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Introduction
Background
Review of the
Process
Advice Gained from
Experience
Introduction
Many occupational health programs
question whether it is in the best interests of their
customers and their program to spin off from the parent
hospital or health system. There are various reasons for
considering this question. We are going to spotlight a
program that asked this question approximately three
years ago and what the result has been. This is the
first of two articles. This article will focus on how
the decision was reached and the results of that
decision to date. The second article will focus on the
use of their information management system to manage the
network of clinics and the financial challenges
involved.
Background
Prior to November 1999, a regional health
system in Michigan comprised of three hospitals operated
an occupational health program under the name of
Business Health Services (BHS). The program consisted of
six freestanding occupational health clinics located
within a 20-mile radius of the main hospital in
southeast Michigan. Four centers operated as dedicated
occupational medicine facilities and two others
functioned as a combination of occupational medicine and
urgent care. The clinics had been staffed with
physicians through a large physician group that provided
contracted medical staffing and medical and
administrative leadership to BHS.
In evaluating their strategy relative to
occupational health and business relations, the health
system concluded that it was no longer in the best
interests of their organization to be in the primary
occupational health practice. The main reason for their
presence in the corporate health market was to capture
secondary revenues and establish some identity with the
business community. They wished to eliminate the program
delivering primary occupational health services as it
was losing revenue.
However they did not wish to lose the
secondary revenue or the relationship with the business
community. In a strategic move aimed at meeting those
goals, they offered the medical group the opportunity to
purchase BHS from the health system. It was believed
that the medical group was better structured and had the
philosophy needed to manage this program.
Both parties hoped to form a loose
partnership in which the medical group and the health
system would combine delivery strengths to provide these
services in their market. The medical group would retain
the Business Health Services name and keep the health
system identity attached to its program.
The medical group engaged an occupational
health consultant to evaluate the option to purchase BHS
from the health system and provide recommendations
regarding their final decision to proceed with full
ownership of Business Health Services. The project
involved several key assessments:
• evaluating the financial position of BHS;
• evaluating the strategic advantages and disadvantages
of the planned purchase;
• assessing the current operational strengths and
weaknesses and making recommendations for improvement;
• identifying primary issues and potential drawbacks
associated with the purchase;
• recommending operational models;
• reviewing a pro-forma budget.
There were definite opportunities in the
area for this occupational health program. It was a
leading occupational health provider in the region and
had a strong relationship with emergency and urgent care
centers physicians and staff. BHS could enjoy an
improved financial position, and its marketing efforts
were outcomes-driven.
As with any major change, there were
potential drawbacks to the proposed program. These
included contract limitations, change in reimbursement,
increased competition, and potential failure of the
health system to meet market demand for timely access to
services. There were also potential personnel issues
such as loss of key staff and the current physician
service contracts.
The consultant recommended that the
medical group proceed with the purchase of BHS under the
terms offered. In order to deal with potential drawbacks
and maximize the opportunities for the new entity, the
following recommendations were made regarding
organizational structure:
• There should always be a single person
at the top of the structure with final and sole
responsibility for the program management.
• There should be working managers.
• There should be a supervisor on-site daily.
• Information systems should be used.
• Certain functions such as billing, reporting, and
injury management should be centralized.
• A rural satellite should be excluded from the deal.
Certain operational recommendations were believed to be
key to the success of the new endeavor. They involved
actions in the following areas:
• implementation of a new billing
system;
• patient flow processes;
• medical records management;
• case management;
• performance improvement program;
• physician staffing restructure;
• implementation of pharmacy services at all clinics;
• negotiation of service contracts based on volume;
• better coordination of services through the emergency
department;
• on-site educational programs.
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Review of the Process
In an interview with Occupational
Health Tracker, Joseph Hymes, Executive Director for
Business Health Services, agreed to discuss the changes
at Business Health Services. At the time of the purchase
Joe had been Program Director with the health system for
four years and had administrative experience in
occupational health for over 15 years. He was well
prepared to undertake the challenges that lay ahead of
him.
Milt E. Dupuy, MD, MPH, Board Certified
in Occupational Medicine and Corporate Medical Director,
also responded to some of the questions in this
interview. He, too, was part of the “before and after.”
Question: “How long did it take
from receiving the recommendation to the actual sale of
the program?”
Hymes: “The recommendation to
purchase was received in May 1999 and the sale was
completed in November 1999. Implementation began in late
November.”
Question: “What were the greatest
challenges you faced in the initial months following the
change?”
Hymes: “BHS needed to retain and
hire all of the staff from the hospital. All but one
employee came from 51 FTEs. We had to establish vendor
relationships with suppliers and sub-contractors. SYSTOC® needed
to be implemented as the registration tool and we needed
to build a billing department.”
