Blog Post

Four Key Components of Comanagement Arrangements


Comanagement strategies are growing more prevalent as hospitals and physicians seek to strengthen alignment. Yet many physicians and health system administrators lack a complete understanding of the essential structures and components for the development of these agreements. Although the specific details of comanagement agreements differ widely across hospitals and specialties, effective agreements will include and address four key components, as discussed here.

1. Scope of Services

Without a defined service line strategy, physicians sometimes act in the interest of their independent practice, paying insufficient attention to overall hospital service line quality, service, and costs. Effective comanagement agreements incentivize physicians to enhance performance through activities such as:

  • Providing physician leadership over the service line, frequently working in a dyad with the service line administrator
  • Participating in the hiring and managing of nonphysician clinical employees
  • Assisting in implementing, monitoring, and managing quality assurance activities
  • Developing, implementing, and updating patient care protocols, pathways, and guidelines
  • Assisting in managing supply chain activities, the purchasing/leasing of medical equipment, and costs

2. Compensation

Compensation mechanisms vary widely across comanagement agreements, but both fixed and variable compensation components are universally included. The fixed portion of compensation is a payment made based on an hourly rate for documented physician time spent on medical directorship duties or committee participation. The variable portion consists of performance incentives paid based on achieving specific quality, operational, and financial goals.

3. Service Line Governing Board

The governing board (or similar leadership body) acts as a strategic planning committee and decision-making body for the service line. With representation from both the hospital and participating physicians, the board’s responsibilities include (but are not limited to):

  • Developing the service line plan and monitoring management company performance
  • Reviewing clinical quality and service line performance
  • Developing recommendations regarding the annual budget
  • Reviewing arrangement payouts and adjustments

For larger service lines, it is common to form additional committees to support the board through more frequent monitoring and facilitation of specific agreement components.

4. Management Company

Comanagement arrangements typically involve creating a new management company composed entirely of physicians, although hospitals sometimes contract with an existing physician group or with multiple individual physicians. In most cases, the management company is solely a legal entity without a dedicated facility, equipment, or staff. The management company provides administrative rather than clinical services, and physicians continue to see patients and bill payors through their independent medical groups.

Putting the Right Pieces Together

Given the potentially complex design and high reward of comanagement arrangements, it is important to understand and address the key components of these agreements. Additionally, it is essential to execute an inclusive and organized planning process to increase the probability of successful implementation.

To learn more about comanagement arrangements, read the full article.