Newsletter

Solutions For a Floundering Hospital-Affiliated Practice

1. Revise the Hospital-Physician Contract

Involve physicians. The contract should recognize physicians as key stakeholders. Physicians who are allowed to influence a process will make it work.

Use incentives and share control. The contracts of successful organizations with group practices as part of their structures reflect the incentives of physician empowerment and professional pride, coupled with financial incentives. The contracts delegate responsibilities and share control to support a turnaround effort. Be sure to have counsel review the contract for compliance with HCFA's Physician Incentive Plan regulations.

Update Pension Arrangements. Employers, recognizing the need for flexibility, are converting to cash-balance pension plans. The wave of the future, cash-balance plans, allow workers to take their money with them from job to job and allow the money to be paid out before age 65. IBM and AT&T recently converted to cash-balance plans.

2. Encourage a Physician Network Separate from the Hospital

Hospitals would do well to consider making it easy for physicians to set up their own network. Financial self-sufficiency sharpens motivation and positions billing closer to physicians resulting in a higher collection rate. Hospitals can, through the Beautyman Alvstad's Hospital Economic Profile Policy, coordinate the physicians economic incentives with those of the hospital.

By assisting physicians in setting up their own network, hospitals can engender the requisite emotional loyalty to accompany the coordination of financial incentives.

3. Decentralize Physician Billing

Another helpful measure is to locate billing personnel near physicians and to have billing personnel report to physicians, including weekly A/R status printouts. Also tie a portion of physician and billing personnel compensation to collections, provided physicians are allowed to review and approve payor contracts.

4. Negotiate Payor Contracts with a Modified Messenger Model

We have found particular success in negotiating payor contracts where we handle the contract negotiations for several hospitals or practices of the same specialty in the same geographic area.

We address each provider's contract separately and confidentially. No information is shared between or among providers. Where we count as our clients a sufficient number in a particular area, we do this work on a fixed fee basis. Each practice makes its own decision and can choose whether to rely on our recommendation. We find the payors tend to be more reasonable when they know they have to go through the same portal, particularly where they have to do so to access a specialty in an area.