kept him informed throughout the process. It seemed the hospital’s plans were to have the practice continue under its current operations management and work toward a seamless transition. The hospital was straightforward with its plan for Community Family Clinic to convert to the hospital’s practice management billing system and also stated that the staff would be employed by the hospital, providing the employees with an appealing benefits package. The physicians and Anthony were assured that staff positions would remain unchanged even though the staff members would be working for the hospital.
Six weeks before the deal closing, Anthony asked to meet with the hospital’s vice president of human resources to develop a staff plan and to clarify his own future responsibilities. He became concerned when excuses were made and no meeting was set. He not only wanted to understand what was expected of him, but he also wanted his staff members to have a clear picture of what they could expect and what support they would receive from the hospital. That never happened. It seems the integration plan did not give enough attention to communicating with staff members, making them feel important, and clarifying what would change once the hospital took ownership of the practice.
Anthony knew working with the hospital would entail a more structured business model, but he was not prepared for the cultural shift required and the impact it would have on the entire practice. Staff members were given new boilerplate job descriptions that were vague and meaningless. The end result was the employees felt disconnected from their new employer. As frustration mounted, an attitude of “us versus them” became prevalent within the clinic. The additional red tape required to comply with hospital standards just added to the challenges and frustration of the workplace. Anthony understood he would need to provide productivity and management reports, but believed the reports fell into a big black hole since there was no discussion about how these reports were used and no feedback on the practice’s performance. For his own purposes, he kept tracking performance using the internal benchmarks he was accustomed to using before the practice joined the hospital, but this was not information the hospital showed any interest in.
The employees unanimously complained that the hospital didn’t care about them or understand how hard they worked. The hospital kept asking more of them without providing additional resources. For example, because it was a provider-based practice working for the hospital, there were far more regulatory issues that needed to be followed and forms the patients were required to complete. The staff members were not told why they needed to get these forms completed, so when the patients complained, the staff would just blame the hospital. The billers now worked at the hospital and weren’t available at the practice to answer questions from patients or staff. Staff members didn’t know how much money to collect from patients and weren’t prepared to answer billing questions. Patients were complaining and didn’t know where to turn.
Staff members also were not happy with the practice management system they felt they were forced to use and were poorly trained to do so. The scheduling module was labor-intensive, and the data entry process was not user-friendly. The system frequently locked up, and cries for help to the hospital’s IT department seemed to fall on deaf ears. To top it off, Anthony was spending more time in meetings at the hospital now, making him less available to his own staff. He had understood the hospital would require more of him, but wasn’t prepared for the amount of time it would require him to be offsite and the seemingly endless rounds of meetings he would need to attend. The employees felt ignored, and Anthony felt guilty.
Case Study
Unrealistic Expectations: Orthopaedic Associates
The hospital approached Orthopaedic Associates, a three-physician orthopaedic practice, a year ago with what seemed like an offer the physicians couldn’t refuse. The practice had outgrown its office space, which was dreadfully outdated, and the physicians were tired of schlepping to and from the hospital, seven miles from their office. The hospital proposal was very appealing, with an offer to provide Orthopaedic Associates with a brand-new office suite on the hospital campus. It would be attached to an ambulatory surgery center (ASC) and an imaging center.
The physicians began to imagine how convenient this would be: how it would save them the cost of relocating to a bigger facility by themselves, offer seamless convenience for their patients, and give the practice an edge over the competition. They dreamed about all their problems going away with a guaranteed income and the hospital’s business-savvy administrators at the helm.
Within a few months the deal was complete, and their new facility was under construction. They moved into the new office three months before my visit, but things weren’t going as they anticipated.
My first meeting was with the practice manager, Rebecca Sage. The doctors and staff used her as a sounding board to vent all their complaints. The new space was nice, but the physicians, who were accustomed to large consultation rooms, were now in smaller offices with additional workspace adjoining the nurses’ station. They complained about the lack of privacy and said they were constantly interrupted and unable to get their work done. Nurses complained that the doctors were becoming antagonistic, and there was some in-fighting. Rebecca felt hamstrung when it came to getting approval from the hospital to make changes. “It takes an act of Congress to get decisions made,” she said, lamenting the good old days when if a doctor wanted a new piece of equipment it would be discussed at the practice’s monthly meeting and ordered within a short period of time.
