As hospitals cut costs in every area, one of the last remaining protected buckets is physician contracts. What if I told you that you can cut 1% off your total spend this next year. Would you believe me? There are three solid ways to cut your spend, and actually, with data, all can be relatively painless. You need a ginzo knife to get in there and “trim the fat.”
The first thing is to go find your total physician investment. You are going to need the data on what the potential spend is and what you are running annually on actual spend for each contract. This sounds easy, go to payroll for employed side for the actual payments. For the independent physicians it takes a few more steps to locate all the physicians being paid. Pull all groups, PC and any payment with an MD or DO behind it. This becomes your target list. The next step is to go pull all the physician contracts to evaluate the potential spend and get to work.
Here are three ways to find money. Any one alone will result in a 1% savings (and maybe more in some cases) in the course of one year:
- Evaluate all contracts as a team each year. Physician contracts can be very political, and different executives will fight for their service lines. For each contract, can you decrease it by 5% and have the same results? That medical directorship Dr. Smith has for 20 hours a month, for the past 8 years, could she achieve the same with 18 hours? 15 hours? Would the service line be impacted? Heck, do we even need this agreement anymore?
- Decrease the scope of what you are asking the doctor to do. Cut out duties in your agreements to eliminate the overlap with services or service lines. Review all the duties in context of the services being covered. Are there any areas in which you are paying multiple physicians for the same thing? Are you paying the medical director of hips and knees for the same service you are paying the medical director of shoulders? Simply asking these questions will help identify hours to be eliminated and even contracts to phase out.
- Consider automating the collection of data from the physician and automating the payment side. By putting in software to make it easier for the physician to document hours, it will result in keeping them between the lines. Approvers will have more data at their finger tips as they approve time logs, resulting in better dialog and engagement with the physician. Most importantly, the automation produces a database of all work, dollars spent, all contracts and makes it easy to do #1 and #2 every year to ensure you are spending where it matters most.
In most hospital systems around the country, physician expenditures go up each year. The measurement of this investment is lacking at most organizations because the systems are siloed and manual in nature. Get your system on track by making physician contract review an annual event.