Here, Gerry Biala, senior vice president of perioperative services, and Matt Kossman, senior director, explain the warning signs hospitals should look for, the time when co-management agreements are often terminated, and how to prevent a co-management agreement from losing steam.
Q: You’ve said before that co-management agreements tend to “lose steam” after they’re formed and implemented. Can you firm up a timeframe of when that is prone to happen?
Mr. Biala: With any new endeavor, there’s a lot of new activity and excitement early on. That’s the same when it comes to co-management. A typical co-management agreement will include administrative tasks as well as incentive metrics in which a predetermined goal is included in the agreement. In my experience, there seems to be a relationship between how you set your expectations and the incentive targets during that first year of the agreement. If you haven’t set your targets or expectations right, the agreement can lose steam in 6-9 months because individual participants will get frustrated with a lack of results.
Expectations and targets should be very clear. This is a changed role and new responsibility for physicians that they will need to be coached through. When you’re setting targets or outcomes, there tends to be a sense of eagerness around achieving higher levels of outcomes than what would be realistic. It is beneficial to all parties to meet frequently with an agenda that includes reviewing current actual performance against the target goals.
Mr. Kossman: When setting targets, the first key is to look at actual performance over at least a twelve-month period. The next step is to then compare your actual results to available benchmark data. This is often eye-opening in that the hospital has a heightened sense of awareness around their performance to peers. This data should be used to thoughtfully develop targets that demonstrate improvements and are also attainable with focused attention. The key is striking a balance on setting a year-one target that is attainable over the first year. Oftentimes, co-management agreements will have targets that increase in successive years to continually drive improvement.
Q: What are some characteristics of a co-management agreement that has lost steam? What should management keep an eye on?
Mr. Kossman: When agreements begin to lose steam, it happens because physicians and hospital leaders aren’t as focused on putting processes in place and monitoring outcomes against incentive goals that are originally set. A lot of energy is usually exerted in establishing the co-management responsibilities, and incentive goals often don’t continue once the agreement is in place. I have seen instances that once the agreement was finalized and committees established, people began to lose track of the ultimate goals. What we’ve seen successfully fall into place is a co-management resource — someone that isn’t a physician but maybe a service line leader in the hospital who can sit in on meetings and drive agendas. They are usually responsible for developing agendas, completing background research and ensuring the most current performance results are available for meeting discussion.
Mr. Biala: One of the characteristics you’ll see when agreements lose steam is improvements completely plateau. They no longer meet expectations. The signs and symptoms can be very clear. You may have physicians who start to decrease their attendance at meetings. They’re no longer engaged in the process. People also begin to divorce themselves from the obstacles. They’ll say things like, “This is something I inherited. I can’t do anything about it.” That’s when you know you’re losing steam.
Q: What might it take for a co-management agreement to be terminated? When might that discussion take place?
Mr. Kossman: A hospital leader might ask themselves, wait a minute, do we have a real performance failure here? That performance failure is when the co-management agreement completely misses the targets for improvement and quality goals are not achieved. One concept of the agreement that should be embedded in the strategy of the hospital is physician engagement — allowing physicians to make decisions. With that, the hospital is co-investing in the co-management company to achieve the strategy. In an instance when the goals are not being achieved, it is a good opportunity to evaluate the level of physician engagement. Often physicians will lose steam or feel the hospital is not providing adequate support for them to succeed. Situations such as this create an excellent opportunity for refocusing on the original goals.
Mr. Biala: It’s been my experience that termination talks mostly occur when the contract is up for renewal and termination clause. It could be 12 months but I’ve also seen it at 18 months or two years.
Q: In your opinion, what would you say is more difficult: forming a co-management agreement or maintaining one?
Mr. Kossman: In my opinion, maintaining a co-management agreement is much more difficult than forming one. When they’re formed, there are generally outside resources that come to the table and help work with hospital and physician leaders to structure the agreement terms. After the agreement is in place, the ongoing maintenance requires diligent use of resources as well as availability of current data to gauge performance. Physician members usually have a full work load and are faced with balancing these added demands to already busy schedules.
Mr. Biala: We certainly recognize that forming a co-management company is a daunting task. You’re introducing a new concept to physicians and it can take a while to get over their suspicions. That can be very daunting. But you get into the maintenance stage and you’re faced with an entire array of obstacles. It’s essentially physicians with the same leaders who have been attempting to carry out this improvement — you haven’t changed the people. Co-management will support change in culture in day-to-day management. Any time you establish a cultural change with more details and more transparency — that’s where it becomes very difficult.
Q: Are there any myths out there that you’d like to clear up regarding the maintenance of co-management agreements?
Mr. Biala: Physicians often ask me if co-management is a step to employment. ‘Isn’t this just a step to the hospital invading my practice?’ Co-management itself is not necessarily a stepping stone to employment. It’s certainly part of physician alignment and can serve as a vehicle to create alignment without employment. There are co-management agreements that include physicians employed by the hospital, so there’s a wide range. A significant reason to not do co-management — in the minds of many hospital and physician leaders — is that once you’ve formed one, you’ll never be able to get out of it. That becomes a real concern. I think it needs to be addressed in the operating agreement and the expectations that are set.
Q: Any other best practices, anecdotes or examples you’d like to share?
Mr. Kossman: A service line resource to assist in the co-management agreement is real benefit and resource to physicians. It’s often someone who is unbiased and doesn’t have a stake in the agreement one way or another, and is solely focused on achieving goals.
Mr. Biala: We once had a co-management agreement that required 16 different initiatives to achieve their objectives. It was very large to handle and a very large task. We determined there wasn’t enough energy in the system to achieve all of the objectives. It needed to be more realistic.
Related Articles on Co-Management Agreements:
Co-Management Agreements 101: Basic Principles to Know
Top 10 Lessons Learned from “Mature” Co-management Arrangements
Physician Hospital Integration Efforts: 4 Key Concepts
