Rae Woods: From Advisory Board, we are bringing you a Radio Advisory. My name is Rachel Woods. You can call me Rae. Rae Woods: We spend a lot of time talking about the physician landscape on this podcast in part, because it is changing incredibly quickly. Not only is the landscape of physician types diverse, there are also more partners than ever before. In this conversation I want to talk about how those two entities actually work together and what a strong partnership actually looks like. To do that I've brought physician expert, Eliza Dailey. Rae Woods: Hey Eliza. Welcome to Radio Advisory. Eliza Dailey: Hey Rae. Glad to be here. Rae Woods: I cannot believe you have convinced me of this, but we are going to have a conversation about my least favorite topic in healthcare, or at least my least favorite word in healthcare. Eliza Dailey: I know, I know; the term "alignment". We're going to be having a conversation about why that's not my preferred way to talk about it. Rae Woods: It's so triggering for me. It's triggering for me on multiple levels. It's triggering for me, because I don't think it's the right way to talk about physicians, but also as somebody who works for a consulting firm, oh man, it's just one of those buzz words. Getting aligned on something; it's instant eye roll for me. Eliza Dailey: Yeah. Well after six months researching the topic, I think I've come across every single way that executives define it in healthcare. So I'm with you. It's one of those ones that means everything and nothing at the same time. Rae Woods: Let's actually get into it then. I think we're going to propose an alternative term here, and that term is "physician partnership". Because there's all these definitions out there, because there are some people like me who get really nitpicky on language, what do we actually mean when we say physician partnership? Eliza Dailey: Sure. When we're talking about physician partnership, we're referring to those non-employment or non-W-2 relationships between independent physicians and other entities. Importantly here, we're not just talking about the relationships with hospitals. We're really looking at all the different ways that other organizations can partner with independent docs. When you actually look at the data, the size of the opportunity is pretty large. About half of physicians still work in practices that they wholly own. So that really is the slice of the pie that we're talking about today. Rae Woods: And this is also important context for a lot of the previous episodes we've done on the physician landscape and how it's evolving. We know that there are all of these different types of potential partners that are out there that are looking at that half of physician practices and saying, how do I work better with you? How do I partner with you? Much of the industry doesn't call this physician partnership. They call it alignment, which I've already admitted is my least favorite term in healthcare. But I think the goal there was to talk about kind of looser affiliations that different stakeholders could have with these physician groups, and let's be honest in affiliation that was legal and outside of outright employment. Tell me why this is actually an outdated way of thinking about doctors. Eliza Dailey: When we thought about hospital physician alignment in the past, those relationships tended to be pretty one-sided and focused mostly on the hospital and what they wanted to get out of the relationship. And in the vast majority of cases, that was referrals. You even just think about the term "alignment" and it's all about aligning one thing to another thing, and that's been independent physicians to hospitals. Well now we see independent physicians getting more sophisticated, larger, more advanced. They are equal partners in their own right. We also see that they're partnering with a lot of other organizations too, not just hospitals. So that's one reason we had to take a more expansive view of the topic. Rae Woods: And the expansive view is partly due to the fact that the physician landscape is strong. It is not a one-sided partnership; it is a two-sided partnership. But the other reason why I think it might be more expansive is that I hope this is about more than just referrals. And you are right, every time that I spoke to a hospital or a physician executive over the past seven years, when they'd asked me about alignment, I kind of point blank said, "Really, what do you mean here? Do you just mean referrals or do you mean anything else?" I hope you're going to tell me that strategic partnership is about more. Eliza Dailey: Absolutely. In successful partnerships, you probably will get more referrals or more sales if you're working with physicians in a non-clinical way that is kind of a side benefit or an added perk. But at the heart of a partnership that's truly strategic, that's not the primary goal. Rae Woods: We're talking about partnership, but at the same time, we know that these groups, whether we're talking about new partners, hospitals, classic physician groups also need to compete with one another. In a world where you need a two-sided relationship, how do you collaborate while still being able to compete at the same time? Eliza Dailey: That's one way that today's partnerships look different than those of the past is that you're going to be simultaneously collaborating and competing at the same time. We often refer to this as