In my last post, we investigated the challenges with contracts between IDNs and hospitalist groups. I offered some starter question on how you can evaluate the effectiveness of your contract.
So how’d you do? Did the answers surprise you? Or were they what you expected?
Based on how you answered those questions, here are a few options to consider when making your partnership the most effective it can be:
Employ physicians outright
An increasingly common option, some IDNs choose to employ the physicians hoping it will create greater alignment. This approach does help the IDN gain greater control over the risks associated with the program and prediction of cash flows. However, it also creates greater administrative burden, and higher outcomes are not guaranteed.
Redesign your hospitalist contract to share more risk and incentivize desired behaviors
- If a contract has been in place for some time and the amount of the subsidy is relatively steady, consider moving to a fixed fee arrangement, perhaps with a risk corridor.
- It will provide a starting point for future reductions in payments.
- Also, consider loosening the staffing requirements and giving the hospitalists more flexibility.
- Examine the cost of the IDN handling the billing and collection function.
- Put some portion of the contract at risk for both parties.
- Work collaboratively to define the minimum metrics that must be achieved to keep the physicians whole, and add metrics to enhance the hospital’s performance and pay more revenue to the physicians.
- Cutting-edge organizations are experimenting with as much as 20% at risk, with a 10% swing to the negative or positive for the physicians.
- Want to take it even further? Consider a co-management agreement, where the group’s incentives are tied to the hospital’s performance on those patients.
Consider using a national hospitalist group
- National organizations can bring more management capabilities, experience and infrastructure than most local groups.
- Recently, multiple national firms claimed potential enhancements not by replacing the physicians, but by providing the infrastructure and leadership to be successful.
- If an organization has multiple contracts in a region, it may be able to float hospitalists between locations as needed, lowering staffing costs.
- Corporations typically have greater financial resources, which equates to a higher ability to accept risk contracts.
- National agencies often demand higher management fees than local groups.
- Local firms are generally managed by groups that live in the community; national firms may not be.
- National groups have multiple clients to tend to and may not be as responsive.
- Because it has multiple clients, national groups could be more rigid in their contracting practices.
- Likewise, because the companies often have built internal reporting systems, they prefer to use those instead of the IDN’s system.
My advice? Study the pros and cons of these options carefully, and weigh it against what’s best for your organization. The ultimate goal is to have a partnership that works best for the IDN, the hospitalists and the hospital, where risk is shared, and performance, quality and satisfaction are high.