Bigger Isn’t Better; Better is Better

Breaking the paradigm of quantity: A challenge for physician leadership.

One of my favorite Jackie Mason jokes goes something like this. A potential customer enters a store whose sign in the front window proclaims: “WE SELL NOT JUST BELOW RETAIL. WE SELL BELOW COST!”. He skeptically approaches the store’s proprietor and asks, “How can you manage to make a living selling below cost?” “Simple” answers the owner, “We make it up with volume!”

When I tell this joke to Hospital CEO’s or CMO’s they laugh until I suggest that they may be doing the same thing with their medical staff strategy: bigger is better. The bigger the medical staff and the bigger their referring volume the better the hospital’s bottom line. The bigger the size of a physician’s practice the better the quality of the physician. “He/she must be a great doctor, look at the size of his/her practice and how many patients he/she refers!”.

This unfortunate strategy has lead to a stampede of practice acquisition, joint ventures, and “institute models” that have, for many, succeeded in bigger referral patterns for hospitals. Unfortunately, few of these bigger systems are actually better. In fact, the acquisition of heterogeneous physician groups with the accompanying variation in practice styles, work ethic, quality and culture have made put further strains on the search for medicine’s holy grail: consistent, measurable, efficient and excellent outcomes.

One could argue that this strategy didn’t make a lot of sense even when it was embraced in the bygone days of fee for service. It made even less sense when DRG’s were introduced and will prove fatal once bundling of all services and ACO’s (capitation on steroids) take hold. Organizations that will succeed are those who invest now in developing excellent physician leaders: those who can influence, model and hold others accountable for consistent, measurable, efficient and excellent outcome. This will often require trimming rather than enhancing the number of physicians with admitting privileges.

The winners here will be those systems that recognize bigger isn’t better: better is better.