Medical Staff Integration: Transactions and Transformation, 1st Edition (Hardback) book cover

Medical Staff Integration

Transactions and Transformation, 1st Edition

By A. Michael La Penna

Productivity Press

246 pages | 16 B/W Illus.

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Hardback: 9781466592964
pub: 2014-10-14
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pub: 2014-10-14
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There is a transformation of equity occurring in the health care industry with hospitals and health systems purchasing physician practices. As traditional hospital structures meet the entrepreneurial physician manager in today’s rapidly changing environment, numerous transitional challenges are emerging.

Medical Staff Integration: Transactions and Transformation fills the void that exists between hospital management texts and physician management literature. It examines the cultural and functional issues that must be addressed when hospitals and health systems purchase physician practices.

Written by a leading consultant in the health care industry, the book covers the changes occurring in a nonjudgmental fashion and from a business case perspective. It supplies an understanding of the basics behind the various types of relationships that are forming as well as the nuts and bolts of the transitions that will result.

The book focuses on the challenges readers will most likely face when merging systems, culture, and functions. It explains how to assure that the acquisitions will meet the needs of all parties—emphasizing the income determination structures required for the continued motivation of physicians.

Addressing some of the limitations hospitals face with physician practice integrations, including the traditional medical staff structure, hospital-based physicians, and contracted physicians, the book also discusses the growing role and impact of compliance.

A companion website allows readers to download forms and models which can assist in the practical application of the ideas presented in the book.


Mike LaPenna brings an important perspective to a key shift in the structure of health care. Providers, payers, employers, and patients are greatly impacted by this shift from relative independence to integration, which has critical implications to the cost and quality of health care as we know it today.

—Larry Boress, President and CEO, Midwest Business Group on Health

There is no more complex administrative environment than health care and no time when it has been more confusing and challenging. Mr. La Penna has outlined several of the models and structures that go well beyond the traditional medical staff relationships. His book is recommended reading for the practitioner, the administrator, and board level stakeholders as they contemplate how to work together in the new health care environment.

Robert Harrison, MHA, PhD, President, Lake Michigan College and Former President of the Michigan Hospital Association

After 25 years of my seeking Michael LaPenna's counsel and direction in half a dozen different medical practice venues and models, I have learned to appreciate his incisiveness, his conciseness, his analytical skills, his wisdom, and his dry humor. A survey of the 21 chapter titles gives a good clue to the superb information in this contemporary and masterful book.

George O.Waring III MD FACS, FRCOphth, Professor of Ophthalmology, Emeritus, Emory University; Private Clinical Practice, Atlanta, Georgia

Mike LaPenna is the consummate medical staff business consultant. His impressive depth of knowledge coupled with his common sense approach has led to successful resolution of a broad array of issues we have faced in managing the business organization, compensation, and management of our physicians and their practices. His words of wisdom and advice regarding physician integration are welcome in this turbulent time of reform and aggregation of health care entities.

—Susan Mendelowitz, RN FACHE, President and COO, Bergen Regional Medical Center, Paramus, New Jersey

Paul C. Mendelowitz, MD, MPH, Former Chief Medical Officer, Holy Name Medical Center, Teaneck, New Jersey

No health care environment is tougher than New York. When change occurs, it is rapid and dramatic. We look to experts who have a proven track record of managing change, Mike La Penna assisted us with the development of an IPA that numbered over 5,000 providers and a dozen institutions at a time when managed care first emerged. He fashioned the governance as well as the value proposition for all of the stakeholders. I welcome any book that captures his expertise and experience.

Dr. Anthony J. Gagliardi, M.D., Vice President & Chief Medical Officer, New York-Presbyterian Lower Manhattan Hospital, and Charter Trustee of SERVITAS IPA of Greater New York

In this time of turmoil and turbulence in relations between hospitals and their medical staff members and with all the different models emerging, it is a help to have a concise review of the options along with practical examples of structure and governance and income distribution. This book is a primer on how hospitals and doctors can find common ground to move from independence to collaboration to some level of true integration.

