Insights from Ludi

How Much Is your Hospital Spending on Physician Agreements?

Posted by Michelle Harmon on Mar 7, 2018 9:04:00 AM

How Much Is your Hospital spending on Physician Agreements_.png

This is funny. (Well, if you are giant hospital nerd focused on broken processes, it’s funny.) Do you know what you are spending on your hospital administrative agreements with your physician partners? You have to know where they are located to start the count. You need to know your “official count” of partnerships (co management, call, employed, medical directorships to name a few.)

Where are your hospital’s physician agreements stored?

So let’s start with that….Bueller, Bueller….to quote Ferris Beuller, circa 1986. Physician administrative agreements are on paper which means it’s a heavy lift to operationalize. Even if you have a giant filing drawer that electronically warehouses your physician agreements, that doesn’t ensure “count” of what is being spent, who is the “pay to”, is it being counted correctly and what is the strategic context of the electronic file. Physician agreements are birthed from needed strategic physician partnerships and that means its relationship driven. Relationships are local and driven from one on one “kismet”, and joint purpose to serve the healthcare community and serving the individual purpose.

With health systems growing at an unprecedented rate, local relationships can be lost and sit in silos. Physician administrative agreements follow the silo path as that’s how they were birthed. Again, we are just simply talking “count” of a hospital’s agreements. It’s a never ending chase. On average, our clients under estimate their contract count by fifty percent.

Let’s say we finally get our hands around the actual count of the physician administrative agreements for a health system. The trek to “hey what do we spend on our physician alignment” has only just begun so get your game face on. We are peeling the proverbial onion when unwinding the agreement that includes the terms, the math, the “pay to”, and the duties (purpose of what the physician actually does on behalf of the health system.)

So now what?

Build a super-secret spreadsheet that totals the annual max of each physician contract? Now we have the spend? Anybody see the pitfalls in that deal? Physician agreements have to be paid out monthly if they are working correctly; accrual accounting is key. Do you have physicians that do six months of their paper logs in one sitting?

Automation of these messy partnerships is critical. Health systems, growing by leaps and bounds, cannot afford to manage physician agreements via silos which accounts for millions in an operating budget depending on the local market strategy. There has to be one source of physician payment truth that provides contract templates that reflect the relationship, compensable duties, and timely accounting that manages the payment of physician administrative work. You cannot measure what you don’t know. Not knowing what you spend on your physician agreements is luxury that has now passed for all health systems.


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Topics: physician agreements