Insights from Ludi

4 Ways To Improve Your Hospital's Physician Agreements

Posted by Gail Peace on Feb 22, 2017 8:18:00 AM

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Many hospitals have embraced the Lean Six Sigma method to collaboratively identify opportunities and reduce waste. Some hospitals even have teams that shine a laser focus on large cost savings opportunities. These projects are collaborative and can also take time and resources to manage appropriately. We have thought of a handful of ways that are rooted in the Lean approach but also take advantage of the work that has been performed by others to date. These four findings aim to improve your hospital's physician agreements and how you manage them. These could be any of the following: an employment agreement, a medical directorship, an on-call agreement, a research agreement or a teaching agreement.


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1.) Use agreement templates with a clear business plan -
Many organizations add new agreements as business opportunities arise or change. One missing step on the front end is a clear business plan that illustrates how and why a new physician agreement is being added. The plan should clearly identify the need, the expected results of the new role and the full financial plans on the business. Each new agreement should be evaluated in the context of the following three questions:

- What pain are we solving?

- What is expected of this new role?

- What will the investment and expected return be?

Organizations that apply business rigor to all new decisions will make the best decisions. Part of this rigor includes evaluating the results each year. Don’t be afraid to pull the plug on business opportunities that do not materialize. This last check and balance step will help sunset deals that are not working as expected saving the organization time and money.

2.) Set clear policies on roles and responsibilities - When new agreements are put in place it is, by definition, increasing the administrative burden on the hospital. Physician agreements should be aligned with the organizational goals and resources. For example, hiring a medical director for the Orthopedic Service Line without identifying a co-lead on the administrative side can be futile. The medical director will not be as focused or able to make meaningful change if the organizational chart does not support removing barriers and road blocks. If the organization is restructuring, then time the new physician agreements with the appropriate changes.

3.) Use the right technology - Many physician agreements require the physicians submit time worked with appropriate documentation. Appropriate documentation means not only does the work have root in the agreement itself, but that it fit within all the mechanics of the agreement.Agreements are super complex and as such require technology to support this documentation. If physicians are free texting work performed on agreements, without a doubt the organization is spending too much staff time chasing this paper and will be open to compliance risk. Use a technology to keep within the boundaries.

4.) Submit time on Medicare Cost Report - Time hospitals pay physicians to teach as part of Graduate Medical Education is submitted on the Medicare Cost Report. Amassing this information throughout the year is an important input on the report. The time captured must be legible, documented appropriately and available in a format that can be easily assessed. Additionally, administrative time physicians spend helping the hospital on various efforts can be included in the Medicare Wage Index that is submitted as part of the Medicare Cost Report. If this information is illegible, missing, or lost throughout the year, the organization is leaving money on the table in reporting these legitimate costs.

In short, managing physician agreements within a structure will help decrease the administrative burden. The structure should clearly identify people, processes and the infrastructure to support this function. Organizations that expect to manage physician agreements with manual processes without clear leadership are increasing the costs to the organization.

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Topics: revenue cycle management, physician agreements, physician software, time management