—Ahmed Abdelsalam, MD, FACS, Managing Partner, Chicagoland Retinal Consultants, LLC

In the process of working in clinical and administrative medical positions for decades, I have had the pleasure of doing a number of joint projects with Mr. La Penna and his team. I am enthused to see that the experience and insight of his years of consulting in the hospital-physician ecosystem have finally made it into print. Anyone who is working with physician transactions will find some solace in knowing that some of us have been there before! This book suggests a number of ways to improve the reader's chances of succeeding in the very complex world of the new medical staff.

William Cunningham, D.O., M.H.A., Assistant Dean College of Osteopathic Medicine, Michigan State University

Table of Contents

Conceptualizing New Models of Care Based on Traditional Structures

Physician-Hospital Organization (PHO)

Independent Provider Association (IPA)

Contracting Unit/Messenger Model

Management Services Organization (MSO)

Group Practice without Walls (GPWW)

Group Practice

Captive Physician Group

Other Models and Combinations of Models

Summary Issues

Does Anyone Know the Definition of Integration?

How Will We Know If We Are Integrated? Maybe, We Already Are!

Integration Is Not a Place, It Is a Process

Integration and the Challenges of Income Determination

Summary Issues

Does What We Have Now Actually Work?

How Did We Get Here? How Do We Get Where We Need to Be?

What Is Different This Time? What Is the Same?

Same Players, Traditional Structures, New Tools

Summary Issues

Ignoring Fundamentals Will Produce Unwanted Results

Different Practices, Different Relationships, Different Approaches

Academic Practices

Retail-Oriented Practices

Concierge Practices and Aesthetic-Oriented Practices

Hospital-Based and Codependent Practices

Physicians in Different Disciplines Have Differing Needs

Summary Issues

Where Are We Headed and What Will Get Us There?

Case Management and Care Management—The New Paradigm

Existing State, Near-Term Future State

Final Note—What Is a Doula?

Summary Issues

The Basic PHO (Joint Governance) or IPA (Independence)

Summary Issues

The MSO (Services)

The Basic MSO Approach

MSO Development

Functional Operations

Financial Operations

Goals of the MSO/Vendor Group

Operational Responsibilities of the MSO/Vendor Group

What Does the MSO Not Do?

Summary Issues

Co-Management Programs (Partnership)

Getting There Is (More Than) Half the Battle

An Orthopedic Co-Management Model

Development Process

Summary Issues

Contracts and Subcontracts (Managing Relationships)

Example: A Hospital-Based Physician Arrangement (Hospitalists)

Hospitalist Group Contract Points/Coverage Terms

Measurement of Hospitalist Productivity and Quality and Value

Job Description—Hospitalist (Internal Medicine)



Description of Hospitalist/Internal Medicine Service Objectives

Responsibilities of Hospitalist/Internal Medicine Physicians

Example: RFI/RFP Scope of Work for a Hospital-Based Group (ED)

Emergency Department Provider Items/General Services

Emergency Department Provider Items/Recruitment and Orientation

Emergency Department Provider Items/Financial Services

Emergency Department Provider Items/Compliance

Example: Evaluation of a Contracted Group’s Performance

Summary Issues

Sponsored Practices and Hired Practitioners (Employment)

Simple, But Many Moving Parts

To Every Project, a Process

Structure—Pick One

Transactions and Transaction Elements

Special Circumstances—Normalizing Practice Numbers

Special Circumstances—Asset vs. Stock Purchase

Special Circumstances—Leasing Practices

Special Circumstances—Fractional Purchase

Special Circumstances—Related Parties

Special Circumstances—Underwater Practice

Summary Issues

Align the Correct Solution Supported by Effective Communications

The Team Must Have a Shared Set of Principles and Core Values

Choose a Structure That Fits the Situation

Physicians Involved in the Care Process Must Have a Meaningful Role in Governance

Physicians Must Be Allowed to Pursue Treatment Options in Line with Quality and Service Standards

Summary Issues

Recognize the Different Parties to the Transaction

The Result of the Transaction Can Often Mean More Than the Transaction Itself

It Is Important to Understand Differing Perspectives

Are There Any Universal Truths?

