Hospitals and physicians are “courting” once again, but this relationship is much more mature than it was in the 90’s. This maturity has developed into a number of physician service agreements, which may be the result of joint ventures, acquisitions, employment or new contractor arrangements. Hospitals can pursue a combination of any one of these, including administrative services, call coverage, co-management, management, ACO models, professional/technical splits, development, billing, and collection or leasing arrangements.
Co-management agreements are becoming more and more popular because they allow for a closer relationship with revenue sharing opportunities without full employment. Initially, orthopedics and cardiology took the lead but Oncology arrangements are becoming more numerous with the various cuts in reimbursement occurring. They can provide an opportunity for “handholding” with the hospital in a mutually-beneficial arrangement while providing a potential foundation for moving to another level of relationship (i.e. ACO) without full employment. This initial arrangement could provide some “trap doors” out of the arrangement and/or “ladders” to the next level in order to provide flexibility and exclusivity for the group while staying away from volume, length of stay, referral or payor mix type metrics.
Best Practices for Co-Management
Some general best practices for these arrangements include:
- A clear understanding of agreement terms, which must define what services will be provided and how parties will be compensated. The valuation should match this agreement.
- Cognizance that survey data is commonly misused. Physicians may point to a survey and request median compensation for RVUs. These earnings can be inflated and hospitals should be careful and mindful of how survey data is used.
- Finally, fair market value means compensation cannot consider the value or volume of physicians’ referrals.
Four Sample Services
- Development of service line (medical directorship, budgeting, strategic planning, community relations/education, clinical protocol development, etc.)
- Ongoing assessment of clinical environment (staffing, scheduling, workflow processes, supervision, case management duties, etc.)
- Materials management (purchasing, negotiations, etc.)
- Medical staff functions (credentialing, committee structure, coordination with administration, etc.)
Eight Sample Performance Metrics
- Benchmarking current operations and performance
- Percentage of appropriate treatment plans at certain treatment stages (initial treatment, adjuvant therapy, completion, etc.) and indications
- On-time infusion start times
- Infusion service efficiency (i.e. turn times)
- Lower cost drug administration with equal efficacy and quality
- Infusion site infection rate
- Patient and staff satisfaction levels
- Compliance standards (i.e. QOPI/PQRI)
Andrew McDonald, FACHE, and Partner in the Healthcare Consulting Division works with a team of experienced healthcare professionals that possess diverse backgrounds in accounting, coding/compliance, due diligence, financial analysis, IT (EMR), reimbursement, valuation and other healthcare consulting services.
Contact Andrew at amcdonald@LBMC.com or call 615-309-2474 for more information on oncology co-management arrangements or other challenges presented by an ever-changing healthcare environment.