Broader Approach Urged for Evaluating Financial Performance of Employed Physicians

(Nov. 21, 2014, Westchester, Ill.) – Current approaches to measuring the financial performance of employed physicians can obscure the value that employed physicians bring to an organization, according to new research released today by the Healthcare Financial Management Association (HFMA).

Based on productivity alone, fewer than 25 percent of senior financial executives surveyed expected to see a positive return on investment during the first two years of physician employment, a finding that researchers described as “not surprising” in light of current payment methodologies and productivity decreases that often occur when physicians move into an employment setting. However, instead of using “loss per physician” as a financial metric, researchers say, a health system should fully account for the value that employed physicians bring to the system. That is, looking at the system as a whole, management should determine an acceptable level of expense to generate sufficient revenues to maintain the system’s financial health and invest in physician financial support accordingly.

“It’s vital to ensure that the contributions of physicians are accurately valued and described,” said HFMA president and CEO Joseph J. Fifer, FHFMA, CPA. “Physician commitment to care transformation is critical to an organization’s success in making the transition to a value-based health system.”  

The report was issued against a backdrop of continued growth in physician employment by hospitals and health systems, with 64 percent of hospital- and health system-based senior financial executives surveyed pursuing a physician employment strategy. The report also addresses clinically integrated networks and accountable care organizations as viable alternatives to physician employment for those providers seeking greater alignment.

Fundamental elements of a physician strategy identified and addressed in depth in the 24-page report include the following:

  • Determining the best alignment opportunities for physician practices in a particular market
  • Building a sufficient primary care base to support specialty services
  • Communicating the need for flexibility and change in physician compensation agreements
  • Developing physician leadership and governance structures

The research findings are detailed in Strategies for Physician Engagement and Alignment, based on quantitative and qualitative research conducted by HFMA in March 2014. Of 118 responses to the survey of senior financial executives, 55 percent represented stand-alone hospitals and 45 percent represented health systems. Site visits and interviews also were conducted with five hospitals, health systems, and medical groups.

To download the full report, visit hfma.org/valueproject.

Karen Thomas
Healthcare Financial Management Association
(708) 492-3377
kthomas@hfma.org

About HFMA

With more than 40,000 members, the Healthcare Financial Management Association (HFMA) is the nation's premier membership organization for healthcare finance leaders. HFMA builds and supports coalitions with other healthcare associations and industry groups to achieve consensus on solutions for the challenges the U.S. healthcare system faces today. Working with a broad cross-section of stakeholders, HFMA identifies gaps throughout the healthcare delivery system and bridges them through the establishment and sharing of knowledge and best practices. We help healthcare stakeholders achieve optimal results by creating and providing education, analysis, and practical tools and solutions. Our mission is to lead the financial management of health care. hfma.org

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The Healthcare Financial Management Association (HFMA) provides the resources healthcare organizations need to achieve sound fiscal health in order to provide excellent patient care. With more than 40,000 members, HFMA is the nation's leading membership organization of healthcare finance executives and leaders. HFMA helps its members achieve results by providing education, analysis, and guidance, and creating practical tools and solutions that optimize financial management. The organization is a respected and innovative thought leader on top trends and challenges facing the healthcare finance industry. From addressing capital access to improved patient care to technology advancement, HFMA is the indispensable resource for healthcare finance