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"Three out of four physicians were seeing more patients and generating more revenue on an annual basis than our group practice."


Shifting Sands
Johns Hopkins Community Physicians has a new (old) way of running its group practice.

Barbara Cook, M.D., brings her perspective as a doctor to her administrative duties at Johns Hopkins Community Physicians.
In a more innocent age, if you had insurance and you wanted to see a doctor, any doctor, you called and set up an appointment. By the 1990s, however, as expensive diagnostic tests and treatments were administered with more and more abandon, health care costs skyrocketed, and "fee-for-service" appeared to be on its way to extinction. The reign of managed care-of gatekeepers and capitation and cost-cutting-seemed here to stay.

It wasn't.

Although in theory managed care had good intentions (cut out unnecessary services, emphasize preventive care), no one was happy with the way it evolved. Physician groups discovered, painfully, that they weren't being paid enough to manage their patients, and began cancelling contracts. Patients rose up, unhappy about losing their freedom of choice. Finally, the tight labor market of the late 1990s gave patients the clout to demand less restrictive health care. Insurance companies migrated back to straight fee-for-service.

Johns Hopkins Community Physicians could serve as a case study of the shift. In the space of a year, the group saw its payer mix completely reverse, from 65 percent capitated business to 65 percent fee-for-service.

Contrary to what one might think, the rearrangement was far from easy for JHCP.

"This was a real sea change for the physician group," says Barbara Cook, vice president of medical affairs for JHCP. "They'd been practicing in another paradigm for a long time, 15 years in some cases."

In a capitated environment, explains Cook, you're pre-paid at the beginning of every month to take care of a particular patient population, whether they come in to see you or not. "So if you can manage them over the telephone, you will," says Cook.

But in a fee-for-service world, income is generated by seeing patients. "So you open your doors, you make more appointments available, you err on the side of seeing the patient rather than treating the patient over the phone," says Cook.

Once its guaranteed business shrunk, JHCP's first concern was that patients would choose to go elsewhere. "That did not turn out to be the case at all," says Cook, thanks to an advertising campaign that explained the changes to the community, as well as some buffed up customer service.

The bigger problem was changing the habits of the medical staff at the organization's 18 group-practice sites. When Cook analyzed the productivity of her physician group, she found them functioning at less than the 25th percentile compared to their peers

across the nation. In other words, says Cook, "three out of four physicians were seeing more patients and generating more revenue on an annual basis than our group practice."

Cook decided she needed to offer incentives if the practice was to survive. She assembled an internal committee, and together they took a year to develop a new compensation plan. Last year, on July 1, 20 percent of physicians' salaries became "at risk" based on productivity (revenue brought in to cover expenses), adjusted for complexity of cases. An additional 10 percent of their compensation became based on quality, measured by looking at things like the rates of mammography for women over 50 or immunizations in children under 2.

Cook, a family practitioner who still sees patients two half-days a week at the Johns Hopkins White Marsh site, understood she wouldn't win any popularity contests by putting such a system in place. But the tough business woman in her wouldn't allow her to do otherwise.

"These doctors do excellent work," she begins. "It's just an extraordinarily competitive, difficult environment out there. Reimbursements have decreased through the years, it's harder and harder to collect the money you bill for, and we've had to put some efficiencies in place in order to survive. The [Hopkins Health] System is not going to keep us afloat. We have to do that."

Cook seems to have found the right prescription. Now, almost all the practices are operating at the 50th percentile; one-third are exceeding the 75th percentile. The month of October marked the highest volumes in JHCP's history.

"As physicians, we all like to think we're working as hard as we can," says Pasquale Bernardi, office medical director at East Baltimore Medical Center-Pediatrics. "But when it comes down to it, if you look at the numbers, everybody's numbers across the board practically went up."

In the new scheme, non-physician staff gets rewarded for increased productivity as well. "We didn't think it was fair to put the doctors at risk if there wasn't some initiative for the staff to step it up a notch as well," says Cook.

Despite all the changes in the health care industry, in fiscal year 2001, JHCP exceeded its fee-for-service budget by $2 million. "Amazingly enough," says Cook, "we haven't put together a compensation model that's broken the bank. And yet we've been able to reward people who've really been working hard. I'm really proud of this group. It's been a tough transition, but they've done it with grace."




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