co-opetition. And that really is the new normal for these relationships that we're seeing today. I think importantly, when I talk to executives, they tend to take a pretty unilateral view; either we are partnering with this org or we are competing with them. But the reality is that both can exist as long as you're thinking in kind of scope discreet areas. So where can you concretely partner? Where are you planning to compete? So actually looking for those pockets of opportunities on both sides of the equation. Rae Woods: I wonder if you can give me an example here, because I think, let's be honest, in the old school one-sided model, there was a clear winner; it was the hospital that was trying to win. Under this new framework of strategic partnerships, is there one winner? Is that even the right goal? Eliza Dailey: To say it point blank partnership isn't about winning. Ideally both sides are benefiting in some way, but actually the thing that makes partnerships truly strategic is when both sides are willing to give something up, they're willing to make a trade off, take on a risk, put something on the line in order to reap the benefits of successful partnership. Rae Woods: What's an example you've seen there? Eliza Dailey: Sure. There's one large health system that I've worked with across the last several months who decided to make a pretty sizable technology investment in the independent practices in their market. They essentially are rolling out their EHR to all of the private practice physicians that they work with. On the surface, you would think that that's a pretty lopsided arrangement. The system is making this sizeable investment, they're dedicating a lot of resources, it's really costly, and the independent physicians aren't nearly ponying up the same amount of capital. To me, that's actually the sign that this partnership is strategic because the system is willing to accept unequal benefits and risks for the sake of maintaining closer relationships with their independent physicians for the sake of better data sharing in their community. Rae Woods: I like that example, but I have to believe that our listeners are still going to be a little bit skeptical at this point. Compromise sort of by definition means that not everybody is happy. In the example you just gave, the system is ponying up a ton of money and giving it to these independent physician groups. Why in this case is it worth it? Eliza Dailey: My recommended litmus test that I really encourage all partners and the organizations that they're partnering with is to ask themselves, can I better achieve my goals working together than I can on my own? I don't want to oversimplify things here, but if the answer is yes, then that means that the partnership is worth it. This is why it's so important that you actually agree on your strategic goals and what you're trying to achieve together in advance. Rae Woods: Especially if it's something that is more than referrals. Eliza Dailey: Exactly. Exactly. I do think there's a lot to be gained from partnership, but I do think there's an opportunity cost if you don't too. If you don't partner with the independent physicians in your market, they will partner with someone else or they will just go out and do it on their own. So lots of reasons to be opting to partner here. Rae Woods: And like we said, they have plenty of suitors out there who are not just hospitals anymore. Rae Woods: Let me again channel the skeptic listener or maybe I'll say the nervous listener who's hearing about a health system that is spending probably millions of dollars on this EHR rollout and is going, "Hmm, isn't that pretty darn close to paying for the behavior that one party wants from the physicians," which of course we know is not allowed. What do you want to say to that kind of skeptical, fearful listener? Eliza Dailey: Sure. I'll first say that I'm not a lawyer. There are laws that regulate these things and this is definitely one area where [inaudible 00:09:56] comes into play. So I'd encourage anyone to consult their own legal counsel. Unfortunately, I am not that. Rae Woods: Nor is Advisory Board. Eliza Dailey: Nor is Advisory Board. Yes, exactly. I do think this is where the contractual piece comes into play because for any strategic partnership, there are the contractual mechanisms that underlie it, and that is actually where alignment comes in. Alignment models are the way that you operationalize or legalize an arrangement. Are you going to partner via JV, co-management? Are you going to set up a membership model? You need both of those things, both the larger strategy and the actual operational contractual models to make it come to life. Rae Woods: We know that we need more of a two-way relationship when it comes to any partner, hospital or otherwise, working with an independent physician group. Do we know what physicians actually want from their potential partners? Eliza Dailey: We do. I can share a couple of things here. I would say the biggest opportunity that we heard from independent groups in our research is to partner around value-based care. We've been tracking for a while that independent physicians tend to be more serious about risk-based payment. And a lot of them are continuing to double down. This is an area where they're actually proactively looking for potential partners. If you can provide a solution here, offer them data, offer them the infrastructure they need to succeed in these