physician contracting best practices for health systems
TRANSCRIPT
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PHYSICIAN CONTRACTING BEST
PRACTICES FOR HEALTH SYSTEMS
FEBRUARY 2016
HOSTED BY ALLISON PULLINS, CMO, MD RANGER
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Outline:
• Brief introductions
• Successful strategies for creating organization-wide
policies
• Vetting market data
• Best practices from MD Ranger subscribers
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ABOUT US
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Our database and subscribers
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MD Ranger includes:
• Benchmarks, available as reports and online queries, with
market data for call, medical direction, administrative services,
leadership positions, hospital-based services, uncompensated
care, clinics and diagnostic testing services
• A secure, web-based Contract Data Tool to collect and
organize contract data (uploads via Excel available)
• Analytic Tools to benchmark internal contracts and total
expenditures, identify compliance issues, compare facilities and
analyze expenditures
• Cost and compliance reports, including an annual Executive
Report, comparing your contracts to MD Ranger benchmarks
• Resources and research to support compliance efforts
• Customer support by experts in physician compensation, FMV
documentation, and compliance
Your host
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• Nine years experience in healthcare
consulting and technology;
specializing in physician marketing,
recruitment, engagement,
compensation, negotiations
• Helps MD Ranger subscribers
leverage data, analyze internal costs
and structure physician contract
compliance programs
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PHYSICIAN CONTRACTING STRATEGIES
FOR HEALTH SYSTEMS
Overview
• Matching physician contracting strategy with overall
strategy
• Recognizing and acknowledging pressures from
hospitals and physicians
• Develop your organization’s contracting process (not
to fear: we’ll walk you through each step)
• Identify opportunities for multi-facility agreements
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Health system benefits are many (for
physician contracting)
• Control costs
• Increase operational efficiency
• Centralize physician leadership
• Decrease duplicative physician payments in some
cases (depending on volumes, demand, location of
facilities)
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…yet so are challenges
• Structuring system-wide policies
• Ensuring those policies are uniform and consistently
applied
• Considering financial goals and costs
• Honoring the physician’s perspective, income
requirements
• Being compliant with federal regulations
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Your goals for an effective system-
wide policy
• Principles, guidelines, and procedures defined at the
executive level to steer policy and create
accountability
• Uniform method to obtain payment rate benchmarks
• Consistent payments within fair market value
• Deliberate and careful cost analysis, and method to
benchmark your financial performance
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Meanwhile, consider your
organization’s overarching strategic
goals
• Does each contracted position help achieve overall
goals?
• Do you have the right physician leaders in place to
accomplish goals?
• Should you build in incentive payment terms to
achieve organizational objectives?
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CREATING YOUR PROCESS—
IN SIX STEPS
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Step 1: Assess the situation
• What’s the current state of physician contracting?• Are your contracts in one place? At corporate, or at the facility
level?
• Do you have an FMV process at all? What are your
documentation requirements?
• Who is in charge?
• IS IT WORKING?
• Do affiliate hospitals have ownership? How much?
• How many physician arrangements are there? Are
there potentially duplicative arrangements?
• Are there worrisome agreements?
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Step 2: Choose a leader and support
team
• Tone from the top
• Executive support essential for physician contracting
• Legal, compliance, finance
• Involvement with CEO, board
• Staff should be compliance-oriented, juggle
competing priorities, and pay attention to details
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Step 3: Select resources
• Market data: overwhelmingly #1 resource for
physician contracting across health systems
• Organizations can choose to rely on benchmarks
from one survey or firm, or could choose to integrate
several surveys into the process (remember to be
consistent)
• Valuation firm(s)?
• Study organization-wide benchmarks
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Step 4: Plan your policy
• Draft plan which includes:• Strategic goals
• Organization’s financial objectives, any details on cost restrictions
• Discuss what needs to be included (step by step) as
your hospitals plan and propose physician payment
rates
• What specifics will be needed for documentation?
• Ensure organizational buy-in throughout
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Forces governing physician
contracting
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Step 5: Establish guidelines for rates
• Use benchmarks to learn how often similar hospitals
engage the physician (and how many hours they pay
for)
• What would be the most appropriate default market
range for your organization?
• Don’t forget to identify unique factors that affect your
situation, e.g. quality initiatives, adverse payer mix,
burdensome call schedule, unique qualifications
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Step 6: Document rates, compliance
• How will you consistently document rates?
• What other documents, besides proof of FMV, should
you require?
• How will you track compliance?
• Will you perform annual audits?