Question: “How did the staff
respond to the changes?”
Hymes: “For the most part, the
staff cooperated and many of them are still with us
three years later. They needed to adapt to new benefits,
new personnel policies, and just being part of a much
smaller organization. There was immense security in
being employed by a major health system. What they
brought was their enthusiasm and their quality.”
Question: “Were there any issues
with the physicians since the program was now physician
owned?”
Hymes: “There were no issues
regarding the physicians. Since the physicians were
always the medical group’s contractors, contracted to
BHS when it was a hospital program, their lives changed
very little, although BHS is a stand-alone practice
rather than a hospital department. It is riskier.”
Dr. Dupuy: “There were no issues
with our physicians regarding the change. In fact, we
appreciated the ability to move quickly when confronted
with a customer
request. There was no bureaucracy to navigate in order
to develop a form, introduce a new procedure, or
customize our information system.”
Question: “What was the reaction
of your clients to the change?” 
Hymes: “We implemented a complete
information blitz designed to inform our customers of
the change, including the new employer ID needed to
facilitate billing. They must have felt confident since
we were still associated with the health system, i.e.,
quality and access to sub-specialists, ancillary
services, emergency centers after hours, physician
credentialing, etc. There was no loss of clients.”
Dr. Dupuy: “There was no perceived
decrease in client satisfaction. We maintained the best
of both worlds: flexibility of an independent practice
with the reputation of quality associated with the
health system. The health system association also allows
BHS to maintain efficient access to system
sub-specialist physicians and ancillary services like
MRI and CT.”
Question: “How has the
relationship with the health system been affected by the
change?”
Hymes: “First, BHS became a
customer of the health system, like all of the
associated medical practices. BHS purchases various
services from the health system, as well as being a
significant tenant in their medical buildings. Second,
BHS is a partner of the health system, fulfilling the
initial health system objective of maintaining
relationships with community businesses. Our marketing
team sells many of the health system services to the
employer community and we promote the concept that ‘we’
are a system, looking to meet the employer’s demand for
full service occupational health 24 hours a day, seven
days a week.”
Question: “Of the recommendations
made by the consultant, which ones have you
implemented?”
Hymes: “We fully implemented
SYSTOC, and utilize it as our billing software.
Other recommendations instituted were:
• A patient-oriented medical record was
developed and a storage/retrieval process was
implemented.
• We are still developing an internal (our cases) case
management model with the hire of two certified case
management nurses. Using SYSTOC outcomes data, we are
able to generate monthly utilization reports for our
customers.
• We implemented a medication dispensing service at
each site.
• We negotiated better service and supply contracts.
• A program to coordinate all after-hours services was
created, to maintain continuity of care, meet employer
needs, and continue case management.
• We have provided as many as nine education seminars a
year for our customers and offer a full range of health
education at the workplace.”
Question: “Were some of the
recommendations modified or implemented later?”
Hymes: “First: Formal process
improvement teams kicked off this year and we are
working to complete a policy and procedure manual. When
we started the company, we were building the processes
from the ground up. We have now started to evaluate
them. Second: We have evolved to the working manager
model at four of our sites and at the fifth, our clinic
manager is responsible for purchasing and information
systems, thereby keeping the number of managerial FTEs
low and staying connected with the day-to-day
operations.”
Question: “How long did it take to
stabilize the program after the change?”
Hymes: “It took 13 months to
stabilize the operations, billing, collections, and cash
flow.”
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Advice Gained from Experience
When Joe Hymes was asked what advice he
would give to administrators considering this type of a
change, he made these recommendations:
• Identify your objectives. Only
then can you measure the success. We regularly re-visit
the consultant’s recommendations and grade our
performance. In year number two, we were able to use
some of the recommendations as our business goals.
• Clearly describe any ancillary
services purchase agreements with the health system and
be specific about service expectations, especially
timeliness.
• Develop a method to track system
referrals to continue to validate the system objectives.
• Identify any service contracts
that need to be switched to the new entity to ensure
continuity, e.g., x-ray service.
• Determine the level of
emergency/urgent care after-hours coordination needed to
meet
community demand.
• If you are using a new federal ID
number, include a completed W-9 form with each initial
bill for the first 90 days.
Summary
Both men felt that the change had been
extremely beneficial. Dr. Dupuy summarized, “Becoming
independent allowed us to focus more of our energy on
providing quality clinical care with greater freedom to
respond to the needs of our patient and employer
clients.” Both Dr. Dupuy and Joseph Hymes appear to be
succeeding in that goal.
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