Performance Enhancement
in Hospital-based Service Arrangements
Every hospital faces the challenge of securing qualified hospital-based providers to efficiently staff clinical areas such as Radiology, Anesthesiology, Emergency Medicine, Hospitalist Care and Intensivist Medicine. In cases where the hospital-based physicians are not employed, hospitals frequently find the need to provide financial support (e.g., through a collections guarantee) to certain of its exclusive provider groups (as the costs of providing the requisite services may exceed the collections realized by the group).
We have noted an increasing number of collections guarantee arrangements that incorporate quality incentives to further the goals of both the hospital and the provider group. The typical agreement with a quality incentive component is structured in two parts:
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The group receives a base guarantee amount for the provision of the basic coverage services. Typically, this amount ranges from 60% to 75% of the total guarantee amount; and
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The group can earn the incentive guarantee (or a portion thereof) by achieving certain operational and quality metrics set forth in the agreement.
FMV Considerations |
While it is a necessity for many hospitals to provide financial support to certain of its hospital-based physician groups, in our observations, the majority of these provider support agreements lack provisions to promote quality and operational improvements through financial reward. Although a portion of this potential "reward" can be handled as a holdback of monies that might have otherwise been paid automatically to the physicians for their services, a fair market value assessment may support higher maximum compensation if a meaningful portion of the payment is at risk. We encourage that hospitals incorporate performance metrics in collections guarantee arrangements as a logical means of achieving improvements. |
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