Health Quest seeks to boost quality metrics. “We see the benefit as really getting the doctors involved now in the development of [quality] metrics [to track]. Ultimately that’s really going to be better for the patient and better for our quality,” he says. “But [focusing on quality] is really better for us on the value side rather than on the reimbursement one.”

While it may not always be possible to set up incentives that encourage better quality while hauling in greater fee-for-service revenue, Ping says, other prizes await hospitals that set up strong alignments now in preparation for the fee-for-value environment. They improve the odds of winning more physician referrals and increasing downstream revenue, and they should lead to higher-quality outcomes that will translate into value-based purchasing dollars, reduce 30-day readmission rates, and potentially improve patient satisfaction HCAHPS scores.

Ping adds that for Health Quest, getting proper physician-hospital alignment right is also a step toward an ACO and a “baby step toward working with our doctors on bundled payments. Also, we want to be sure they want to practice at our hospital and not at another.”

When drafting hospital-physician arrangements, Jensen says financial leaders should ask four questions:

• Are the incentives truly large enough to drive the desired physician behavior?
• Has the organization “seriously thought through ‘the law of unintended consequences’?”
• Is the clinical and financial data accurate and transparent?
• Do the goals align with the culture of the organization?

There are numerous physician-hospital alignment models that can be adopted, and which one is best will depending on the service lines it’s applied to, as well as the organization’s larger goals. Jensen recommends that leaders borrow a model from a similar-sized, successful institution, and then test and prototype it before full launch.

Health Quest uses three models for its alignment agreements:

• Employment—for its 180-plus employed physicians, the organization starts with a work relative value unit (RVU) calculation coupled with quality and patient satisfaction score bonuses
• Employment “lite”—a revenue expense approach with some incentives built in for patient satisfaction and quality
• Non-employed physicians—a new approach, piloted just six months ago with 15 oncologists, that targets specific service lines for development as “institutes”

The leadership of each service line institute, consisting of a medical director from the hospital and the practice’s management, is charged with developing strategy and operational plans for the service line’s success. Physicians are paid a bonus based 70% on quality and 30% on patient satisfaction for five agreed-on metrics. The percentage of bonus paid to each physician is based on whether the participant reaches a baseline goal, a target goal, or a stretch goal.

“We used an outside [consulting] firm to do the valuation for our incentives, and we worked with the doctors to develop the five metrics being measured so they would be meaningful,” explains Ping.

Pitfall #2: The law. There are multiple regulatory and legal issues to watch when it comes to physician-hospital alignment agreements, so get your corporate attorney involved from the beginning.

“There’s the Stark Law, actually three separate provisions that govern physician self-referral for Medicare and Medicaid patients,” says Jensen. And, he says, don’t forget to keep an eye on the Physician Payment Sunshine Act-Section 6002 of the Patient Protection and Affordable Care Act—which will require docs to reveal payments from pharmaceutical firms, medical device makers, and other companies.

However, Jensen says the rule that should concern hospitals the most is the federal anti-kickback law and regulatory safe harbors.  This can get you in trouble with regulators and possibly sour a deal. That’s because the compensation of the physician sellers cannot be in excess of fair market value (FMV). Although the physician sellers may feel they are worth a certain amount—which they might have even earned as an owner—FMV calculations might result in a lower level of compensation.

“When it comes to compliance with fair market value, we made sure we went to an outside consultant for our incentives and for the medical directorship positions,” Ping says. FMV compensation was also an issue with Health Quest’s service line institutes for non-employed physicians. “We developed job descriptions for each of the medical directorships and interviewed all of the candidates,” and opened participation in these institutes to any physician on staff or who had privileges and appropriate credentials, he says. “Actually, it would be best for patient care if all the doctors in the area are in the institute.”

But, I asked Ping, what if everyone physician hits the incentive bonus stretch goal target and receives the
maximum payout?

“That would be great for our patients, but it could be financially challenging. So we planned for it in our business plan. Even if the FMV says the incentive rate should be 15%-25%, if the business model only supports 5%-10%, then we’ll go with that,” he explains.

For financial leaders working with physician-hospital agreements, Jensen offers a final note ofprudent advice: “Be fair.” That’s a good way to begin and end any agreement between physicians and hospitals.

---

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media. She may be reached at kminich-pourshadi@healthleadersmedia.com.

http://www.healthleadersmedia.com/page-4/FIN-279002/2-Pitfalls-of-PhysicianHospital-Alignment

By Katherine Mangan

The Association of American Medical Colleges on Thursday approved sweeping changes to the Medical College Admission Test that will require aspiring doctors to show that they understand the psychological and social underpinnings of medicine, and not just the hard science.

The changes, the first in the test since 1991, will take effect in 2015, giving the current crop of premedical students a few years to broaden their course loads.

The revamped test is designed to help students prepare for a rapidly changing health-care system and a patient base that is growing, graying, and becoming increasingly diverse, officials said.

“Being a good doctor is about more than scientific knowledge. It also requires an understanding of people,” the association’s president, Darrell G. Kirch, said in a prepared statement.

The changes were developed by a 21-member advisory committee that spent three years studying the matter and analyzing 2,700 survey responses from college and medical-school faculty members, medical residents, students, and advisers. The panel released its recommendations in November.

The test will include two new sections: one on the psychological, social, and biological foundations of behavior, and another on critical analysis and reasoning skills. It will also have two natural-science sections covering material learned in introductory biology, general and organic chemistry, biochemistry, and physics courses. The new test does away with a writing section that wasn’t widely considered.

The changes will tack an extra two hours onto a grueling test that currently takes four and a half hours to complete, Dr. Kirch said during a conference call with reporters. To prepare for it, students might want to add introductory courses in psychology and sociology to the natural-sciences courses they have traditionally been told to focus on, he said.

Critics, including some medical-student advisers, have said such a broadening of the scope of the test would burden premedical students with more requirements and discourage many from applying. But Dr. Kirch said, “We see it as giving them more freedom” to study what they’re really interested in. He added that one of the best ways to prepare for the new exam is by reading broadly.

“These changes should signal that someone who was a psychology major or a cross-cultural studies major or an English major has as much potential to enter medical school as someone who majored in chemistry,” said Dr. Kirch, who majored in philosophy before he entered medical school four decades ago.

At a time when medical schools are struggling to attract more minority students to meet the needs of an increasingly multicultural population, a broader, revamped test should help, Dr. Kirch said. That, combined with a more holistic look at applicants in both interviews and letters of recommendation, should give medical schools a better sense of which applicants have the personal, as well as the intellectual, attributes to be successful doctors.

http://chronicle.com/article/Who-Will-Be-a-Good-Doctor-/130847/

Source: The Chronicle of Higher Education, 2012