5 Tips for Aligning Physicians Through Contracts

Organizations seeking to improve their alignment with physicians may want to consider making changes to the physician contracts. Contractual relationships for specific physician clinical, managerial or investment services and are typically targeted toward a combination of improving clinical quality, operational efficiency and programmatic development.

These agreements are generally less intrusive than other economic-type alignment tools, allowing organizations to make changes more easily. Moreover, the tools typically do not require an entirely new structure to manage. As such, these tools are the most prevalent in hospitals today and as a result need to be evaluated to ensure they are appropriately positioned to advance the organization's goals.

Kate Lovrien, a strategist with Kurt Salmon's Healthcare Strategy Group, discusses five tips for executives to improve alignment with physicians through contracts.

1. Reexamine on-call arrangements. Ensure the right on-call arrangements are in place to guarantee adequate physician coverage for emergency and inpatient departments. "This includes both per diem on-call pay, which usually takes the form of a daily stipend, and activation payments, which are made only upon an actual call event requiring a physician's presence in the emergency department," Ms. Lovrien says.

2. Revise terms in medical directorships.
These positions, which include stipends to oversee specific programs, services and departments, and achieve certain metrics, will help incentivize improvements to clinical quality. Making a substantial portion "at risk" is important to provide incentive to achieve the desired outcomes. "Revise directorships to be more in line with the quality outcomes your organization wants to achieve," Ms. Lovrien says.

3. Consider joint or full management over employment.
Clinical co-management and professional service agreements can allow closer partnerships without the legal ramifications of employment. Trusted physician partners can manage a service line or even the entire hospital. "This improves quality, operations and program development because these metrics are stressed in the initial agreement and the physicians are a part of that discussion," Ms. Lovrien says. "The agreements usually include a base fee (a fixed, monthly payment), and an incentive fee, which varies based on whether or not the desired outcomes are achieved."

4. Invest in business ventures with physicians. These joint ventures take the form of legal partnerships designed to share risk or expertise around specific healthcare functions or services, such as ambulatory surgery. "An organization can benefit from physicians' expertise in these new areas, and may find innovation more attractive if the risk is shared with another party," Ms. Lovrien says.

5. Nurture the partnership. Regardless of type of contracts, physician partnerships need consistent nurturing and cultivation. "The deal does not eradicate the need for constant communication on how to improve the quality and delivery of services," says Ms. Lovrien. "It is important for administrators to constantly evaluate the direction and success of any agreement and partnership and discuss changes needed through open communication."

Learn more about Kurt Salmon.

More Expertise From Kurt Salmon:
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Physician-Hospital Alignment: 4 Strategies to Align Physicians
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