Chapter 2: Developing Effective Physician Strategies

Published February 20, 2024

Why Physician Decisions Matter for Every Health Economy Stakeholder

The most expensive thing in healthcare is the physician’s pen, or in modern times, access to a computing device equipped with electronic ordering capabilities. Nothing happens in the health economy without a physician decision, and there is little in the current – and still dominant – fee-for-service reimbursement system to limit what treatments, diagnostics or therapeutics a physician orders.

Physician decisions affect the performance of every health economy stakeholder. The volumes of every hospital, surgery center, imaging center, physical therapy clinic and life sciences firm depend on physicians to provide healthcare services for patients, to admit patients for inpatient stays, to refer patients for outpatient care, to implant medical devices and to write prescriptions. Likewise, the medical loss ratio of every health plan and the healthcare costs underwritten by every self-insured employer are impacted by the products and services physicians provide or order, as well as those they forego.

This chapter examines how every health economy stakeholder can develop more effective physician strategies to improve the design and performance of their provider networks.

What Health Economy Stakeholders Are Doing Wrong, and Why

At its core, the $4.5 trillion health economy is the aggregation of billions of distinct encounters between physicians and patients. Effective physician-focused strategies require a detailed understanding of which physician rendered what services to a patient, how many times, where the physician delivered the care and where that patient went next.

Although CMS has documented that the vast majority of provider directories are outdated and unreliable, most health economy stakeholders are Scrooge-like when investing in provider information. Instead of understanding that an accurate provider directory is table stakes, most stakeholders view it as an obligatory nuisance, which might explain why their physician strategies often fail.

The foundation of every effective physician strategy is a comprehensive and dynamic directory that provides accurate information about locations, affiliations, specialties and practice status. For more complex physician strategies, the directory should be enriched with provider practice patterns, including their referrals, prescribing patterns, payer mix and patient panel size, as well as any available quality information.

The Questions Every Stakeholder Should Answer

To develop effective physician strategies, every health economy stakeholder must be able to answer:

  • Who are all the healthcare providers operating in the target market, including facilities, physicians, allied health professionals, “payviders” and digital health firms?
  • In the target market, how does the demand for services correlate with the supply of providers who are qualified to deliver those services, based on their specialties and credentials?
  • How might physician supply evolve in the target market due to changes in the workforce, such as career change, graduation, retirement and shifts to part-time employment?
  • How might the supply of facilities evolve in the target market due to demographic, economic, technological or regulatory changes?
  • Which healthcare providers are aligned with the stakeholder’s provider network? Is that network adequate to meet the healthcare demands of the market?
  • How can the stakeholder strengthen their network through alignment with physicians or facilities in the market, whether through employment, affiliation, strategic partnership or acquisition?
  • How will current and future policy and payment trends influence growth opportunities for the stakeholder’s products and services in the target market?

Only with a comprehensive understanding of all healthcare providers in each target market can stakeholders effectively develop strategies that strengthen their organization’s network performance.

Explore strategies for each health economy stakeholder: