Co-management programs are becoming an increasingly important tool in population health management.
Engaging physicians in service line development is an essential part of a healthy network, but arranging the deals can be complicated. Below are some tips to keep in mind for before, during, and after the agreement is made.
Before the Negotiation Begins
Master the Basics
Before you begin the negotiation process, be sure you have a solid understanding of co-management agreements. In its most basic form, co-management aims to assign service line management tasks to physicians in your network. Compensation plans vary, but are usually made up of an hourly base fee and an incentive fee for reaching quality targets.
Assess the Situation
Reach out to your current service line director, and figure out the most important aspects of the service line. These could include cost, satisfaction, operational measures, clinical quality or any number of other factors. To understand where your service line is currently at, it can be helpful to develop a dashboard of relevant performance indicators and compare your data to national standards. Benchmarks are typically available through clinical registries published by industry organizations. The National Surgical Quality Improvement Program or the American College of Cardiology are two examples of potential data sources.
Define Goals for Incentive Fees
After you compare your network’s benchmarks against industry standards, you will be able to easily see where your service line is falling short. Using this information as a baseline, you can construct specific goals to remedy these shortcomings. These goals will then serve as physician incentive programs. An initial list of ten to twelve goals is ideal, as this will most likely be narrowed down during the negotiation process.
During Negotiations
Discuss and Finalize the Base and Incentives
Once you have decided on your list of incentives, it’s time to begin negotiating with physicians. Based on their feedback, the group should be able to narrow the list down to four to six final components. This number allows the physicians to focus on a variety of areas while still ensuring the probability that the goals can actually be reached. The group should also decide on target goals for each incentive. Again, this can be determined by using industry benchmarks. Next, the group must agree on a base hourly fee. Payable duties should be clearly defined and relevant to the service line being managed. Make sure to remove general clinical duties from the agreement, as physicians are already being compensated for these tasks.
Craft the Payment Structure
Now that the incentive and base terms have been defined, the physician group must establish the payment weight of each component. Generally, the incentive fees range from 40% to 70% of the total payment, with the hourly base pay making up the rest of the difference. To make things more complicated, you may want to weight incentive goals differently within the plan. Equally-weighted plans are common, but assigning slightly higher weights to metrics that can be compared to industry standards can be more effective at measuring progress.
Dot Your I’s and Cross Your T’s
In order to avoid regulatory and compliance issues, it is important to work closely with your legal team to ensure that the agreement terms meet Stark and anti-kickback regulations. It can also be very useful to work with an independent valuator who can ensure that the total compensation is within fair market value. Once the plan is finalized, your legal team must then draft contracts for all the physicians to sign. Take note that some physicians opt to retain their own counsel to review the contract, which can lengthen the negotiation time.
After the Agreement Has Been Signed
Provide the Tools
Once the negotiations are finished and contracts have been signed, you still need to make sure that the physicians have everything they need for service line management. It can be helpful to provide hospital resources such as meeting spaces, scheduling assistance or other general support initiatives. It is important to make it clear to the physicians that they will have the resources they need to successfully implement the new program.
Manage the Metrics
As previously stated, payment of the incentive fee is based on the achievement of metric goals. In order to measure progress toward these goals, there needs to be a clear and reliable process in place for gathering and analyzing data. The physicians in the program need to be able to understand and trust this process so that everyone is on the same page.
Track the Hours
It is essential to be very diligent about monitoring and maintaining the time logs of physician hours. The base fee is dependent on the exact hours worked by each physician, and failure to properly keep track of these hours could result in compliance and regulatory issues.
Instituting a co-management program for the service lines in your network can be a valuable way to measure and work toward a number of progress metrics. Keep the above suggestions in mind for a smooth and easy negotiation process.
By: Neal Barker, Partner at HSG
nbarker@hsgadvisors.com
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