Katz, Sapper & Miller Insights

Provider Realignment: How Well Is Your Physician Enterprise Functioning?

Jimmy W. Burnett, Mark Benninghoff

The COVID-19 pandemic has profoundly altered healthcare. Staffing shortages, soaring labor costs, discontented providers, and industry consolidation have changed the paradigm.

As health system leaders, you may be reevaluating your operations – questioning provider suitability, specialties, locations, and compensation. And you may be rethinking how to prioritize physician services in light of changing dynamics.

Evaluation of your physician enterprise is a strategic, cost-effective way to adapt to new market realities and minimize losses. In this article we will explore the anatomy of a provider realignment and how that affects your physician enterprise.

Strategic Positioning and Specialty Services

A crucial step in realignment is evaluating your physician enterprise strategy. Does your current outpatient operation suit your community’s needs, payer mix, and market share? Or are your services mismatched with community needs, lacking in-demand specialties, with outdated technology, inefficiencies, and administrative gaps?

Part of assessing your strategy involves assessing your specialty services. When have you last evaluated your service lines, like obstetrics and cardiology, to determine their viability and profitability? Although these services may not be lucrative by themselves, do they drive other profitable services?

If key physicians have relocated, leading to gaps in service and expertise, or if your outpatient practices were acquired along with their providers without thorough consideration of how they fit into your larger plan, you need to adjust your strategy to enhance your market relevance.

Managed Care Contracting and Incentives

Even if your organization has long-established payer contracts, you should reexamine these agreements regularly. Changes such as growth, reductions, or adding new practices can affect your value to the payer network, possibly justifying a rate increase.

Keep reading here.