Clinical co-management arrangements are unlike other arrangements between hospitals and physicians. A medical director agreement, or an on-call agreement, for example, come with a customary set of responsibilities to be performed. In contrast, clinical co-management arrangements can cover just about anything. Structures, services delivered, participants, compensation—all show wide variability. If you’ve seen one such arrangement, then you’ve seen—one. The answer to the perennial question of what you can pay under such arrangements is, it depends what you are paying for.
Health systems usually use co-management arrangements to align physician interest with the system’s interest in service line quality and performance. They are often used in cardiology and orthopedic service lines to engage physicians to achieve successful clinical integration and prosper in a value-based world. Co-management arrangements can also help align the interests of all physicians in a given specialty and promote collaboration among employed and independent physicians.
While co-management arrangements usually include both fixed and incentive elements in their compensation structure, the key determinant of acceptable payment is what services will be covered under the agreement.
For example, which of the following categories will be included, and what activities within each category?:
- Staffing: Will the arrangement cover interviewing and selection of staff paid by the hospital or system, staff development and training, or direct provision of staff?
- Operations support: Will the physicians provide an administrator or a clinical manager? Will they handle patient scheduling, policy and procedure development, or process improvement?
- Quality improvement: Will the co-managing physicians be responsible for establishing best practices or clinical pathways? Will they need to establish and monitor indicators for patient satisfaction and quality of care?
- New program development: Will the arrangement involve development of new programs or services? Responsibility for accreditation requirements? Physician recruitment? Promoting the program?
- Financial planning and reporting: Will statistical reporting, development of operating and capital budgets, and/or ongoing budget monitoring be included in the arrangement?
The system needs to decide which of these, and more, it wants the co-management arrangement to cover. The physicians must consider which services they are interested in executing, which they have the resources to pursue, and which they can deliver well.
Even after a co-management agreement is executed, ultimate authority and responsibility for the service line continues to rest with the hospital or system. The hospital or system should therefore seek to contract only for those duties that supplement and are complementary to the management services provided by its staff.
An open dialogue is the best way to match the services the physicians are willing and interested in providing, with those the hospital/system needs and wants them to provide. Only after that process is completed and there is definitive agreement on the services to be provided, can the value and associated compensation levels of those services be determined. What can you pay? The fair market value of the agreed-upon services. Compensation cannot be linked to referrals or admissions, and the compensation arrangement must meet commercial reasonableness standards. The nature and variability of co-management arrangements will inevitably bring up regulatory concerns; these should be proactively addressed during the development of the arrangement.
By Karin Chernoff Kaplan, Managing Director Richard Chasinoff, Director – Veralon
