ACCA: Creating a service line agreement with non-integrated groups

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CHICAGO—Looming Medicare cuts combined with dismal economic times have pressed more and more physician groups to think about hospital integration. And while the process may be tangible, both parties must have a seat at the table when trying to decide the right model for these joint ventures, according to a presentation yesterday at this year’s annual American College of Cardiovascular Administrators (ACCA) leadership conference.

“If you don’t govern it well, it’s not going to work,” offered Cathleen D. Biga, president and CEO of Cardiovascular Management of Illinois. During her talk, Biga offerd tactics on how groups and hospitals can form a clinical co-management agreement, an agreement that compensates physicians for their participation in the management of their hospital department or service line.

New lingo, she says, refers to these types of agreements as the cardiovascular (CV) service line, but how can you have a service line agreement in a non-integrated group?

“If your hospital is such that it needs to crawl before it walks you might want to give them service line agreements over the cath lab, or cardiac testing,” said Biga. “Start smaller on a department level to truly see what the outcomes will be.”

Typical duties of a CV Service Line include assisting with implementing CPOE, evaluating new technology, vendor and product selection oversight, solving quality and performance problems and providing operational and financial oversight of the service line, among others.

Biga offered that there are three models:
  • A clinical co-management in PSA setting if one practice participates: clinical co-management duties and compensation are a component of PSA;
  • Joint venture co-management company; or
  • Clinical co-management in an employment setting.

Within a co-management or service line agreement, Biga said that the joint operating committee of the hospital and physicians reps would have authority over the cardiology service line, subcommittees can be used to facilitate performance under the co-management contract and multiple committees can reflect the multiple facilities involved.

However, during these types of agreements, physicians cannot build into quality indicators or financial benchmarks, what she said are very important aspects within the hospital.

“You can’t put length of stay or case-mix indexing into an agreement,” said Biga. “Everyone around the table should be talking about inventory control and vendor selection during a clinical co-management agreement; however, you cannot incent for these.”

Biga offered that the agreement is usually between the hospital and:
  • Contracting physician groups in a PSA model;
  • The entity employing physicians (compensation is passed through to employed physicians) such as in an employment model; or
  • A separate co-management company formed for the purpose of providing the clinical co-management services in either model.

Hospitals can contract through clinical service agreements such as employment agreements, stock agreements, service line agreements, among others, said Biga. “However, the thing that has surprised us is the number of groups who have integrated without taking their product line with them.”

By doing so, many of these facilities have had to go back to the drawing board months later to try and negotiate for their service line. “What they have found is that while employment is good, physicians really want their whole service line.

"In an employment model, you will employ the professional service, office practice, cath lab practice but not the management of the product line,” offered Biga. And while Biga said at her facility integration agreements are renewed every five years, service line agreements are renewed annually to account for core measures and to attempt to alight with the hospital on these types of quality measures.

Biga said with these types of agreements, struggles like obtaining best practices and lab accreditations become relatively easier.

And despite the fact that co-management means facilities can be non-integrating, she offered that several key core elements including governance (strategy and oversight), committees and roles and responsibilities are still necessary.

“Get everyone to play in the same sandbox,” concluded Biga. With a service line agreement, physicians and other participants will belong to the cardiology executive team and have the ability to work together without being integrated, she said. Forming teams is vital for success.