PHI is part of Piedmont Healthcare, a nonprofit organization and parent company of Piedmont Hospital, a 481-staffed-bed acute tertiary care facility in Atlanta. PHI now includes more than 85 cardiovascular physicians, including those at Piedmont Hospital's Fuqua Heart Center of Atlanta, and hospital-based services at other Piedmont hospitals.
Various management plans were considered initially, but were not all successful. Under one plan, the hospital attempted to maintain control of physicians with a medical directorship. "But we very quickly found out that it wasn't going to get us to the promised land," Molden says.
There are definitely challenges in establishing medical directorships, she adds. They don't always do a good job of giving physicians real responsibility, authority, and accountability. There is often a lack of real rigor in that process. Because physicians have day jobs, it can be hard to devote real time and energy to create the necessary changes.
A joint venture cath lab was tried, but "that didn't go very far," Molden adds.
Regarding both the abandoned medical directorship plan and the joint venture cath lab, Molden says, "I wouldn't say they failed, but rather they were evolutionary models; they didn't fully align interests and incentives, but were a way to build relationships and build trust, a way to get something accomplished that leads to the next step.
"I wish we were omniscient, but this integration and alignment we stumbled through—we had some incredible 'aha' moments in the process," Molden says.
Eventually, PHI worked out plans for governance "allowing physicians to control the clinical process by having a seat on the board of directors, but not ownership," she says. And over time, "we built trust within the groups and the hospital staff." Physicians control the clinical enterprise in areas such as the cath labs, the cardiovascular operating rooms, and nursing units, Molden says.
Regarding the aligned organization, it comes down to making a decision. Molden cited $6.3 million in savings in fiscal year 2010 (June 2009 to June 2010) compared to the previous year, "through cooperation agreements which related to vendor choices and evaluation."
The savings really began to set in in 2010, the third year of the program, hospital officials say. The savings included $1.2 million on cardiac rhythm devices. The hospital projects the savings will grow in fiscal year 2011, to about $10.4 million.
Molden says the savings are "absolutely attributable to alignment. The physicians get together to consolidate spending. They make sacrifices on their preferred vendors, for example, for the better good of cost savings as an institute. Fifteen different physicians might come in with 15 different preferred vendors on an item, but by reducing that to one, savings are made," she says. "The savings came directly from the supply chain."
Because of PHI's wide corporate reach, the CEO, CMO, and COO have a series of dinners with a total of 100 physicians; 15 at a time over a two-week period. A common topic to start the discussions: Are you an owner or a renter of PHI? "To a man and woman, they feel they are owners," Molden says.
The purpose of the sessions is "really just a litmus test to see how well PHI is doing engaging and involving its organization," Molden says. "Of course, nobody is truly an equity owner at Piedmont, as we are a public, not-for-profit hospital. But we do feel like 'owners' in the sense that we stand in the shoes of our community."