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MULTI-FACILITY
ARRANGEMENTS
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When multi-campus coverage
arrangements are appropriate
• When two facilities within the same health system are
physically nearby and the emergency department
volume is such that call burden for one physician is
not overwhelming, it may be possible to have one
physician covering both facilities
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What’s needed
• Physician(s) on panel must have privileges at both
facilities
• Second call position may be needed to address
infrequent conflicting demands
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How much it costs
• Adding a second campus to one coverage position
on average increases the cost of the agreement by
26%
• Example: if two hospitals each pay $100 for coverage
to two physicians, the estimated appropriate rate if
they consolidated contracts to have one physician
provide coverage of both campuses would be $126.
This is 37% savings per campus!
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FMV for multi-facility call
arrangements
• Use market data to determine appropriate payment
ranges for a single position
• Use MD Ranger’s formula for multi-campus coverage
service (each campus brings a 26% increase)
• Document market rates and justification for
negotiated payment rate
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When multi-facility directorships are
appropriate
• When two or more facilities within the same health
system can rely on the same physician to complete
the same duties for both hospitals, a multi-facility
medical directorship or administrative position may
be advantageous
• We seen these for facilities in the same region or
across multiple regions in unique situations such as
training or system-wide implementation programs or
quality initiatives
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What’s needed
• Physician must have available hours for the position
• Though there is no significant difference in hourly
rates of pay for physicians with multi-facility
administrative positions, there is a significant
difference in the average number of hours required
• As with all medical direction and administrative
positions, the job description must warrant the
required number of hours, and timesheets are
essential for compliance
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How much it costs
• On average, a single physician contract for the same
service across two campuses costs 37% more than a
single campus position, with the difference largely
driven by hours required not hourly rate of pay
• Each additional campus in the contract commands an
average 10.7% increase in the number of hours up to
five or more campuses
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FMV for multi-facility
direction/administrative arrangements
• Use market data to determine appropriate payment
ranges for a single position
• Use MD Ranger’s formula for multi-campus
administrative positions. Note that hourly payment
rates typically do not increase, but rather annual
hours and annual payments for the position are
higher
• Document market rates and justification for
negotiated payment rate
• Require and monitor timesheets
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Physician payments are higher, yet
costs may be lower
• Multi-facility contracts typically cost more than single
facility arrangements
• However, they are less costly than individual facility
payments when considered in aggregate
• Our data demonstrate that though there is decidedly
more work to cover 2+ facilities, the amount of work
(measured in hours and annual payment rates) is not
proportionate to the number of facilities covered
under the agreement
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These arrangements are becoming
more common
In 2015:
• 8% of MDR call agreements were multi-facility
arrangements
• 10% of administrative agreements were multi-facility
arrangements
Note: these numbers are increasing year to year
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LEVERAGING MARKET DATA
Consider
• Sample size
• Participant characteristics
• Consistent, comprehensive collection method
• Thorough and transparent auditing processes
• Specificity and ‘match’ of job description
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What does market data reveal?
• What similar hospitals pay
• How rates are distributed
• Hours per month
• Annual payments
• Hourly rates
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Why is market data important for
health systems?
• Standardization
• Cost control
• Market data products can reveal compliance and/or
financial challenges in your organization
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What market data can do
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• Give a sense of the range of rates in the marketplace
• At minimum, help you establish a general range for
payment rates
• Select rates for apples to apples services
• Create a foundation for your physician contracting
process
What market data can’t do
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• Address 100% of your physician contracts
• Tell you the “right” percentile or range at which you
should pay
• If you should be paying the physician in the first
place*
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BEST PRACTICES FROM OUR
PARTNERS
Educate your colleagues about
consequences of violating federal law
• Stark Law, AKS, and False Claims Act
• Fines, penalties, vary
• Physicians are at risk too; make sure to educate
them as well
• MD Ranger has many resources:
mdranger.com/resources
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Automate as much of the contract
process as possible
• Remember: technical violations are still violations
• With the volume of these types of contracts across
your entire organization, always ask if you can
automate.
• Contract management systems can be helpful
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Identify and segment your high-risk
contracts
• Slicing and dicing by expiration date isn’t the only
way to view contracts
• High-performing health systems know when tenuous,
difficult agreements come up for renewal well in
advance
• Make sure your staff have enough support for
renewing and documenting these agreements (this
could include supplemental, internal documentation)
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Cost control: unintended
consequences of strict policies
• How you structure your policy should have effects—
even down to the contract level
• Consider policies that could lower your rates overall;
make sign off process for high-dollar agreements
more challenging
42*Pseudonym
Always loop in AP
• Making sure that payments are compliant (current
contract, hours documented, etc) is harder than it
seems
• The buck stops with AP
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