Copyright © 2022 by Jones & Bartlett Learning, LLC, an Ascend Learning Company

Essentials of Health Care Marketing, Fifth Edition Eric N. Berkowitz

The Reddington Medical Group was a two-hundred-and-twenty-person multispecialty group practice in the northeast. Established for over sixty years, the group had evolved to be a well-respected organization and for thirty years had actually operated its own health maintenance organization that was recognized as an early standard for delivering high-quality care in a region that was not known for closed panel HMOs. In the early 1990s, the medical group decided to sell the managed care plan to an insurance company and operate as a more traditional medical group as it expanded with satellite clinics and its own free-standing surgicenter. In recent years, similar to other parts of the country, hospitals and academic medical centers had begun to acquire medical practices and also began to merge with each other. As a result, the physicians at Reddington felt increasing pressure whether to merge with one of these larger organizations or to decide to continue to grow themselves and stay independent.

In 2014, a very large independent primary care practice of some 80 physicians consisting of family practitioners, internists, and pedi- atricians approached the leadership group at Reddington regarding a possible merger. The Hawley Medical Associates had wanted to know about the possibilities of exploring a relationship or engaging in a stronger relationship if a merger was not possible. Preliminary discussion indicated that both groups felt the landscape for practices necessitated the need to scale up for survival. Exploring further talks was fruitful.

The Reddington Group The Reddington Group, established sixty years ago, had a board of directors consisting of 10 individuals of whom four were community members. A CMO was a physician appointed for a five-year term, and the current CEO was recruited from outside the organization. This individual had come from a major group practice on the west coast. The management team was highly skilled, most with MBAs. The CFO had formerly been a financial executive at a major health care system in Nashville but had returned to the northeast for family reasons.

In recent years, the group had made significant investments in technology, and to support the conversion, the clinical staff were trained to convert. As a result, even the oldest physicians in the group were now comfortable with the use of the EHR system, and the group had achieved a patient registration and utilization of 63% last quarter on the portal. This metric was closely monitored.

There was an attempt across the satellites to have a uniformity of patient experience and a brand presence, although on some of the patient surveys, some individuals said that they felt as if they were in “a department store” and it felt a little too “mechanical.” At a recent quarterly meeting, the doctors asked the marketing director to try to get a better understanding of what such sentiments meant.

The physicians in the group have been relatively stable over the years. Doctors have a productivity formula as it is an incentive-based compensation system. However, factored into compensation are patient satisfaction scores. This issue has been a point of contention with some members of the medical staff who feel it is at odds with trying to be productive in that you can inflate your score, but it can sometimes be at the expense of providing quality medicine.

The Hawley Medical Group The Hawley Medical Group was formed approximately in the late 1960s by a group of primary care physicians. Six physicians had left aca- demic medicine in Boston and decided they wanted to start a practice that was less hierarchical in its structure, would provide the highest quality, patient-centered environment, where the clinicians in the group would all have a voice. Over the years, this philosophy remained and all the clinicians operate almost as a cooperative in terms of their major strategic decision-making after they have been with the group for three years, although initially, once a person was hired, they participated in group decision-making. Physicians are compensated based on a straight compensation plus bonus based on the group’s margin. The straight compensation is on years employed. The same plan is in place for other staff. While the group has four satellite offices, each office has its own identity in terms of how it positions itself. Patients often remark, “I like the feel of the XYZ site,” or “The W location is so mellow,” and the Hawley Medical Group believes that’s what gives the group its uniqueness.

The result of this management approach is a high retention rate in its staff, some of whom have been with the group for over thirty to thirty-five years. In facing the decision to join any group or organization, Dr. Philip Murton said the group met for over a year and a half, and he described it as a “religious or spiritual conversion” for the group to come to this decision point. Nevertheless, he said all realized if the group were to survive, they needed to change with the times.

A Medical Group Explodes CASE STUDY

Essentials of Health Care Marketing, Fifth Edition Eric N. Berkowitz

Copyright © 2022 by Jones & Bartlett Learning, LLC, an Ascend Learning Company

The Outcome of the Discussion After several months of further discussion, the Reddington Group acquired the Hawley Medical Group, all its assets, and retained its staff. Over the next several months, little changed for the groups. As part of the initial agreement, four members of the Hawley Medical Group joined the Reddington Board, and four members of the Reddington Board were replaced, one of whom was a community member. Over the next year, several issues began to arise that were disconcerting to some members of the Board. Initially, a discussion came up regard- ing future upgrades to the EHR system.

At that point, Dr. Orton from the Hawley Group said, “We are fine with what we have at Hawley. We need no upgrades. No money needs to be spent from our budget.”

The other Hawley doctors agreed. A few of the Reddington doctors shifted in their seats uncomfortably. The CEO, Dr. Admundson, responded, “Thank you, Dr. Orton, but I think as we move forward, we need to consider being on the same EHR for the benefit of all our patients. We are not there yet. We are one group now, and we need to have a holistic perspective. Really, it is not your group’s budget or really Reddington’s budget but a budget.”

At that, Dr. Orton was noticeably upset, but the meeting was winding down. At the next board meeting, when the past meeting’s minutes were read and there was a call for corrections, Dr. Carlton said, “I have

something to say that has bothered me since last month. I think we are losing focus on what has transpired here between our two groups. Let’s be clear here. One group, Reddington, bought another group, Hawley. This was not a merger of equals. It is nice that four people could join the Board, but the discussion about the EHR and the budget was insulting. We have to make investments now for what is a larger organization, not question everything as if we are a small 80-person primary care practice.”

At that, the room was totally silent. What has gone wrong with this situation? You have been brought in as a consultant by the CEO to deconstruct the issues here and

provide a framework to see them through this challenge before this organization destroys itself.

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