contracts, those are the types of things that they're looking for. Eliza Dailey: For example, the number one thing we heard in our interviews that independent physicians want is access to real-time clinical data. They specifically want it for patients who are attributed to them and their value-based contracts so they can see patient progress, when they're admitted to a hospital, they can see what their utilization looks like when they're getting care outside of their practice, all of those things that might all ultimately impact their bottom line performance in risk-based arrangements. Rae Woods: Because it impacts their ability to control cost, uphold quality under a value-based payment agreement. Eliza Dailey: Exactly, exactly. It's a whole lot easier if you're on the same EHR. Most organizations are not. So we're seeing a lot of workarounds here, either standing up ADT feeds or setting up encounter notifications. I think it's an important opportunity for business partners and tech vendors to be able to provide a solution to bridge that gap. Rae Woods: So they want help with their business model, they want help with value-based care. What else are they looking for? Eliza Dailey: The other big thing that physicians are looking for is autonomy and to retain their decision-making. The physicians who have remained independent today are independent by choice. When we talk to them a lot of them actually call themselves fiercely independent. So we've seen partnership models that allow for more flexibility in autonomy, surge and popularity. In the past, I think a lot of partners have viewed the models that allow for more control to be the more successful ones, but we're actually seeing now that because the landscape has changed, the inverse is true. Eliza Dailey: For example, we're seeing MSOs become more popular; management services organizations. Those are kind of membership type models that physician practices themselves have run for years. We're actually seeing hospitals begin adopting some of those looser membership type models too. Rae Woods: By the way, this is exactly why we decided to create a new framework for how to look at independent physicians, physician partners in the market. And that's why when we had that episode with Sarah and Prianca we spent so much time talking about the role and the kind of scale of autonomy and what different partners could provide. Eliza Dailey: Yeah, exactly. I think importantly, this is an area where hospitals have been further behind. And so we see them actually looking to other types of partners and suitors in the market and drafting off some of the models that they've been rolling out to date. Rae Woods: This is exactly where I wanted to go next. If we know what the physicians want, they want help with their business model, they want more autonomy, how can potential partners actually differentiate themselves, especially given the fact that the market is just more and more crowded? Eliza Dailey: First, I would say that partners need to make sure that they're going out to the market with a pitch that actually reflects the needs and wants of physicians today. So value-based care support, autonomy, the things we just talked about. But really just as important as what you're offering is how you work with physicians. What does it actually feel like to be a physician who partners with your organization? We've seen physicians become really adamant that they want to be involved in decision-making, they want to feel like they have a voice, that they are valued as a strategic partner. In some ways that's equally as important to the actual tangible offerings you're providing to physicians in your partnership. Rae Woods: By the way, I want to underline something that you said that our audience might have missed, which is that some partners do this better than others. A consistent feature we've seen across shifting power dynamics over the last several months, several years is that hospitals tend to be at the bottom of the list, which is so interesting to me, given where we started with alignment being this concept that historically favored hospitals, and today, I'm not sure that it does or that it should. Eliza Dailey: That's exactly right. Rae Woods: Let me continue to kind of channel these potential partners, whether or not we think they are a good partner or not. It must be difficult from their perspective because they're working with several physician groups and several kinds of physician groups. So should they have a single partnership strategy or are they sort of forced to have many? Eliza Dailey: That's an inherent tension that we heard throughout this research; how to strike the right balance between working with independent physicians at scale, while still providing them kind of the tailored support that they want and that they feel is important. The answer is yes and no. You want to have some strategy that outlines a consistent approach to partnership across multiple entities that your organization is really holding hands on. But at the same time, you really need to be rolling out partnerships at a local level. Eliza Dailey: What we found is that market dynamics, like the number of competitors or the size of the organization or the other players that are in the market, really dictate what these partnerships look like in practice. So especially for those organizations that work across several markets, you will have an overarching strategy, but