Using Quality-Focused Networks to Align Hospital and Medical Staff Relationships

Change is constant throughout health care markets nationwide. In both highly competitive urban areas and rural markets with sole community providers—-as well as settings in-between—health care delivery environment and hospital-medical staff relationships are being reshaped.

Hospital medical staff configurations typically resemble one of the following:

• Some physicians, principally medical and surgical specialists, can be classified as "reluctant consumers" of hospital services. These owners of free‑standing and/or group practice‑affiliated ambulatory surgical, diagnostic and treatment facilities, are required to maintain staff privileges for more complex services requiring hospitalization.
• Other physicians, principally primary care and some office‑based specialists, are fairly categorized as "absent users" of hospital services, since hospitalist programs have made active medical staff membership largely unnecessary for them.
• An increasing number of physicians have become "dual citizens" as health system employees in addition to their status as members of the hospital's medical staff.

The emergence of distinct groups within a single medical staff creates stress for both physician‑to‑hospital and physician‑to‑physician relationships. In some communities, tension emerges between dual-citizen physician staff members and reluctant-consumer and absent-user physicians on that same staff. Since physicians need to direct patients for care at a designated hospital or facility, an insider-outsider dichotomy and any related conflict can be a challenge for hospitals and health systems.

In response to these relationship concerns, among other vehicles, quality focused networks (QFNs) may represent a construct that can help align hospitals and diverse medical staff members to better achieve shared goals.

Quality Focused Networks

A QFN organizational structure includes hospital-employed and independent physicians who belong to a common medical staff, and become engaged collaboratively to deliver cost-effective, quality patient care. A QFN can help align divergent goals and needs of all three physician types around the shared goal of delivering patient care. This type of organization can also be instrumental in repairing strained relationships among hospital medical staff.

No two QFNs will be structured or operated in precisely the same way. Nonetheless, common attributes typically include the following:

• Participation by one or more hospitals and a diverse representation among each hospital's medical staff
• An interoperable electronic health record (EHR) serves as the data platform for quality and patient care initiatives, coupled with systems to access and assess claims data
• Focused programs are directed at quality and cost, including clinical protocol development, clinical best practices and monitoring linked to evidence-based medicine
• Genuine commitment is demonstrated by hospital-affiliated dual citizens, and hospital resources are deployed to help drive quality-focused initiatives
• Important payers are willing to incorporate quality and outcomes measurements, as well as price, in determining reimbursement for inpatient and outpatient health care services

Regulatory Developments
A number of regulatory, technological and operational changes are converging to facilitate the development of QFN-type organizations and initiatives:

• Government adoption of exceptions to the Stark physician self-referral law, and the expansion of safe harbors under the Anti-Kickback Statute that allow hospitals to actively support adoption of EHRs and associated technology. These rules permit hospitals and health systems to sponsor and pay a large portion of the costs associated with new technology that can serve effectively as a QFN's central nervous system.
• Emergence of "clinical integration" as a valid basis, recognized by anti-trust authorities including the Federal Trade Commission, for bringing together competing and otherwise unrelated providers for quality-focused payer contracting and other purposes without violating antitrust laws. Historically, competing providers could only engage in joint contracting activities by sharing financial risk—but a properly constructed clinical integration and quality‑focused program is now recognized as a lawful mechanism for collaboration.
  
• An increase in the portion of funds devoted by public and private sector payers to quality and cost management in patient care services. The Medicare PQRI initiative is an important example in this regard.
  
• The government's somewhat increased tolerance of exceptions for gain-share and related payment incentive programs and recognition of the potential value of in incentive alignment along cost, quality and other grounds. Among other actions, the Centers for Medicare & Medicaid Services (CMS) proposed new exception to the Stark law—published in the 2009 PFS proposed rule published in July —-that would permit new "shared savings" and "incentive payment" programs involving hospitals and physicians. The programs would effectively build on gain-share, cost management and quality focused programs, e.g., PQRI, pay-for-performance, that are emerging as part of the agencies' strategy to help rein in health care costs.

Opportunities for Change

A convergence of business, professional and regulatory variables creates opportunities that encouraging development of a QFNs and similar initiatives among hospitals and members of their medical staffs. No single initiative involving QFN development is likely to address all the complexities of hospital-medical staff relations, but the development of clinically integrated networks with a dedicated focus on quality, cost and related initiatives may be an effective strategy to help hospitals maintain positive relationships with the increasingly diverse members of their medical staff.