Strategic Planning and Achieving Financial Sustainability in a Multispeciality Physician Group
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This project provides an analysis of the existing healthcare industry, strategic planning process, and how both relate to achieving financial sustainability in a modern multispecialty physician group. In 2010, the Patient Protection and Affordable Care Act (PPACA) sparked the shift from volume- to value-based care in the healthcare industry. As a result, physician groups' financial structure and sustainability continue to be directly impacted without reimbursement focused primarily on Fee-For-Service (FFS) revenue. By providing data from online sources, including the Medical Group Management Association (MGMA), this project finds that the most financially threatening impacts from the shift are declining reimbursement rates, rising healthcare expenses, and the shifting healthcare provider mix. After analyzing different literature connecting strategic planning models to financial sustainability, this project explores the different opportunities that physician groups have to minimize their financial pressure. The biggest opportunity is to shift from volume- to value-based healthcare through physician payment policies. However, physician compensation models are also simultaneously a potential threat. After analyzing different physician payment methods, the volume-based physician compensation model poses a large threat. In this model, the more patients a physician sees, the more FFS, capitation, and other revenues they will gain. This model incentivizes physicians to provide healthcare to more patients, potentially neglecting quality. However, after breaking down and analyzing the existing healthcare industry and the different financial threats and opportunities in the comprehension section, this research project concludes that physician groups need to quickly integrate their traditional compensation models into the value-based healthcare system. More specifically, this research project recommends that physician groups need to switch from volume- to value-based compensation models, incorporate Electronic Health Record(EHR) systems, and integrate health insurance quality-incentive programs to maintain financial sustainability, while maintaining physicians' job satisfaction at an optimal level. To demonstrate the effectiveness of different value-based revenue streams, this project includes an application section. This case study analyzes the financial scenario of a surgical physician group before and after shifting into a more quality-focused healthcare provider system. With the shift from volume- to value-based healthcare, the revenue gained from these quality-incentive programs counteract the financial losses and physicians continue to break even financially. While volume-based compensation models financially incentivize physicians to produce more volume of medical procedures and services, a value-based compensation model shifts the focus to achieving higher quality patient outcomes. Value-based compensation models, EHR systems, and quality-incentive programs are examples of the most recent value-based opportunities in the healthcare system. However, novel opportunities and threats generated from changing healthcare law and reform instituted by the United States government will continue to arise, and should be considered.