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1. Create a separate company partner with the hospital. Sanjay Jatana, MD, founder of Denver Spine, is part of a co-management agreement with one of the hospitals in his area. The physicians who work within the orthopedic specialty at the hospital created a company to form an operating agreement with the hospital. Inclusion in the company is based on credentialing and a quality of care set up by the physician group. “The concept is that a company is created by a bunch of physicians working at the hospital and the prime function of the company is to improve quality and efficiency of care for that institution,” he says. Benchmarks in 18-20 categories are set for several different components to improve the efficiency of the surgical process, decrease readmission rates and length of stay and minimize the cost of implants. Once the benchmarks are set, surgeons must meet the benchmarks 100 percent in each category to receive extra compensation.
“The idea is that it’s not gainsharing, it’s more of a co-management agreement that has nothing to do with the volume of surgery being conducted at the facility,” says Dr. Jatana. “It’s designed more toward quality and efficiency.” Under these agreements, physicians aren’t putting in time that isn’t reimbursed and are able to use the hospital’s database to monitor patients.
2. Devise an agreement where both parties gain from the partnership. Under management services agreement, the hospital partners with a physician to manage the hospital’s service line with financial remunerations, says David Ott, MD, a surgeon with Arizona Orthpaedic Associates in Phoenix. These agreements can either be comprehensive or limited, depending on how both parties wish to align. Some of these agreements include hospitals essentially “leasing” operating rooms for the surgeons to employ the staff of the hospital and run the department as a mini-hospital within the hospital. “For a really busy surgeon, this type of agreement could mean a significant revenue enhancement,” says Dr. Ott. “The compensation is a demonstrable amount that is pre-negotiated and measurable.”
Hospitals can’t legally pay for referrals, but if the partnership with the physician demonstrates savings, the physician can share in that. “Physician groups will contract with the hospital in a managed services agreement, where the physicians share in the hospital’s gain,” says Dr. Ott. “For example, if there is a reduction in the price of implants used at the hospital, the physicians would share in that gain.” For more limited agreements, there might not be financial gains for the surgeons, but they can hold a leadership position where they work on efficiencies and agree upon policies and procedures within the hospital.
3. Financial separation is often beneficial. Marin General Hospital (MGH) in Greenbrae, Calif., began a collaboration with the University of California, San Francisco Department of Neurosurgery and the orthopedic spine surgeons at the Mt. Tam Spine Center, led by Dr. Robert Byers and Dr. Brian Su. The collaboration has resulted in the launch of the Marin General Hospital Spine & Brain Institute, an effort focused on bringing multidisciplinary specialists together to provide a wide range of patient treatments, including elective spine and brain surgery. All three entities partnered on the Institute, but they have remained financially separate.
“The hospital provides the bulk of the marketing budget for the Spine & Brain Institute, which includes advertising in newspapers and magazines as well as promoting to other physicians through literature and symposiums,” says Dr. Su. “We’ve been meeting with the marketing team at Marin General Hospital. They see that if we can treat more of the local elective spine and brain surgery cases in our area, it will be a good thing for the community.”
When a patient calls for a physician referral through the Spine & Brain Institute, physicians are assigned to them on a rotating basis (unless the patient specifically asks for one surgeon over another). “There’s equity in assigning patients that way,” says Dr. Arora. “Marin General Hospital doesn’t favor one physician or physician group over another.”
If patients need rehabilitation services associated with the Mt. Tam Spine Center, MGH does not receive compensation for the services.
4. Keeping the agreement open. Even though OrthoIndy physicians have partnered with St. Vincent, they can still see patients at other hospitals, which is important for maintaining positive relationships in the community. “The beauty of this partnership is that it allows us to grow in different markets,” says John Martin, CEO of OrthoIndy. “It’s an arrangement that has continued to allow us to work with other facilities in relationships that we have valued over the years.”
5. Protect your practice in the event of a failed partnership. If a practice is the only orthopedic group in town, the surgeons will have the advantage in negotiations because hospitals want their services, says Jan Vest, CEO of Signature Medical Group in St. Louis. However, if the hospital has alternative sources for joint venturing, the surgeons have a weaker position. Smart surgeons will make sure the contracts state that if the co-management or joint venture doesn’t work out, the surgeon or practice can continue existing in the same community, says Mr. Vest. “If the arrangement doesn’t work out, you want to be able to return to private practice with no harm, no foul,” says Mr. Vest.
6. Be prepared for a slow transformation. Hospitals are racked with bureaucracy, and even the most optimistic orthopedic surgeons aren’t going to immediately change the system through an alignment or joint venture. “A lot of surgeons believe you can implement changes quickly and hospitals should do something differently beginning tomorrow. The surgeon has to know the system and work through it,” says Neel Anand, MD, director of orthopedic spine surgery for the Spine Center at Cedars-Sinai Medical Center in Los Angeles. Throughout these meetings and negotiations, it is particularly important that orthopedic surgeons help administrators understand their point-of-view through the lens of financial gain because most administrators don’t have a medical background and may not understand medical implications driving a decision.
7. Foster a good relationship with medical staff. Respecting the entire medical staff is essential to forming a good relationship with hospital executives, especially if you are new to the team. Current medical staff is often concerned about competition for patients or operating room time, and you have to make sure you step in line with community values and seniority. “The most important thing is to be able to influence the medical staff so the administration’s support for you is mirrored by the medical staff’s support,” says George Rappard, MD, founder and director of the Los Angeles Brain and Spine Institute at Hollywood Presbyterian Medical Center in Los Angeles. “A hospital can form an agreement for a directorship, recruit the new surgeon, market the surgeon and if the medical staff is against him, his ability to succeed is going to be limited by his ability to suffer.”
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