Tips to streamline your physician contract approach in 2023

While physicians understand the need to track activities agreed upon in their contracts, the administrative burden of doing so and the compliance risk related to recording errors are significant. By implementing a physician payment automation solution, health systems can reduce the paperwork and risks associated with physician contracts.

In an October Becker's Hospital Review webinar sponsored by Ludi, Carter Cowardin, MHA, national account manager of Ludi, and EJ McMahon, MD, MBA, FACP, senior vice president and chief medical officer of Capital Health (Pennington, N.J.), discussed challenges associated with managing physician contracts and payments, and described how streamlining the process with an automated physician payment system can help.

Four key takeaways were:

1. The physician compensation landscape is complex and always in transition. "We're currently straddling two different worlds," Mr. Cowardin said. "On one side, we have the traditional fee-for-service methodology, which is how the bulk of providers are still compensated. On the other side, we have value-based compensation models, which is where we should be going."

2. The current culture around physician contracts is confrontational, burdensome and inefficient. According to a Ludi survey of physicians nationwide, nearly half of physicians describe their relationship with their hospitals as transactional or combative and more than half say they spend up to three hours per day on administrative tasks unrelated to patient care or the EHR.

"Many organizations have a difficult time assessing the overall expense related to their physician alignment strategy between multiple AP, payroll and accounting schemas," Mr. Cowardin said. "The data can be hard to collate and distill into useful information to inform strategic decisions."

Hidden operational costs for 100 physician contracts may include $750,000 in compliance risk, $250,000 in missed contract terms and reduced payment errors, $220,000 in knowledge transfer time (i.e., when an employee leaves the organization and there is a new hire to take over that role) and $200,000 in turnover-related payment dissatisfaction. This is where physician payment automation can make a world of difference.

3. Best practices in establishing and managing physician contracts revolve around standardization, alignment, staying on top of compliance and automation. "If you collect data during this process, it can be used to develop a long-term database of business intelligence that can support dashboards and feed into the strategy and development process to continue the cycle of improvement," Mr. Cowardin said.

Here are best practices:

-       Standardize contracts. Use templates that provide options for market demands.

-       Align strategy. Ensure contracts match market and organizational priorities. Know fair market value.

-       Check calculations. Ensure each payment is correct, with an eye toward contract maximums.

-       Track compliance requirements. Collect time logs where required by Stark Law.

-       Periodic review. Check contracts and payments to ensure ongoing need.

-       Automate. Streamline payment processes to increase efficiency, add a layer of compliance protection and gain business intelligence around your physician contracts.


4. Capital Health has increased physician satisfaction while reducing administrative costs and compliance risks with DocTime® from Ludi. Capital Health moved from a paper-based physician payment system to Ludi’s comprehensive, automated solution that tracks, manages and audits any type of physician payments. “The benefits of getting away from paper were huge. For someone doing clerical work in our medical office, there are several hours every week that they would spend tabulating, stapling, xeroxing – and now this is all automated, allowing those same team members to focus on other priorities. This is time that has been freed up and has made the situation far less open to variability and mechanical human error. With DocTime, I think we have a much greater assurance that we are tight with our documentation when it comes to dollars going to our physicians. That gives our compliance team much needed peace of mind. For our doctors, it offers more transparency in their payments and helps them easily keep track of their time with less paperwork involved. The reception has been very positive.”

By automating payment and tracking physician contracts with a solution like Ludi, health systems can reduce administrative burden, decrease compliance risk and reduce costs.


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