Why can't you reduce losses from physician practices? Culture

For nearly 20 years we have been helping health systems improve the financial performance of their employed physician practices.  Sometimes the results of the effort are dramatic and, at times, not so much.  What makes the difference? Culture.


Changing the culture of an organization is much like turning a tanker.  The process takes great effort and is slow but the goal is reached.  Physician networks lose money because the business model is flawed.  Unless that model is changed the results will remain the same.  One CEO, faced with losses that exceeded $9 million per year set a goal of a $3 million improvement.  Presented with an opportunity to build the bottom line by more than $6 million he decided to do nothing because the “barn wasn’t burning” yet.  Another client with an $85 million annual loss was hesitant to close unproductive practices and streamline the administrative structure.  The end result was a $10 million improvement but it could have been dramatically higher.


All physician networks have a strategic value.  Often that strategy requires that a subsidy be provided but many practices exist because the community needs the resource and these should operate at or near break-even.  Losses are tied to a small list of causes: 1) staffing, 2) inefficient practice size, 3) revenue cycle, and 4) physician compensation.  Unless you are willing to address all of these in a committed fashion your performance improvement will be modest at best, even if your barn IS burning.


Want to learn more about our approach to performance improvement? Contact Greg Mertz, Managing Director, at gmertz@physicianstrategiesgroup.com.


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