Chapter 21
To Understand Success,
Study Failure
In the 1980s, subcapitation
appeared as an option, and in some markets as the
only option, for doctors and specialists and health care systems. Now that most
operators have forgotten the lessons learned in the 1980s, it is back, in the form of
accountable care organizations (ACOs) and a variety of population management
risk contracts and payment schemes.
For some practices, it might work this time, if it is approached with purpose and
with physicians who have their motivation aligned with the goals of the health care
system in some form of compensation that is not fee for service based. What are the
signals that an organization failed, or is about to fail, or is positioning itself for fail-
ure? ere are certainly some elements that are common—the practice acquisitions
are generally understaffed at the administrative level, and they are undermanaged
by any measure of talent and experience. e practices that have been acquired do
not have the necessary infrastructure in place to handle capitation, quality, or effi-
ciency measures. e practices are populated with doctors who are from a genera-
tion that grew into medicine and into their medical careers chasing fee-for-service
and procedural revenues.
Subcapitation is the alternative to fee-for-service payments through which a payer (an insur-
ance company or Medicaid or Medicare) will pay a group for some component of care for a
group of patients. is transfers the risk from the payer to the provider.
186Medical Staff Integration
The Group in Crisis
Actually, most medical groups are in a state of constant tension that borders on
crisis, if not chaos. e challenge of a medical group that is in change or transition
can bring issues that have been long-standing problems to the forefront as major
issues. Also, the change in a leadership or governance or management structure will
allow issues that have been long simmering to surface in a rapid boil state. It seems
trivial to compare something like the deconstruction of the Soviet Union and the
resulting disorder in the Balkan States to a medical staff transformation, but the
change from a dictatorial style of entrepreneurial management to one that is more
bureaucratic and, in some cases, participatory (democratic?) allows long-standing
issues to come to the forefront. ese can be major items or minor matters, but
when they all surface at once, the result can be challenging. Challenges can be
handled. Catastrophic challenges have to be handled in crisis mode.
e administrator charged with the direct management of the practice has to
reflect on the continued role of the physician in the direct delivery of care and in
the overall leadership position in the practice as the issues that are emerging are
categorized and addressed. e Kettering
comment goes something like this: “A
problem that can be defined is already half solved.” Many times there are many
problems, and the challenge is to define them and define the stakeholders that have
to be included in their solution. In a crisis situation or a turnaround, the manager
should move quickly to (1) assess the situation, (2) define the stakeholders, and (3)
prepare an “issues listing” that can be used to prioritize problems and actions to
resolve them.
e use of an issues listing as a tool for discussion is one that is employed by
consultants who, quite frankly, often do not have a grasp on the situation and who
are struggling to gain ascendancy and credibility in a group that is unstructured.
Developing an Emergency Turnaround Strategy
Sometimes it is helpful to check a laundry list of activities just to see if all the bases
are covered. In an ambulatory setting there is a certain set of building blocks that
comprise a successful practice. is is a listing of the basics. It is not meant to
replace the need for a formal business plan that might be used in a calm and rea-
soned environment. e intent is to use a list like this to ask basic questions about
Charles Franklin Kettering (1876–1958), American inventor and social philosopher. Kettering
was a contemporary of Alfred P. Sloan and worked as a developer and innovator at General
Motors during its formative years.
ere is no source for this statement, except for my own experience. I have been a consultant
for over 25 years and can attest to this struggle and the challenge of moving a group from
problem definition to resolution. Many times, the problems are actually resolved by airing the
definitions and scope.

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