Where is physician-hospital alignment headed in the next 10 years?

Becker's Hospital Review caught up with Max Reiboldt, president and CEO of Coker Group, about the future of physician-hospital alignment. Mr. Reiboldt has 25-plus years of experience in healthcare, with expertise in the tactical, strategic, financial and management issues health systems and physicians face in an evolving marketplace.

Mr. Reiboldt will present on the future of physician-hospital alignment at Becker's 16th Annual Future of Spine + The Spine, Orthopedic and Pain Management-Driven ASC Conference June 14-16 in Chicago.

Editor's note: Responses have been lightly edited for style and brevity.

Question: What are the most popular physician-hospital alignment models today?

Max Reiboldt: By far the most popular [alignment model] still is employment, where physicians are employed by hospitals and health systems as W2 employees. Seemingly these days there are different structures of employment models where groups can have more autonomy and independence, even while they are technically employed. For example, a professional services agreement model gives you systemically more independence because you are contracted as a group for professional services, but you're still aligned. Co-management and CINs are much more contractual and even more at arms length, and typically are in response to a more narrow form of affiliation. And clinical co-management agreements are even more tied to quality and value-based agreements.

So in terms of prominence, the most popular alignment models we see today are employment; professional services agreements; clinically integrated networks; and clinical co-management agreements, in that order. 

Q: What compensation models have you seen emerge over the past few years for hospital-aligned physicians?

MR: We've seen a combination of productivity and value-based reimbursement incentive pools, as well as hybrid models. Because we are mostly in a fee for service environment, most compensation models are still productivity based. Most of those are still tied in some way to work relative value units, and yet as we move slightly away from FFS to fee for value, we are experiencing at least a portion of incentive plans tied to quality metrics. Metrics are established within a speciality. If you hit those metrics, a portion of the extra or bonus compensation is set aside to the quality pool of dollars. Compensation models should be responsive to the reimbursement system and structure. Once again, since we're still mostly FFS we're still experiencing and developing more compensation models tied to production, but it is starting to move away.   

Q: How does the shift to value-based care affect compensation models for specialists, including orthopedic, spine and neurosurgeons?

MR: To drill down more in those specialties, what we are seeing more of is some form of bundled payment that a payer would provide. Consider an ortho surgeon that does a spine lumbar infusion that is bundled. A payer would negotiate with the CIN or the hospital, and the hospital would in turn subcontract through the CIN or directly with the physician group, and the hospital would get the bundled payment that would cover everything from inpatient, to surgical, to follow up, etc., including hospital stay and anesthesiology. The hospital would then take the responsibility for distributing a portion of the bundle to the surgeons. That would be the way they're compensated, even if they're a private group. If they're employed, we might change the compensation model to make it responsive to the bundle. The bundle is a fixed form of revenue, so the only way you can profit more so from that would be by delivering the service at a reduced cost, such as by reducing supply costs for surgeons.

One example is Walmart contracting with a hospital system in the Northeast. They will send a significant portion of their covered employees who need a total joint replacement to this location, and they will be given accommodations and surgical services, and all that will be bundled and paid to this health system. The system, in turn, will contract for the professional services involved, like anesthesiology. So that's a real-world example I think we will see more and more of.

Q: Where do you see physician-hospital alignment headed in the next 10 years?

MR: I do believe hospitals and physicians will have to be even more closely aligned for reimbursement and coordination of care purposes, so there's a lack of redundancy, lack of care revisions, reduced hospital stays, etc. The only way that [this] can get done is to have all providers communicating better through more sophisticated technology, as well as better coordination, meaning the right hand is talking to the left hand within the physician base. If we have better coordination than traditionally has happened, then the cost of care should go down.

Where I see things going is more incentives tied to quality measurements and cost reductions. And the way you lower cost is to have skin in the game on both ends of the spectrum. If you're a physician who only cares about professional fees, you'll care less about things like length of stay, whereas in a bundle you will be held accountable for that. I think that's where we're headed ever so slowly. As the payers start to resonate more with some types of value-based reimbursement, then all those things we discussed — alignment models, compensation models — will respond in turn.

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