Last week, I posted about a recent webinar Ludi and MD Ranger conducted to address some of the impact of COVID-19 has had on hospital-physician contract strategies nationwide. My friend Allison Pullins, Vice President, Chief Strategy and Operating Officer at MD Ranger focused on how to avoid pitfalls of setting up physician contracts during the pandemic. From there, I “took the mic” to discuss ongoing management of those contracts as COVID-19 continues to loom over the United States and into 2021.
One of the main ideas that I wanted to drive home is that if you are not deliberate about tracking physician hours, you’re going to find yourself in a bind down the road as things keep changing. Especially if your organization wants to collect CARES Act funding.
But regardless of COVID-19, you need to have sound practices in place now to pay your doctors no matter what. Why? Because it’s the right thing to do, especially if you want to maintain good relationships with one of your most important assets. It’s also a big part of your hospital’s business. In fact, did you know that “physician spend” (i.e., every dollar you spend on your physician contracts) equals 5-10% of the average hospital’s net patient revenue and projected to grow annually at 5.4% (Health Affairs, 2019). That’s some big dough!
More than that though, in a survey we conducted with HFMA on physician pay, we found that although over 90 percent of hospital financial teams consider physician spend to be an important factor in their annual budgeting, which is great news. But, more than two-thirds (70 percent) of hospitals indicated their physician payment processes “are difficult or cumbersome.” That means they likely don’t have an accurate view of that spend, which is startling.
So here’s my advice on how to manage those contracts with good business acumen – pandemic or not:
Step 1: Establish a central source of truth for all of your physician contracts, enterprise-wide. Having everything housed in one database is a surefire way to avoid errors, ensure accurate payments and track physician spend year-round.
Step 2: Leverage digital time tracking to avoid payment mistakes. This includes some of the more common ones such as, time and process related, non-compensable duties and FMV related. You also need this kind of automated support for CARES Act reporting.
Step 3: Automate payment calculations and avoid math errors. Even if you just use a program like Excel to do it (although there are much better options!), automating this part of the payment cycle can be very helpful.
Step 4: Streamline approval workflows. Another part of the payment process that should be automated to ensure a smooth handoff from physician to approver to finance teams.
Step 5: Pull financial data regularly to help answer critical questions:
- Who are we economically aligned with?
- If we are aligned with them, should we be paying attention to the physicians we are not aligned with?
- What do we spend on Medical Directorships, Call Coverage and Co-Management Deals?
- Does this still warrant the partnership?
- Does it need this many hours? Maybe more?