what partnership actually looks like in practice and the individual ways that you're working with individual physician groups, will look different. Rae Woods: So beyond having too narrow of an approach to partnership, what are some other big reasons why we see these things break down? What can we help our listeners avoid as they work with physicians? Eliza Dailey: A couple of things here. I would say the first is overly relying on the contractual models to really underpin these partnership arrangements. We find that organizations tend to run at the models or the specific contracts without actually thinking through what the shared purpose is that they're trying to achieve, what their overarching strategy is. And like I mentioned before, you need both. I would encourage organizations to really invest in the upfront considerations around you and your partner's goals. What are you trying to achieve? How will you measure success? Things like that. Eliza Dailey: The other thing, and this was actually one of the most interesting things we found in the research is that those partnerships that hinge on interpersonal relationships are actually more vulnerable. How many times have you talked to an executive and they say, "Yeah, I'm buddies with the CEO down the road and we have this great relationship." I think that's great, but it actually makes the partnership pretty vulnerable because we find that when those executives turnover, not uncommon in healthcare, you actually have to start the partnership from scratch. So rather than focusing on those individual interpersonal executive relationships, how can you build trust as an organization and really embed that across all levels. Rae Woods: If that's what we want our listeners to avoid, what are the hallmarks of successful partnership? Eliza Dailey: Successful partnerships place more importance on having a shared purpose and shared understanding of what both sides are trying to achieve rather than the specific contractual model. I'd encourage executives to really invest in that upfront discussion with both sides present at the table to really understand what your goals are for the arrangement, really building that trust upfront and acknowledging how this partnership will be different than maybe those of the past. Rae Woods: Even so, I think that we're still a little abstract right now, to be honest. I think folks might be nodding their heads and saying, yes, I agree with purpose first, contract second, help me make this real. How will an organization know if their partnership is actually successful? Eliza Dailey: Just like any strategic initiative, it's important to have metrics of success. Particularly with partnership, I encourage organizations to actually agree on those upfront, pre-define them before you actually enter the arrangement so both sides know what they're trying to achieve and what success looks like. Specifically with partnership, these should be tailored to the specific arrangement. So we're not thinking metrics that could really be used to measure success for anything, but how can we look at the difference in what would've happened if we worked alone versus what the outcome is now that we've worked together. Eliza Dailey: For example, if you look at a clinical partnership, oftentimes we'll see organizations measure cost savings for care delivered via the clinical partnership versus delivered separately. So really trying to parse out what is the value add from us working together. Rae Woods: Well, Eliza, I feel like we could talk about this and physician landscape for literally hours. But for now what's the one thing that you want our listeners to take away or act on? Eliza Dailey: Can I cheat? Can I talk to both partners and physicians? Rae Woods: Everybody on the physician research team cheats for the record. But yes, I will let you do that. Eliza Dailey: Great. My advice to partners would be to not take your existing relationships for granted, or make assumptions about the physicians in your market. We've spent a ton of time on this podcast talking about how the landscape has changed, and that means you need to have a different partnership strategy. Physicians want different things. They have more options. They're willing to play the field. You have to change your strategy here, or you will find that independent physicians will go elsewhere. Eliza Dailey: My advice to physicians would be to actively be part of those conversations. If the partners on the other end are revisiting their approach right now, it's a great opportunity for you to advocate for a seat at the table. Independent physicians have a lot more power today than they have before, and I think much more power than many organizations realize, and so now is an important moment to decide what you want your role to be in those partnerships and whether you'll act as a partner yourself. Rae Woods: Well, Eliza, thanks for coming on Radio Advisory. Eliza Dailey: Thanks, Rae. Rae Woods: I know I sort of joked at the beginning about alignment being my least favorite term, but I actually think this is a really good example of when a shift in language results in a shift in strategy. We are talking about so much more than relationships between hospitals and independent physicians and frankly, about so much more than just referrals. And we need to make sure that the way that we approach partners reflects that strategic shift. That's why as always, we are here to help.