Transforming the Healthcare Landscape

While increasing economic alignment between hospitals and physicians is a reality of the marketplace, most hospitals have yet to achieve broad alignment across their physician base. With the current national emphasis on healthcare reform and significant changes in reimbursement on the horizon, there is both a compelling need and a tremendous opportunity for healthcare organizations wishing to close their remaining alignment gap as rapidly as possible.

According to a nationwide survey of healthcare senior executives, a key determinant of success for hospitals and health systems is physician alignment.  A high level of alignment between physicians and healthcare leaders implies:

  • Common understanding of mission and vision
  • A highly adaptive and transformative culture
  • Agreement of key goals and objectives
  • Consensus on critical priorities
  • Willingness to focus energy on those priorities

Alignment as defined has been difficult to achieve given the increasing time demands and financial performance pressures placed on all parties.  But, it is certainly worth the time and effort as the survey findings indicate:

  • The better the alignment, the higher the revenues and the lower the costs.
  • The most important alignment indicator leading to revenue growth is physician involvement in strategic decision making.
  • Hospitals and health networks with above-average alignment claimed 13% positive impact on annual revenue growth year over year.
  • Sixty percent of respondents felt their physicians were not sufficiently aligned with the institution regarding clinical quality.
  • The top three priorities for hospitals and health systems as focus areas for improved alignment are: clinical quality, utilization management and service line excellence.

Many factors go into aligning hospitals and physicians.  Six key areas of alignment are:

  1.   Recent trend in relations between a hospital and its physicians – Hospitals scoring well in this area already have a culture of cooperation that lends itself to higher overall performance.
  2.   Current state of alignment – A closely aligned hospital-physician team has shared goals, understands what actions must be taken to achieve those goals, and works toward them with clearly defined metrics which enable them to track progress.
  3.   Status of a formal alignment plan – Successful hospital-physician alignment does not happen by accident and requires a formal plan in place.  While the elements of an alignment plan may vary considerably from one organization to another, there are several elements important to any successful plan.
  4.   Physician involvement in strategic decision making – The need for physicians and hospital executives to work collaboratively is hardly new.  Although every market is different, there is a fast growing trend to more economic alignment among hospitals and physicians.
  5.   Physician engagement in care improvement programs that support clinical quality, patient safety, and efficiency – The demand for better coordination of patient care requires re-engineered clinical and operational processes that require a level of commitment that cannot be achieved without well-conceived strategies to address culture transformation and enhanced alignment.
  6.    Degree to which referrals stay within the hospital or system – If physicians refer or take patients outside the system, it can often be a reflection of physician frustration and should be viewed as an opportunity to focus attention on areas where improvement may be needed.

Hospitals and health systems embarking on major initiatives will benefit greatly from careful consideration of physician alignment and the cultural dimensions of transformation—both early in the planning process and throughout the life of the initiative.  I believe that those organizations that most effectively address alignment and culture are likely to be most successful in the execution of such initiatives.  What are your thoughts?


Mobilizing for A resource Revolution (McKinsey Global Institute)


Over the next quarter century, the rise of
three billion more middle-class consumers
will strain natural resources. The race is
on to boost resource supplies, overhaul their
management, and change the game with
new technologies.

McK mobilizing_for_a_resource_revolution