PHYSICIAN GROUPS: ‘Outmoded and Defensive’ Management Responsible for Crises
In response to recent reports of state physician groups' fiscal crises, Dr. Robert Shomer, former president of Hawthorne Community Medical Group in Los Angeles, argues that physician groups are still capable of providing high quality, cost-effective care, so long as they have sound governance. He writes:
"Despite all the recent bad press about their financial condition, physician groups are the most effective vehicle to deliver high quality, cost effective care. Delivering critical medical services, however, does not provide an exemption from business efficiency. If run correctly, physician groups can provide the support systems needed to deliver high quality patient care at affordable rates. But without efficient business models, modern managerial techniques, comprehensive information systems, and management incentives tied to quality patient care, a physician group cannot be financially viable.
"HMOs only bundle together packages of physician services. They do not deliver medical care, nor are they insurance companies since they pass on risk to physicians. They spend a considerable part of the health care dollars they receive in competing against each other, yet they all contract for medical services from the very same physician groups. If the services are the same, the basis for the amount of health care dollars spent on HMO competition is highly questionable.
"Although completely dependent on the availability of these services, HMOs have succeeded in keeping the physicians who provide them in a completely subservient position. They are able to do this mainly because they have created better information systems, are better managed, and because the public and the media do not completely understand the actual dynamics of managed care. This lack of knowledge allows a "pass the buck" mentality for managers and HMOs, and patients do not know where to turn for the service they deserve.
"With the help of outside consultants and entrepreneurs, California physicians have attempted to respond to the power of the HMOs by organizing into groups. Management of these groups, however, has all too often been inefficient, incompetent, and even greedy. Such managers focus on cosmetic changes and forming larger paper networks. Instead of responding to lower HMO rates by increasing efficiency through effective information and support systems for physicians, they slash salaries and staff. Morale plummets, and the problems patients face only increases. Concerned with maintaining their own power, such managers used outmoded and defensive "central command and control" administrative structures. All too often they have been computer illiterate and did not understand how to implement the efficient information systems absolutely necessary to stay in the business of delivering high quality and cost effective health care. Since their own incentives were not linked to service quality, these managers, in many cases, continued to earn the same or even more money.
"In addition to HMOs attempting to maintain their own profit margins by squeezing the physicians, we are now seeing in California many effects of greedy, inept, or incompetent medical group management. The decline and fall of Medpartners can be held up as a good example of many of these problems, but before they its troubles worsened the situation further, such management was in place in many of the groups they absorbed" (Shomer, special to California Healthline).