Transition Is More Than a Corporate Function—It Is a Cultural Reprogramming

The Future of Independent Hospitals and Private Practice Is Limited

Summary Issues

Address Issues of Colleagues, Culture, and Politics

Physicians and Providers in Alternative Organizations—the IPA and PHO Revisited

Medical Staff Issues and Trends—The Structure of the New Medical Staff

What Defines a Good Plan?

Summary Issues

Discern between Patient Management and Practice Management

What Is the Commitment Level to a Different Level and Style of Governance?

Operational Management Is Not Governance—Managers Manage and Doctors Govern

Why the Resulting Product Is Often Less Than the Sum of the Parts

Summary Issues

Separate the Transactional Issues from the Transitional Process

Practice Transition Does Not Follow a Recipe

It Is Not "Business as Usual"


The Staff

The Revenue Stream


Summary Issues

Establish Fundamental Standards and Link These Standards to Definitive Policies

Was the Practice Well Managed Beforehand?

Quality vs. Quantity and the Bottom Line

Managers Must Have Defined Roles and Responsibilities

Is There a Clear Set of Achievable Metrics for the Practice?

Are the Metrics Aligned with Management and Provider Compensation Models?

Patient Service Process Measures and Patient and Consumer Satisfaction

Metrics Can (Should) Change over Time

What about Financial Measures?

Summary Issues

Align the Compensation with the Programming

The Hospital/Health System as Paymaster

Some Basic Regulatory (and Commonsense) Constraints

One Model, Many Factors

Call Compensation and Confusion

Putting It All Together

Summary Issues

Developing a Core Set of Strategic Issues

Visions and Hallucinations

Succession Planning


Financial Issues, Systems Level

Specific and Special Opportunities

Issues Listing—One Approach

Summary Issues

Is There a Clear Value Proposition?

Summary Issues

Build an Organization That Can Learn and Transform Itself

Summary Issues

To Understand Success, Study Failure

The Group in Crisis

Developing an Emergency Turnaround Strategy

The Group Approaching Crisis

Summary Issues

Appendix: Samples and Examples



About the Author

Mike La Penna has been a consultant to physician groups and hospitals for more than 25 years. He has served in a number of board positions on health care organizations and community service organizations. He has been an executive in both nonprofit and for-profit health care environments.

Mike is a graduate of the University of Chicago’s Graduate School of Business, where he earned an MBA and a certificate in health care administration. He has a BA in economics from Western Michigan University, and he has held faculty positions in both undergraduate and graduate business programs.

Mike’s expertise includes strategic planning, payer negotiation, real estate ventures, product branding, independent provider association (IPA)/physician-hospital organization (PHO) development and management, equity and risk arrangements, technology applications, faculty group practice plans, and merger, acquisition, and divestiture strategies. The La Penna Group, Inc. was founded in 1987 to provide business consulting services to physicians, hospitals, and health care delivery systems. It has also worked with industry and with governmental units to develop solutions for a variety of health care delivery situations. He has been an advisor to numerous national associations and authored numerous articles on health care trends, physician practice management, and network development. He has commented on health care for numerous publications and news outlets, including Crain’s, the Wall Street Journal, the New York Times, and NPR. Mr. La Penna is an advisor to some of the world’s largest health care delivery organizations and to numerous Fortune 100 firms.

Subject Categories

BISAC Subject Codes/Headings:
BUSINESS & ECONOMICS / Industries / Service Industries
MEDICAL / General
MEDICAL / Administration