Physician Integration Developing a Successful Process

2. Hospital Integration Drivers Physician Integration Drivers Prerequisites to a Successful Physician Integration A Physician Integration Process Primary Physician Concerns Threats to Hospital Physician Alignment Compensation Plan Objectives Governance and Management Objectives

3. Protect and/or grow market share Protect and/or share in downstream revenue Preserve existing physician practices in system Secure a more stable provider platform Create greater leverage with payers Physician recruitment and retention Improve coordination of care and patient experience Focus on efficient delivery of quality care Increase physician engagement - a team approach to healthcare delivery

4. Declining reimbursement Increasing operating costs Desire to stabilize or improve physician compensation Physician recruitment � hospitals outbidding practices No one is willing to buy-in to practice Capital needs Access to EMR and other IT technology infrastructure Focus on quality of care Position themselves for future payment models Minimize practice management involvement Work/life balance

5. A real hospital/physician partnership is created Partnership attitude is win/win or win/neutral Focus is patient first, integrated organization second and individual third Integrated organization will outlive all original members Key drivers are access, service, quality and patient satisfaction Mission, vision and values are well defined, well known and aligned for all parties The process must be transparent - A "no surprises" philosophy of communication among all parties

6. Requires hospital leadership that trusts physician leadership and physician leadership that trusts hospital leadership The process is a dialogue not a debate - "your views are as important as mine" Meaningful dialogue requires everyone to have a stake in the process The process must make efficient use of available hospital resources Integrated enterprise management - a qualified physician leader paired with a qualified administrative leader Physician and administrative leadership must be tightly coupled and moving in a unified direction

8. Identify the hospital decision making body (DMB) for physician integration transactions All parties need to understand the hospital's decision making process and related time frames Establish a physician integration team (PIT) with representatives from: Executive management Finance Legal Business development Operations Human Resources IT Physician integration opportunities enter the process through the PIT and/or the DMB

9. With DMB approval, the PIT analyzes the integration opportunity and develops a business case addressing key issues such as: The major drivers of the opportunity Strategic importance of the opportunity Impact on downstream revenue Impact on competitive position Capital requirements Known legal, contractual and conflict of interest issues Many others If the DMB determines the opportunity is a strategic fit, the following information is distributed to the physicians: Confidentiality and Exclusivity Agreement Physician Representation Authorization Form Physician data request form

10. Upon receipt of the requested physician data the PIT team will perform some preliminary due diligence work such as: Determine physician need and supply Determine physician's current alignment with hospital strategies and operations Identify any prerequisites to this integration opportunity Identify market indicators influencing this integration opportunity Review practice revenues, expenses relative to benchmark data Review physician compensation relative to benchmark data Review practice staffing relative to benchmark data Review payer mix, fee schedules, and coding practices Review current leases and contracts Review pending malpractice claims Review physician investments in other medical related businesses PIT presents findings and recommendations to DMB

11. With DMB approval, the following activities commence: Physician PIT members are selected by physicians Weekly or bi-weekly PIT meeting schedule is established Due diligence process begins Prepare financial projections to determine net economic benefit and potential physician compensation pool PIT will: Develop service line strategic plan Develop governance structure Identify leaders and leadership roles Develop compensation plan Review employment agreements Address operational challenges Determine transition timeline Develop transition plan

12. PIT presents complete integration plan to DMB for review and approval Upon DMB approval, legal documents are prepared for review and signature by all parties Upon execution of legal documents, the transition plan begins for: Personnel Facilities Credentialing

13. Primary Physician Concerns TATA

16. Physician led - physician engagement is a key to success Physicians must support and engage in a collaborative organizational structure and culture Physician-administrator teams - a qualified physician leader paired with a qualified administrative leader Physician and administrative leadership must be tightly coupled and moving in a unified direction Physician behavior must be consistent with the vision and values of the organization

17. Contact Information J. Brian Eadie, CPA, CAPPM Direct: 317-844-6600 Email: beadie@ksmcpa.com