AMC Funds Flow Arrangements & Finances
Teaching hospitals rely on the services of school of medicine (SOM) faculty and staff to serve their patients, manage their residency programs, and impart medical direction for hospital units. In exchange, teaching hospitals provide payment for the clinical services administered and support for academic programs. However, what each party expects and wants can diverge over time; thus, it is often necessary to update agreements to reflect current realities.
ECG works with your teaching hospital and SOM to document, rationalize, and revise the funds flow. We help to develop a payment methodology that appropriately reflects the services provided, is based on fair market principles, incorporates the interests of all parties, and provides for periodic update.
ECG utilizes our broad experience with AMCs to foster informed decisions at each step of the process and to respond to unique aspects of each SOM/teaching hospital relationship. We understand the services that are commonly needed at AMCs and the corresponding requirements to effectively provide those services. Furthermore, we understand how to overcome one of the biggest challenges in structuring financial arrangements between SOMs and hospitals – collecting information at a level of detail that provides confidence to all parties without being overwhelming.
Whether structuring arrangements for the entire SOM or for a specific department, our work will ensure that the teaching hospital is receiving a return on its investment in the SOM, and the SOM/faculty practice plan can rest assured that it is receiving fair compensation for its services.
Selected Projects
Redesigning organizational and financial relationships between a hospital and affiliated practices. Expand Minimize
ECG fundamentally redesigned the organizational and financial relationships between a major teaching hospital system and its affiliated faculty practices. Our involvement included the development of a new affiliation agreement that consolidated payments for faculty services related to teaching, indigent care, medical administration, and other clinical and academic program support. The revised arrangements resulted in an objective means for supporting faculty activities, characterized by consolidation of funding, a predictable level of support, and accountability for financial and operational performance. As a result of the new 3-year agreement, the parties understand the services to be provided, are comfortable with the resulting support levels paid, and witness an improved relationship.
Developing a revised payment methodology. Expand Minimize
In this engagement, ECG clearly documented services rendered by SOM faculty to a large county hospital and established a payment methodology to promote joint planning regarding future changes in service provision and funding levels between the SOM, hospital, and county department of public health. Under the recommended payment methodology, direct patient care and patient care administration services would be funded on a cost basis, based on FTEs committed to each activity. The methodology developed was approved by all parties involved and provided a framework for county leadership to discuss healthcare costs with internal and external constituents.
Evaluating the relationship between an SOM and a private practice teaching affiliate. Expand Minimize
ECG conducted a high-level comparison of a private practice teaching affiliate’s existing technology, staffing levels, and other key infrastructure components to those of peer AMCs in order to identify areas of concern and to confirm anecdotal evidence of shortcomings. Furthermore, we estimated the value of medical direction and other professional services provided to the hospital for comparison to payment levels proposed by its leadership, as well as reviewed hospital financial performance to evaluate its future financial viability. University leadership used ECG’s analysis in discussions with hospital leadership regarding the strategic direction of the facility and its affiliation with the SOM.
Assisting with updates to an affiliation agreement between an SOM and its primary teaching hospital. Expand Minimize
ECG completed a detailed review and documentation of the current scope of services provided by SOM faculty and support staff for the school’s primary teaching hospital. Our analysis indicated that the SOM was fulfilling the FTE requirements stipulated by the affiliation arrangement and that there was a shortfall of approximately $10 million in hospital funding.
