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Related Experiment Videos

What are IDSs doing about poorly performing physician networks?

W H Morrison1

  • 1Longshore & Simmons, Conshohocken, Pennsylvania, USA.

Healthcare Financial Management : Journal of the Healthcare Financial Management Association
|November 7, 2000
PubMed
Summary

Most integrated delivery systems' (IDS) physician networks are unprofitable, with limited capitation revenue. Few organizations utilize relative value units for physician productivity measurement, despite their effectiveness.

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Area of Science:

  • Healthcare Management
  • Health Economics
  • Physician Network Analysis

Background:

  • Integrated delivery systems (IDS) often acquire physician practices to enhance care coordination and financial performance.
  • The financial viability and operational structure of these acquired physician networks are critical for healthcare organizations.

Purpose of the Study:

  • To assess the financial performance and management structures of integrated delivery system (IDS) physician networks.
  • To identify common practices in physician compensation and revenue allocation within these networks.

Main Methods:

  • A national survey of 105 healthcare organizations was conducted.
  • The survey collected data on network profitability, revenue sources (including capitation), organizational structure, and physician productivity measurement.

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Main Results:

  • Most IDS physician networks are operating at a financial loss.
  • Capitation revenue constitutes a small portion (≤25%) of total revenue for 75% of respondents.
  • No standardized method exists for allocating capitation revenue among physicians.
  • 43% of physician networks are structured as hospital departments, cost centers, or divisions.
  • Only 21% of organizations employ relative value units (RVUs) to measure physician productivity.

Conclusions:

  • The current model for IDS physician networks faces significant profitability challenges.
  • The reliance on capitation is limited, and revenue allocation methods lack standardization.
  • Underutilization of effective physician productivity measures like RVUs may hinder network efficiency and financial outcomes.