The track record of hospital-physician combinations in the 1990s was checkered at best. Hospitals overpaid for physician practices; partnerships broke up before their value could be tapped.

The current generation may turn out worse. A study published in the New England Journal of Medicine last year calculated that hospitals were losing, on average, $150,000 to $250,000 per doctor per year in the first three years after a merger. While hospital leaders have given more thought to how physician employment agreements are structured, they are not laying the groundwork for lasting partnerships with their physician organizations and, thus, are not reaping the full value of these affiliations. Too often they neglect to address the cultural issues.

In a successful hospital-physician partnership, both parties hold each other accountable, and both are invested in its success. They share common values, and they remain honest and transparent about decisions. Focusing on culture rather than strategy will help your physicians and hospital administrators work together to improve your health care system.

Cultural Differences

"Creating the right culture" might sound more like a New Age seminar than a critical component of a business merger. But physicians and hospital administrators approach the world so differently it's almost impossible for them to work together effectively unless they recognize their differences and plan accordingly.

Physicians tend to be:

  • doers
  • reactive
  • independent
  • solo decision-makers
  • business owners

Physicians tend to possess these personality traits, but they're also trained to be this way. A patient needs a doctor who responds quickly and decisively to her problems.

On the other hand, hospital administrators, who are dealing with larger businesses and a broad range of patients, employees and their families, and communities tend to be:

  • planners
  • proactive
  • participative
  • collaborative problem solvers
  • business stewards

The two approaches are not compatible without a lot of thinking and effort from both sides. Doctors get impatient with the time it takes to hear from multiple voices before making a decision. Administrators get frustrated when, in the interest of expediency, the physician moves forward before discussing the impact on the rest of the organization.

The differences might be summed up best as follows: Physicians tend to focus on the individual; hospital administrators tend to focus on the larger group. These approaches can lead to different answers to dozens of everyday questions, such as hiring and firing, new equipment investments, and nurse staffing on weekends. Consider your 500-bed hospital, which might have two MRI scanners. Because of the volume of patients and your need to use the scanners in the most efficient manner, a patient occasionally might have a six-hour wait before he can be scanned. The doctor, focused on that one patient, flies into a rage: "I ordered an MRI for this patient at 7 a.m. Here it is 2 in the afternoon, and he's still waiting!"

Working Together

From the hospital administrator's point of view, reconciling the differences boils down to a simple question with a difficult answer: How can you make decisions that serve communities of patients without hurting the sanctity of the one-on-one, doctor-patient relationship?

Start with a vision. Both parties need to ask themselves why they're going into business together and what they hope to accomplish. Then, the conversation flows to how the physician group and the hospital can do it together.

Once the two sides agree on the why and the how, they need to create a working relationship in which both are responsible for delivering the results, both benefit when they deliver, and both suffer when they don't. In short, both sides need to do two things:

  • hold each other accountable
  • put some skin in the game

One method that has a successful track record for creating a working relationship is as follows: Pair physicians and hospital administrators in key functions so that physicians are involved in the decision-making process and are accountable for the consequences of those decisions. There won't be any more conversations in the stairwell in which a group of doctors complain about the latest directive and pledge to undermine it,because they helped to develop the directive in the first place.

Common Values

Too often, when two parties begin negotiations to combine, they jump to strategy and tactics. A better place to start is uncovering your common values, which then will lead to the rest. Culture trumps strategy every time.

From there, you can focus on a few keys to successful implantation. The successful partnership should stress:

  • operational competence;
  • transparency and honesty between the parties — avoid the dirty little secrets that undermine physicians' trust;
  • fact-based decision-making — keep the rumors out of the process;
  • delivering results; even with the best of intentions, both sides will lose trust in each other if the organization consistently falls short of its goals.

Today, there is much debate about the ideal way for hospitals and physicians to work together. But almost any model can work. The real challenge is to align your organizations, constituents and business models into a productive enterprise that — most important of all — keeps the patient at the center of every decision.

Chuck Peck, M.D., F.A.C.P., is the president and chief executive officer of Health Inventures, a Boulder, Colo., surgical and physician services company.