In addition, there was a change in attitude displayed by one of the physicians since the move. Dr. Jenkins was clearly frustrated with the hospital’s constant interference with how the practice was managed and its seeming criticism of everyone’s performance, and the highly structured business model the physicians now worked under. As her frustration continued to mount, she began to ignore it all, doing her own thing. She was viewed as a maverick by much of the practice team. She was out of sync with everyone in the practice and was starting to bristle with the patients. She was clearly unhappy, but wasn’t talking about it. She just took more time off and saw fewer patients when she was in the office. Dr. Jenkins’ productivity plummeted. She was consistently delayed in returning from the hospital, causing her to run late, and patients were complaining. The scheduler was frustrated because Dr. Jenkins wanted a lighter schedule when demand was already greater than capacity.
It was an impossible situation. Dr. Jenkins seemed generally disconnected from the practice. Her patients were bolting. Some were demanding to switch to one of the other physicians, whose schedules were already at capacity, and others were leaving the practice altogether. These three physicians who had gotten along well for years were now at odds with each other. The hospital was holding the practice responsible for Dr. Jenkins’ behavior, and her two partners were justifiably upset.
So was Rebecca. She was a conscientious self-starter with a record for being a top performer, but was beginning to feel a sense of helplessness, believing she had more responsibilities than she could possibly handle and a dismal support system. Rebecca was now required to manage both the orthopaedic practice and the hospital’s newly acquired gastroenterology practice, Anderson Digestive Medicine. She was struggling for acceptance from the new practice’s existing staff. Her workload was far more demanding with running two practices and the new responsibilities the hospital placed on her. Even though she was no longer responsible for billing, she was the one who had to handle billing questions that came up when patients were in the office for an appointment. Many of these patients were confused, not fully understanding the connection with the hospital and getting billing statements that were totally unfamiliar to them. Rebecca felt like she was drowning and, like Anthony, was being called into administrative meetings at the hospital that further decreased her ability to give either practice the management attention it deserved.
Case Study
A Sense of Abandonment: Anderson Digestive Medicine
Donald Anderson, MD, ran a busy solo gastroenterology practice with a full-time nurse practitioner. He also owned the adjoining ASC, where he spent most mornings doing procedures. He was working at capacity and in the process of recruiting another gastroenterologist when the hospital approached him about acquiring his practice. It offered to take over the recruitment of a new physician and the associated costs. It also wanted to purchase the ASC and release him from the responsibility of managing both the ASC and his practice.
Dr. Anderson was tired of the business side of medicine, and he welcomed the opportunity to join the hospital and follow suit with some of the other physicians in the community. His office manager was planning to retire, and he was assured the hospital’s management team would be able to provide the practice with a higher level of business management expertise, leaving him free to focus entirely on the clinical side of the practice. What he didn’t realize was that the small practice culture would disappear once the hospital was running the show. The camaraderie of the small practice environment and the freedom in how he managed staff decisions changed in ways he had not anticipated.
Employees felt like “Big Brother” was watching them. They didn’t like that the hospital’s human resources department gave them new job descriptions and would be involved in when and how they would receive performance reviews. The employees resented what they perceived to be a lot of unnecessary paperwork and red tape. Dr. Anderson hadn’t realized the ASC would be independent of the practice and be staffed by hospital personnel. This left Dr. Anderson with a smaller staff that felt totally disconnected from its previous team members at the ASC. Dr. Anderson was also less involved in how patient care was managed at the ASC. The staff members missed the good old days and complained about how the hospital burdened them with more work, hadn’t replaced their full-time manager, and seemed to show little interest in the workings of their practice operations.
Rebecca Sage, managing this practice as well as Orthopaedic Associates, spent very little time in the office. The hospital’s administrator was always asking for a variety of management reports, but didn’t give her a clue as to why. Rebecca had no idea how the practice was measuring up and didn’t really know what the hospital expected when it came to the practice’s performance.
Consultant’s Overview
The overarching problem between the hospital and these three practices was without question a clash of cultures and too little attention to building trust and developing shared goals and a plan to achieve them. Unrealistic expectations and weak channels of communication further compromised the relationship between the hospital and the practices (Figure 1).
Figure 1. Overcoming the cultural clash between the hospital and the practice.
Without question, there were unrealistic expectations on both sides of this equation. The hospital clearly did not have an understanding of how small medical practices function, and the practices had unrealistic expectations of the support they would receive from the hospital.
These practices did not have a clear vision of how their practice operations would change under hospital ownership and gave little thought to what the hospital’s goals were in acquiring them. The three practices did not understand the restrictions and regulatory issues the hospital would require them to abide by. They also didn’t understand the reason for all the red tape and time required to make changes and obtain approval for requests. All these factors created barriers to building trust and creating a unified front.
