Physicians and hospitals are aggressively pursuing alignment strategies to stay competitive and match the accelerating pace of change and innovation. A spectrum of models is available, from minimal integration (e.g., medical directorships) to maximal integration (e.g., practice acquisition/physician employment by a hospital). While hospitals employing specialists such as cardiologists and cardiovascular surgeons is popular in some markets, it is neither available nor workable in all situations and communities. It is best to consider a range of alignment options and pick the model that best meets the client's unique circumstances and needs.
Being aware of the available alignment models and their implications to the cardiac physician practice will assist physicians in making a sound business decision that can result in positive change to the practice. Closer, formal alignment with a hospital can:
- Align strategic, operational and financial incentives between physicians and their hospital partners
- Provide a platform for developing customized integration strategies (such as pay-for-performance, gainsharing, joint ventures, etc.)
- Improve operating performance and profitability for the hospital-enhance convenience for the physician
- Reduce/prevent competitive risk and predatory recruitment of physicians
- Gain competitive advantage; retain and expand market share
CFA has developed a multi-step process that can assist physicians and hospitals in determining the most appropriate integration model to pursue.
Management Services Agreements
Although each situation is unique, and no one model fits all, CFA has found the Management Services Agreement (MSA) to be an excellent model for physician/hospital alignment in circumstances where employment models are unacceptable. The MSA model is a regulatory-compliant model that not only can be used to compensate physicians, but can also incorporate many varied non-monetary approaches to align incentives.
Developing and implementing a MSA is typically a four-step process:
Step 1: Describe the MSA legally and how it will align incentives for both parties
Step 2: Determine the key deliverables, or "targets of opportunity" around which to align stakeholder interests.
Step 3: Set benchmarks and timeframes which serve to provide measurability, objectivity, and facilitate timely completion of MSA deliverables.
Step 4: Negotiate the terms, conditions, and expectations of the participants.
As no single model is right for every circumstance, careful analysis is required by those who best understand both the local opportunity and the intricacies of structuring such complex arrangements.