The abbreviation PSA stands for two very different things in health care. On the purely clinical side, it refers to the first form of surgical tape, called a pressure-sensitive adhesive, developed by a surgeon, Horace Day, in 1845. In the world of healthcare finance, however, PSA refers to a professional services agreement — a type of hospital-physician arrangement.
These two types of PSAs have an important characteristic in common: They both must be “sticky” to be effective. In this regard, the first type of PSA has come a long way in the past 173 years; it is much stickier today than it was when Day invented it.
Unfortunately, the same cannot be said about professional service agreements—they just haven’t gotten much “stickier” over the years in the sense of binding the hospitals and physicians closely together in a way that ensures both parties have a shared vision for ongoing collaboration and aligned economic incentives and consequences. This quality has been elusive in these types of agreements, because there has been relatively little change in the types of PSAs hospitals and physicians have formed over the years. For the most part, they contain the same components and serve the same transactional function they have since their inception and expansion throughout the past two decades.
This article was originally published by hfm Magazine, January 2019.