Stop the Financial Bleed: Triaging the Cost of Hospital-Based Physician Services
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This document provides an overview of hospital-based physician arrangements, including common specialties, payment mechanisms, and best practices. It discusses the growth of hospital spending on physician contracts and key considerations like staffing levels, provider compensation benchmarking, and operating expenses. The document concludes with a case study example of renegotiating an emergency medicine contract at a hypothetical hospital based on analyzing reimbursements, collections, efficiency, and market data.
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Stop the Financial Bleed: Triaging the Cost of Hospital-Based Physician Services
- 1. Stop the Financial Bleed: Triaging the Costs of Hospital-Based Physician Services October 2018
- 2. Agenda § Host introductions § Hospital-based arrangements: § The basics § Payment mechanisms § Key considerations and best practices § Case study 2
- 3. Your Hosts Luis Argueso § 10+ years of valuation experience with hospital-based service arrangements § Author of numerous articles on fair market value, commercial reasonableness, compensation trends, and telemedicine § Consulting experience with hospitals and provider groups regarding hospital-based service lines Allison Pullins § 6+ years on the leadership team at MD Ranger; 12+ years of industry experience § Helped hundreds of hospitals use market benchmarks and tools to enhance their physician contracting programs § Hosted 55+ webinars on physician services, FMV documentation, compliance best practices, and more 3 Stephanie Tafoya § 2+ years of compensation valuation experience § Prior to working on valuations, 5 years of experience managing physician compensation survey data at MGMA § Author of articles demonstrating proper use of benchmark data
- 4. THE BASICS 4
- 5. Common and Emerging Specialties § Anesthesia § Critical care/Intensivists § Emergency Medicine § Hospitalists § General Hospitalists § OB Hospitalists (aka “Laborists”) § Psychiatric Hospitalists § Pediatric Hospitalists § Orthopedic Hospitalists § Surgical Hospitalists (aka “Surgicalists”) § Neonatology § Pathology § Radiology § Trauma 5
- 6. Growth Demonstrated in Benchmarks 6 Source: MD Ranger
- 7. Financial Assistance Needed § Sometimes professional services revenue insufficient § Why? § Payor mix § Coverage requirements § Volume § Specialty § Market factors 7
- 8. Hospital-Based Arrangements Grow in Scope 8 § MD Ranger tracks hospitals’ spending on physician contracts in aggregate § Over the past three years, we’ve seen growth in hospital spending for these types of services Source: MD Ranger
- 9. When You’ve Seen One, You’ve Seen Only One § Each hospital arrangement is unique § Benchmarks can be guideposts § Careful analysis needed for all hospital-based arrangements 9
- 10. Key Trends § Ever-increasing costs due to reduced volumes § Higher demand for services § Continued bifurcation of hospital-based “versus” office-based physicians § Specialty hospitalist services 10
- 12. Subsidies § Cost of the services exceed the anticipated professional revenue § Provider bills and collects § Flat payment is negotiated § Market benchmarks are available 12 Source: MD Ranger 2018 Reports
- 13. Collection Guarantees § Cost of the services exceed the anticipated professional revenue § Also known as a “Revenue Guarantee” § Provider bills and collects § Flat payments are occasionally made § Parties meet regularly to reconcile the practice’s revenue against the guarantee amount § Hospital pays for remaining shortfall or practice refunds the excess 13 Cost to Provide Services Payment Professional Collections
- 14. Payment Mechanisms by Service 14 Source: MD Ranger 2018 Reports
- 15. Call Coverage Payments on the Rise 15 Source: MD Ranger
- 16. KEY CONSIDERATIONS AND BEST PRACTICES 16
- 17. Staffing § Is proposed staffing level reasonable? § Look at time requirements, production levels § Note: physician-only staffing will likely result in fewer FTE’s but higher costs § Heavy on APPs? Costs could decrease 17
- 18. Provider Compensation § Primary cost-driver § Keep in mind: § Location § Recruitment challenges? § On-call coverage issues? § Production levels? § Visit www.hcfmv.com for Stephanie’s insights regarding the nuances of compensation benchmarking 18
- 19. Run to Benchmarks § Market benchmarks are available for total annual payments in hospital based arrangements § Benchmarks are useful to understand where your agreement payment falls relative to other arrangements in the specialty § Use benchmarks with great care 19
- 20. Operating Expenses § Billing and collecting expenses § Malpractice § Legal, accounting § Taxes § Insurance § Miscellaneous 20
- 21. Expertise in Marketplace & FMV 21 § Your organization should have access to experts who: § Know and understand hospital-based service arrangements § Understand your organization’s profile (AMC? Critical access?) § Latest trends in hospital-based service lines § FMV and commercial reasonableness § Don’t have such expertise internally? Hire a consultant who can help
- 22. CASE STUDY: EMERGENCY MEDICINE AT SYCAMORE HOSPITAL* 22 *pseudonym
- 23. Reimbursement Changes Prompt Renegotiation § Physician group expects reduction in commercial payor revenue § Hospital and physician group need to negotiate new agreement § Hospital embarks on analysis of service line 23
- 24. Sources of Revenue Analysis § Payor mix comparison § Collections per visit comparison § Collections per wRVU 24 HCUP EM “Poor” Payor %: 45.7% HCUP Benchmark Payor Mix
- 25. Efficiency Analysis § Throughput comparison § w/RVUs per hour § Measure ED acuity 25
- 26. Key Take-Aways 26 Review Market Data •MD Ranger •Compensation surveys •Specialty-specific resources Understand Agreement Terms •Service Level •Payment Mechanism Perform Expert Analysis •Staffing •Operating Expenses •Benchmarking
- 27. Need support? § Contact us with questions § Download resources on www.mdranger.com or www.hcfmv.com § Follow us on social 27