SAN FRANCISCO—Even after integration, cardiology groups and hospitals operate according to different agendas and with different goals. Each would like to credit for revenue, a situation that is particularly apparent after the initial five-year contract expires. Marc E. Shelton, MD, from Prairie Cardiovascular, in Springfield, Ill., shared secrets for optimizing the group’s position during a March 10 presentation at the American College of Cardiology (ACC) scientific session.
Here are Shelton's three strategies:
- Although the hospital may cling to its perception of the cardiovascular service line cost center, it is a net revenue generator and should be viewed as essential. The hospital may characterize the group as a cost center or system expense. Shelton advised the audience to portray their groups as investments. How? Cast a wide net around downstream revenue, he continued. Examples of revenue that may not be captured in the hospital’s initial pass include transferred ancillaries, expanded outreach centers and new programs. Transcatheter aortic valve replacement (TAVR) may be a loss leader for the practice, and perhaps the hospital, but can be positioned as a revenue generator. That’s because the number of aortic valve surgeries may increase if the hospital gains a flagship reputation for offering the procedure. Prairie Cardiovascular estimated net annual system revenue attributable to TAVR at $1 million based on 40 TAVRs using this formula.
- The cardiovascular service line can help save the hospital on the expense side. These savings should be detailed for the hospital. This includes items such as vendor contracts and equipment purchases as the practice may inform and streamlining these processes.
- The cardiovascular service line data management is critical, Shelton said. Practices need to get data, scrub and share it with the hospital—repeatedly and at least quarterly, said Shelton. That’s because universities and hospitals cost-shift “egregiously,” he said. For example, in the first year Prairie Cardiovascular increased from 125 caths to 600 at one hospital. When he asked the hospital to calculate revenue gained, the figure was $726. That’s because revenue had revenue had been cost-accounted to various departments like the emergency department. Physician leaders should be actively engaged in the data review process. Shelton added the caveat that soft value-added services, such as assistance with lab credentialing, community service and marketing, can be difficult to account for; however, practices should track any soft activities.
During the negotiation process, hospitals need to be aware of two costs, he concluded. “There is the cost of retaining good physicians and the cost of recruiting and hiring new physicians.” Both should figure into the negotiation.