physician contracting for small hospitals
TRANSCRIPT
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Physician Contracting for Small Hospitals A MD Ranger On-Demand Webinar
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Objectives
• The challenges • Our approach • Best practices
The Challenges
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Small hospitals shoulder bigger burdens
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0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
<=25 26-‐99 100-‐249 250-‐399 >399
Annual Physician Expense per ADC by Licensed Beds
Payments are higher
• Hospitals with under 100 beds pay 28% more for call coverage than hospitals with 100-199 beds.
• Hospitals with under 100 beds pay 64% of what hospitals with 100-199 beds pay for medical direction and administration but amount more to percentage of overall budget.
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Cost per visits remain high
$0#
$15,000#
$30,000#
$45,000#
$60,000#
$75,000#
$90,000#
$105,000#
25th#percen4le# 50th#percen4le# 75th#percen4le# 90th#percen4le#
Paym
ent(p
er(Tho
usan
d(Em
ergency(Visits(
Emergency(Payments(per(Thousand(Emergency(Visits(Hospital8Based(Total(Annual(Payments(
Under#150#General#Acute#Care#Beds#
150#General#Acute#Care#Beds#and#Over##
Source:#MD#Ranger,#Inc.#
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Economies of scale unavailable for small hospitals
$0#
$100#
$200#
$300#
$400#
$500#
$600#
25th#percen1le# 50th#percen1le# 75th#percen1le# 90th#percen1le#
Paym
ent(p
er(Surgical(Procedu
re(
Anesthesia(Payments(per(Surgical(Procedure(Hospital7Based(Total(Annual(Payments(
Under#150#General#Acute#Care#Beds#
150#General#Acute#Care#Beds#and#Over##
Source:#MD#Ranger,#Inc.#
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What’s at stake
• In addition to clinical, operational, and financial challenges, physician relationships are integral to running a small hospital smoothly.
• Attracting and retaining physicians, guaranteeing physician coverage, and leadership can be particularly difficult.
• Federal and state laws demand certain levels of coverage
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Justifying payments isn’t always straightforward
• Documenting the fair market value of payment rates for coverage, leadership, clinics, and other services can be difficult and expensive.
• Physicians can have more leverage with small hospitals, particularly those in rural areas or competitive markets.
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Making strategic decisions is more difficult
• Smaller hospitals have fewer resources, so you do more with less.
• Sometimes sacrifices are made just to get the coverage you need.
• Yet, even small hospitals must document FMV for each contract.
• Don’t make the process overwhelming and expensive; it doesn’t have to be.
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Our Suggested Approach
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Create a standardized process that is simple and effective
• Designate an executive to oversee the process. At small hospitals, this typically falls on the CEO or CFO.
• Automate as much of the process as possible. • Financial management is key; ensure that financial
analysis is done annually, if not more frequently, on contracting expenditures.
• Determine a rigorous, yet straightforward, way to document FMV consistently.
• Predetermine a way for your organization to handle exceptions
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Determine and document FMV with market data
• Using high-quality market data is the fastest, most straightforward way to determine and document physician payments
• Test for commercial reasonableness • Determine if there’s a match in scope of services • Find the appropriate market range and determine
payment • Document FMV
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Seek outside help when needed
• If there is no comparable market data or the position demands particular qualifications, consider getting a valuation.
• Smaller hospitals typically use outside valuation firms for FMV opinions, given resource constraints.
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Best Practices
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Don’t be held hostage
• Avoid situations where you must overpay to provide coverage.
• Sharing market data with physicians can be helpful to demonstrate what’s realistic. It’s also important to explain how federal guidelines restrict payments.
• Always consider alternatives to paying a per diem, like paying per episode or for uncompensated care.
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Do more with less
• Automate as much of the contracting process as possible.
• Using easily accessible market data as the foundation of your process can cut down wait times from valuation firms and expense, too.
• Document FMV compliance with easy-to-read, consistent reports that outline key elements from contracts, like payment, hour requirements, etc.
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Compare your organization to like organizations
• When possible, use data from facilities with similar demographic profiles.
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