Multi-Facility Physician Contracts: Tips for Health Systems
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Health systems face unique challenges including on the physician contracting front. Learn: --The benefits of multi-facility contracts from both a financial and an operational standpoint --How much multi-facility contracts can save over multiple individual contracts --About documenting FMV for multi-facility arrangements
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Multi-Facility Physician Contracts: Tips for Health Systems
- 1. 1 Multi-Facility Physician Contracts: Tips for Health Systems An MD Ranger On-Demand Video
- 2. 2 Objectives • Advantages • Call arrangements • Directorship/administrative arrangements
- 4. Benefits are many • Control costs • Increase operational efficiency • Centralize physician leadership • Decrease duplicative coverage payments in some cases (depending on volumes, demand) 4
- 5. Payments are higher, yet costs may be lower • Multi-facility contracts typically cost more than single facility arrangements • However, they are less costly than individual facility payments when considered in aggregate • Our data demonstrate that though there is decidedly more work to cover 2+ facilities, the amount of work (measured in hours and annual payment rates) is not proportionate to the number of facilities covered under the agreement 5
- 6. These arrangements are becoming more common In 2014: • 8% of MDR call agreements were multi-facility arrangements • 10% of administrative agreements were multi-facility arrangements Note: these numbers are increasing year to year 6
- 7. Determining FMV for Call Arrangements 7
- 8. When it’s appropriate • When two facilities within the same health system are physically nearby and the emergency department volume is such that call burden for one physician is not overwhelming, it may be possible to have one physician covering both facilities 8
- 9. What’s needed • Physician(s) on panel must have privileges at both facilities • Second call position may be needed to address infrequent conflicting demands 9
- 10. How much it costs • Adding a second campus to one coverage position on average increases the cost of the agreement by 26% • Example: if two hospitals each pay $100 for coverage to two physicians, the estimated appropriate rate if they consolidated contracts to have one physician provide coverage of both campuses would be $126. This is 37% savings per campus! 10
- 11. FMV for multi-facility call arrangements • Use market data to determine appropriate payment ranges for a single position • Use MD Ranger’s formula for multi-campus coverage service (each campus brings a 26% increase) • Document market rates and justification for negotiated payment rate 11
- 12. Determining FMV for Administrative Arrangements 12
- 13. When it’s appropriate • When two or more facilities within the same health system can rely on the same physician to complete the same duties for both hospitals, a multi-facility medical directorship or administrative position may be advantageous • We seen these for facilities in the same region or across multiple regions in unique situations such as training or system-wide implementation programs or quality initiatives 13
- 14. What’s needed • Physician must have available hours for the position • Though there is no significant difference in hourly rates of pay for physicians with multi-facility administrative positions, there is a significant difference in the average number of hours required • As with all medical direction and administrative positions, the job description must warrant the required number of hours, and timesheets are essential for compliance 14
- 15. How much it costs • On average, a single physician contract for the same service across two campuses costs 37% more than a single campus position, with the difference largely driven by hours required not hourly rate of pay • Each additional campus in the contract commands an average 10.7% increase in the number of hours up to five or more campuses 15
- 17. FMV for multi-facility direction/administrative arrangements • Use market data to determine appropriate payment ranges for a single position • Use MD Ranger’s formula for multi-campus administrative positions. Note that hourly payment rates typically do not increase, but rather annual hours and annual payments for the position are higher • Document market rates and justification for negotiated payment rate • Require and monitor timesheets 17
- 18. Contracting Questions? MD Ranger, Inc. 650-692-8873 inquiries@mdranger.com 18
Editor's Notes
- Hi there. Welcome to MD Ranger’s educational video series. Today we’ll cover tips for developing physician call and administrative contracts across multiple facilities in health systems. Feel free to share this on-demand video with other physicians you think it could help.
- Here’s are our learning objectives. First we’ll discuss advantages to creating these types of agreements. Then we’ll discuss how you might go about determining appropriate payment rates for both call and administrative agreements.
- Okay, so what are the advantages to having multi facility contracts? If you are a health system who hasn’t yet leveraged these types of arrangements, here’s why you should consider exploring it.
- With ever-shrinking margins and pressure to decrease costs, many hospitals and health systems seek the clinical and operational advantages that centralization creates. MD Ranger data strongly suggests the benefits of multi-facility physician contracts as an important strategy for controlling costs. Hospitals and health systems with more than one campus or facility can save money and streamline both physician emergency coverage and administrative services through multi-facility agreements, particularly if distances are short and call-in demand is modest or uneven.
- Replacing single facility physician contracts with multi-facility arrangements can have positive, measurable impacts. Although payments to physicians whose duties span multiple facilities are higher than single facility contracts, they are less costly than separate, individual facility arrangements when the duties are assigned to a single physician. MD Ranger's subscriber-based comprehensive reporting system provides an unparalleled opportunity to evaluate the frequency and benefit of these types of arrangements, providing insight into the payment rates and time differentials of single versus multi-campus contracts. These data can be helpful in providing guidelines for documenting fair market value and commercial reasonableness for situations that, on the surface, appear to exceed common benchmarks.
- So, how do you go about setting proper payment rates for these types of contracts?
- When is it a good idea to think about call coverage agreements that span two facilities? You need to make sure the circumstances are right.
- Keep in mind that….
- Administrators are often curious if these types of arrangements could save them money, and they will.
- Here are some general guidelines to think about setting a proper payment rate. You’ll need to make sure you’re adhering to your organization’s guidelines and rules about physician contract compensation, of course.
- And lastly, let’s discuss administrative payments in these types of arrangements.
- Directorships and leadership positions are more easily leveraged across two or more facilities than coverage agreements. If your health system is currently not thinking about structuring these types of agreements, it should.
- It’s important that you find a physician willing to put in the extra hours that an administrative position across campus could demand.
- Typically these arrangements do have a higher mark up than coverage agreements; however, it’s possible to have directors that span across more than two or three facilities.
- Here’s a graphical representation on how multi campus positions can save money across campuses.
- Very much like call coverage, setting payment rates for administrative multi-facility agreements includes using high quality market data and looking closely at the number of hours it will require the physician to complete her duties.
- These types of arrangements can be complex. If your organization needs help brainstorming, or you need access to data, call us! We can help.