Analysis
The hospital did an admirable job with vetting the practices financially and managing the legal and financial requirements in acquiring these practices and developing a governance plan. This was no small accomplishment and required considerable resources, both administrative and financial, to complete successfully. Unfortunately, too little attention was given to gaining an understanding of the culture and mindset of small practices that were accustomed to making quick business and financial decisions, even though those decisions were sometimes reactive. In the hospital, such decisions often required considerable investigation and administrative discussion, and an organizational hierarchical process.
These three medical practices were previously managed in a more casual manner than that of the hospital. There was limited organizational structure, policies and procedures were not well-defined, and, in fact, only one of the practices had formal job descriptions for the staff. The physicians and staff did not realize how difficult it would be to adjust to a more structured business model.
These issues were immobilizing the hospital’s ability to build trust and create unity between it and the practices it now owned. It needed the physician leaders and practice managers to be part of the solution. Below are the major issues that contributed to the friction and dissatisfaction that were festering within these provider-based practices and the performance issues that concerned the hospital’s administrative team:
No shared vision;
Failure to create unity between hospital administration and the medical practices;
Inadequate staff integration plan;
Lack of physician performance benchmarks and clear productivity expectations;
Failure to develop effective channels of communication;
Limited support from the hospital’s human resources department;
Disconnect between the hospital’s human resources department and the practices;
Poor morale; and
Dissatisfied patients.
Recommendations
Our goal was to focus on improving communication, creating unity through a strategic process that would identify shared goals and negotiate how these goals would be achieved and what would be required of each key stakeholder to accomplish them:
Schedule a strategic retreat, planned and facilitated by the consulting team.
Develop a strategic plan to:
Determine the shared vision;
Establish specific goals; and
Assign appropriate responsibilities.
Create and maintain operational unity by:
Conducting a meeting with the hospital team, physicians, and each practice administrator to discuss the findings of my assessment and recommended approach to resolving existing problems and providing a more promising future;
Establishing a work session with the practice administrators, hospital physician liaison, and the vice president of human resources to develop a staff integration plan for each practice, clarifying what support would be provided to the staff by the hospital; and
Developing cross-functional teams to guide and participate in the following actions:
Distribute a job description questionnaire for each staff member to complete in order to prepare more accurate job descriptions;
Prepare a training guide for each position based on the new job descriptions;
Develop key performance indicators for each position that will be used as a performance metric during the employee’s performance reviews;
Schedule monthly staff meetings for each practice; and
Schedule quarterly combined staff meetings with all managers and appropriate hospital administrative participants.
Outcome
After reviewing my report and determining the most practical approach to achieve the organizational goals, there were a number of executive staff meetings. A timeline was developed to approach implementing the recommendations. The ultimate goal was to develop a trusting relationship between the executive team of the hospital and the medical practices it acquired. This required developing shared goals and creating a work plan based on mutual input that would build unity and develop solid work teams with a shared purpose.
Lessons Learned
Unrealistic expectations and a failure to understand the importance of cultural differences between hospitals and medical practices often result in division and failure to unite. In this situation, the problem was addressed early on, and changes were made before the hospital reached out to other physicians to become part of its organization.
Understanding cultural differences when bringing different groups and entities into a collaborative partnership is critical. Culture is the heart of each organization — its beliefs and what it stands for. Integrating cultural beliefs into a future partnership can only happen if those beliefs and ethics are aligned with those of the potential partners. It is important to start the partnership process by having honest discussions and gaining an understanding of what each stakeholder thinks it will gain from the partnership and understanding each other’s intentions. What are their goals; what do they hope to achieve; and, just as importantly, what will each of them give that will make the partnership stronger, and what will the merged group gain? It is through this process that each person can make the best decision; and when a person chooses to come on board, he or she will contribute to building trust and unity.
Finally, physicians who are accustomed to being the owner and making their own practice decisions are sometimes challenged with the new business arrangement. They can sometimes become disconnected from the strategic planning and financial requirements essential to sustaining the hospital-owned, provider-based practice. The relationship between a hospital and the medical practices it acquires calls for a clear delineation of responsibilities and expectations, as well as defined performance goals.
The Payoff
The relationship between a hospital and the medical practices it acquires calls for a clear delineation of responsibilities, expectations, and performance goals to address cultural differences that may exist. By setting these in place ahead of time, the organization can head off frustration, disillusionment, and disengagement while building trust, respect, shared values, and common goals for success.
Excerpted from The Patient-Centered Payoff: Driving Practice Growth Through Image, Culture and Patient Experience by Judy Capko and Cheryl Bisera.