New report: Learn more about aligning hospital and doctor incentives

With the rise of consumerism in health care, patients are demanding to be more involved in their care decisions, and providers are striving to understand patients' preferences and decision drivers. To influence patients' choices, leaders often focus on flashy items designed to get people's attention, such as cutting-edge technology or a first-rate experience. But despite the speed at which health care is changing, the data show a clear constant for most people: our doctor matters more than anything else in our care decisions.

What Australian hospital executives need to know about consumer surgical preferences

In a survey of 2,000 patients in Australia—where patients have both public and private choices for health care—we found that three of the top four drivers of consumer choice were factors related to the doctor providing the care. In competitive markets, hospital leaders must increase alignment with doctors to appeal to what patients really care about.

Simply put, doctors are a big part of what makes the hospital go. So if you want to make strides in the strategic direction you've envisioned, you need to be aligned with your doctors. Part of doctor alignment is giving a little upfront so that you can gain in the end. To help you do just that, we've investigated multiple contracting options for strengthening relationships with independent doctors.

Operational preferencing

Our research uncovered several strong options, but we want to highlight one alignment model in particular: operational preferencing. This option allows you to strengthen alignment with doctors by giving them jurisdiction over one specific part of the hospital: the operating theatre.

Operational preferencing is an agreement between the hospital and the doctor in which the hospital commits to making specific scheduling, purchasing, and construction decisions that the doctor wants. This alignment model grants the targeted doctor authority over scheduling, staffing, and operational decisions.

In some cases, we've even seen hospitals build separate operating theatre space for targeted doctors. The arrangement and privilege gives doctors many of the benefits of operating their own practice, without having to worry about the administrative burden.

There are two really great benefits we want to highlight:

• It fuels healthy competition. This model is offered to not just one doctor, but a few select doctors. Having to operate in a more intimate setting creates healthy competition for participating doctors and efficient practices in the designated operating theatre space.
• It combats loyalty to other institutions. Frankly, if doctors have to choose between similar environments where they have more or less control and flexibility, the choice is easy. This model allows you to compete for talent by giving doctors more say.

In one example, we saw doctors with designated operating theatre space increase volume by as much as 300%. The ensuing competition increased the patient volume of other surgeons at the hospital by as much as 20%. 

Operational preferencing is just one way hospitals can improve alignment with doctors—we've put together a field guide on doctor incentives, with deep dives on three more methods to strengthen relationships with doctors.