Physician Enterprise Value

A formula that we’ve created and we’ve been
tracking for many years now, and we call it the Physician Enterprise Value. Which is a ratio of the health system contribution
margin, or the investment that you’re making into your physician enterprise, and what is
the contribution margin that you’re getting for the investment that you’re making. And this is where we can begin to tell people,
based on looking at best practices and on our history in working with dozens and dozens
of large system-employed physician groups, how you’re performing. So when we look at that ratio, we know that
if you’re under three-to-one return, that there’s significant opportunity and we’d categorize
that as “Poor” performance, and there’s really almost a turnaround situation. If you’re more in the three-to-five return,
we’d call that “Suboptimal”, better than a turnaround situation, but significant opportunity
for improvement. And then if you’re above five then we’d call
that “Solid Improvement”, but we still think there’s an opportunity to improve. We see groups getting up into the eight-,
or even ten-to-one return.

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