ECG Management Consultants

Over the last several years, a remarkable number of private medical oncology groups have shifted to hospital and/or health system employment. Given the critical importance of the oncology service line, many hospitals and health systems have either acquired a group of medical oncologists or are likely to do so in the near future. While the acquisition of a medical oncology practice offers a variety of benefits to a hospital and/or health system, the expected financial results are frequently not attained. This article explores the issues hospitals and health systems must address to ensure the strong financial performance of the acquired practice.

Physician compensation and performance incentives are undergoing a fundamental shift as healthcare providers embrace value-based delivery models. Physician organizations generally recognize that production-driven plans will need to evolve to reflect changing economics, but there is a reluctance to move too far ahead of reimbursement changes. In this presentation, we review the impact of healthcare reform on provider compensation and plan methodologies, including emerging physician compensation plan trends; compensation trends relative to production for primary care, surgical, medical, and hospital-based specialties; market trends in APC compensation; and value-based compensation considerations.

Physician organizations and health systems are under renewed pressure to come together to build economies of scale, align incentives, and share risk. To attract and manage physicians, health systems need to offer a variety of compelling structural options, develop high-performing physician management capabilities, integrate clinical services across the continuum of care, and effectively manage risk within shared contracts. This presentation explores a range of options for success in these endeavors, including physician employment, medical foundations, hospital-affiliated group practices, clinically integrated physician networks, physician hospital organizations, medical group joint ventures, comanagement agreements, and management services organizations.

Office of Inspector General (OIG) recently issued Advisory Opinion 12-22 addressing an existing comanagement arrangement between a rural hospital and a cardiology group. Under the arrangement, the group manages the hospital’s four cardiac cath labs; recommends equipment, supplies, and devices; and provides strategic planning, medical direction, staff development, and other services. This Executive Briefing explores the arrangement, including its acceptance of combined fixed and capped performance-based compensation and its reliance on safeguards to prevent reduction or limitation of services and inducement of referrals. It also explains how other hospitals can utilize the OIG’s guidance to improve the performance of service lines.

The U.S. Department of Health & Human Services’ (HHS’s) Office of Inspector General (OIG) recently issued Advisory Opinion 12-15, addressing an existing arrangement under which a hospital pays a per diem fee to physicians for on-call coverage at the hospital’s emergency department (ED). This is the third advisory opinion that the OIG has provided related to ED call coverage arrangements. Together, Advisory Opinions 07-10, 09-05, and 12-15 provide guidance to hospitals developing and maintaining call coverage arrangements. This Executive Briefing summarizes our thoughts on the key takeaways from the advisory opinions and implications for payments under these arrangements.

Hospital acquisitions of physician practices are often likened to a marriage and for good reason. As in marriage, whenever hospitals acquire physician practices, both parties are in for some major changes - some anticipated, others not - that are sure to test the strength of the relationship. The root cause of most conflicts can usually be traced back to a lack of preparedness for the changes that the relationship will bring. This presentation explores this theme and provides practical advice on what hospitals and physicians must do in order to prevent the avoidable sources of conflict and mitigate the unavoidable issues.

As healthcare reform unfolds in Massachusetts and nationwide, hospitals are adding physicians to their payrolls at an unprecedented rate. Drivers for this trend include healthcare reform, quality improvement, and opportunities to leverage the economics of healthcare delivery. While moving forward with employing physicians, hospitals should take time to assess and strategize how best to transition physicians to fully integrated and aligned relationships. This presentation addresses the strategic, structure and legal issues involved in developing hospital affiliated group practices, clinically integrating with physicians, acquiring physician practices and compensating physicians to achieve system goals under alternative payment arrangements.

Healthcare organizations are mobilizing their physician and administrative leaders to expand their focus beyond volume to include service experience, cost, quality, and outcomes. If these organizations are to succeed, substantial work is required to create the care delivery model of tomorrow while they continue to provide care today. Probably the most critical elements in this transition are physicians who have the most direct line of sight on both cost and quality. Not surprisingly, there has been a surge in interest in transitioning to physician compensation systems that are more closely aligned with the value-based future. However, in the flurry of activity surrounding paying doctors based on “value,” we repeatedly see healthcare organizations with a strong sense of urgency despite a poorly defined direction. This Insight provides the information necessary to help you decide how to best manage the pace and implications of payment reform on physician compensation within your organization.

As hospitals, health systems, and academic medical centers (AMCs) begin to evaluate their first series of physician transactions (e.g., employment, Professional Services Agreement [PSA]) that occurred during the past 3 to 5 years, many are now revisiting the fundamentals of physician compensation. The central challenge for most organizations is to develop physician incentives that drive productivity and quality while ensuring that compensation remains grounded in the fiscal reality of the organization – an aspect of plan design that is often overlooked (e.g., during the 1990s). As such, the long-term financial feasibility of past approaches that merely index compensation to benchmarks (e.g., median compensation per WRVU) and assume health systems take on full financial risk are beginning to be questioned. This Executive Briefing highlights five trends that are emerging nationally and includes recommendations for organizations seeking to take a proactive approach to physician compensation plan design in this rapidly evolving market.

For hospitals and oncologists alike, alignment can be an intimidating concept, particularly given the unique revenue streams associated with oncology services (e.g., infusion administration, radiation oncology treatments). However, an increasing number of organizations are pursuing stronger affiliations in an effort to better coordinate care, improve access, and ensure the long-term financial viability of oncology services. While physician employment has received much of the recent press, the Professional Services Agreement (PSA) has gained prevalence as a mutually beneficial, high-integration alignment strategy. This article highlights the basic features and benefits of a PSA model for oncology services and offers an explanation for this model’s increasing popularity.