How Healthcare Institutions Can Mend Relationships with Their Physicians

How Healthcare Institutions Can Mend Relationships with Their Physicians

Improving the relationships between physicians and their institutions can improve quality of care.

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How Healthcare Institutions Can Mend Relationships with Their Physicians

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The healthcare world is turbulent, and it’s been that way for a while. With all the recent changes in organization, payment and technology, there is even more anxiety about what’s to come. Based on a national survey recently conducted by Bain & Company, we believe that we’re heading for a period of greater tension in the historically uneasy relationship between physicians and healthcare facilities. This discord could lead to a slowdown or even a reversal of physician employment trends and more battles over which devices physicians can use and which drugs they can prescribe.

Over the past five years, 72% of physicians surveyed by Bain who changed jobs said they went to work for “management-led organizations,” including hospital systems and large physician groups. All parties entered into these relationships with the best of intentions—tighter coordination of care, stronger referral bases for hospitals and increased financial stability and job security for physicians. But we’re starting to see the seeds of problems. A major reason for the tension is a lack of alignment between physicians and their organization’s vision and goals. Physicians are not confident that their institution has the right organizational structure in place and they feel substantially disengaged from the decision-making process. Another reason for dissatisfaction is the increasing focus by the procurement departments on cost reduction, which physicians believe can adversely affect quality of care. Forty percent of surgeons say they no longer use a product simply because it is not on a preferred list at the hospital where they work. Likewise, 65% of office-based physicians say drug formularies limit their prescribing decisions and more than half say these limits constrain their ability to provide quality patient care.

Who is making these purchasing decisions and why are they producing such conflict? As decision making shifts away from physicians to decisions shared with the procurement department, two-thirds of surgeons report pressure to go along with their hospital’s purchasing guidelines. Procurement officers see it differently. Only half as many believe surgeons are pressured to cooperate. And while surgeons and procurement overwhelmingly agree that reliability and clinical evidence are important purchasing criteria, they disagree on the importance of price—only 53% of surgeons believe lowest price should be an important or a very important purchasing criterion, compared with 72% of procurement officers. These disconnects are causing increasing conflict with little relief in sight.

The good news is that these relationships can be salvaged. Improving the relationships between physicians and their institutions can help to strike the right balance between clinical and economic decision making about the purchase of devices and drugs.

What to do? First, health care organizations need to redouble their efforts to involve physicians in key decisions from the very start of the process. No longer can administrators rely on support for decisions in which the physicians had no real input. Although this seems an obvious solution, implementing it will take significant commitment. Ignoring this key issue will certainly cause relations to deteriorate, with consequences for all stakeholders. Second, administrators should work to establish true partnerships with vendors, recognizing their role in sharing best practices about their products. Just playing them off against one another for the lowest price can further alienate physicians who may not agree that the cheaper products are fully substitutable. Third, pharmaceutical and device companies need to recognize that a purely clinical approach to sales can limit the successful adoption of many products and provoke even greater conflict between physicians and procurement departments. Embracing a fresh approach to both the clinical and economic value of their products can help smooth the tension with both pillars of their customer base.

Although exhorting everyone to communicate more effectively may seem like an anodyne solution, it will require more than communication to mend tense relationships. There must be meaningful action and follow-through. In the case of the dissatisfied physicians we interviewed, their unwillingness to recommend their organization to others as a place to work reversed itself significantly when their institutions helped those physicians feel inspired by the mission and vision of the organization and engaged them meaningfully in decision making. Fixing these areas of friction can increase cooperation, and that can improve care quality, lower costs and eliminate significant wasted effort.

Written by Josh Weisbrod and Tim van Biesen, New York-based partners in Bain & Company’s Healthcare practice.


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