ACC: 4 steps to fair market value at the 5-year mark

SAN FRANCISCO—Cardiology practices can position themselves optimally for re-negotiating fair market value after the initial five-year contract by employing thorough and deliberate preparation strategies, according to a presentation March 10 at the American College of Cardiology (ACC) scientific session.

Gregory D. Timmers, CEO of Prairie Cardiovascular in Springfield, Ill., offered the strategies as part of the session “My 5-year contract is up, now what?”

Timmers advised practices to:

  1. Set the stage. Fair market value, after the first negotiation, centers on compensation. Practices that have a good relationship with the health system and demonstrate value time and time again are best-positioned, he said, and may be able to negotiate a figure at the top of the fair market value range. Another strategy to bump compensation is to maintain an ongoing list of value-added services the practice provides to the health system. He also recommended practices perform an internal fair market value analysis to set an anchor price rather than negotiate around what the health system is willing to pay.
  2. Volume still reigns. Despite the near constant talk of changing reimbursement and compensation, “volume is where it’s at.” Work relative value units (RVUs) represent the primary determinant of where the practice falls in the fair market value range. However, he discouraged practices from using productivity as a metric because it places compensation at risk.
  3. Consider new sources of compensation in the negotiation. In an integrated environment, the number of potential revenue sources is “huge.” These include medical directorship, teaching and administrative duties and on-call coverage. However, Timmers advised against co-mingling work RVU and incentive revenues, which could understate the work RVU denominator. “The solution is to [segregate] work RVUs and carve out nonclinical cash compensation.”
  4. Incentives are options. There are more than 160 incentives that can create sources of revenue. Timmers “highly recommended” that these are tied to meaningful change, such as appropriate use, CPOE or e-prescribing, and suggested practices negotiate three or four manageable incentives.