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AAOS Now

Published 7/1/2013
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Maureen Leahy

Is a Clinical Comanagement Agreement Right for Your Practice?

Benefits include physician independence, new income stream

The main reason that orthopaedic surgeons are turning to hospital and health system employment is uncertainty about healthcare reform, according to John Fink, senior manager at ECG Management Consultants.

“Orthopaedic surgeons are very entrepreneurial and independent, yet uncertainty about the future is prompting many of them to seek employment,” he said during the presentation, “Hitting Your Stride: Understanding Alignment Strategies With Hospitals to Strengthen Your Orthopaedic Practice,” at the 2013 American Association of Orthopaedic Executives Annual Conference.

Mr. Fink explained that, fortunately, employment is not the only option.

Given the desire of many physicians to maintain independent practices, as well as the shift in medicine from volume to value, new physician-hospital alignment strategies have emerged. One such model is the Clinical Comanagement Model (CCM), which, according to Claudie Bolduc, senior consultant at ECG Management Consultants, enables physician groups to retain their independence and gain additional influence over hospital operations while creating a new revenue stream to help mitigate some of the uncertainty about the future.

As Ms. Bolduc explained, the CCM is a formal mechanism by which hospitals engage independent physicians to manage the inpatient and outpatient components of a particular service line such as orthopaedics. The management company—usually set up as a limited liability corporation (LLC)—can be wholly owned by one or several physician groups practicing at the hospital, or it can be a joint venture with the hospital. The hospital contracts with the LLC for service line management and oversight. In return, the hospital pays the LLC a management fee, which flows back to the individual investors as equity distributions based on the percentage of ownership.

Mutually beneficial
Clinical comanagement agreements have been particularly successful in orthopaedics and cardiology, benefitting both the hospital and physicians, according to Ms. Bolduc. For physicians, the agreements provide the following opportunities:

  • Enhanced efficiencies/patient throughput
  • New program development
  • Management fee and bonuses
  • Leadership positions
  • A platform for reimbursement changes, including value-based purchasing, bundled payments, shared savings, and global payments

“Clinical comanagement agreements make it possible for both parties to pursue value-based payments or payment bundling. The CCM and the bundled payment model [where a single payment covers an entire episode of care] sometimes exist together; at other times, they can be pursued independently,” Ms. Bolduc explained.

Key services
Under the CCM, physicians are responsible for providing a wide range of management and oversight services including budgeting, staffing, scheduling, evaluating emerging technologies, tracking performance, training, educating, and planning and business development. These services are typically provided through the physicians’ participation in medical directorships (eg, spine, joint replacement, sports medicine) and subcommittees (eg, finance, quality, efficiency). Service line coordinators are often subcontracted to assist with administrative functions.

The desired level of involvement in the directorships and subcommittees can vary greatly among the investors, Ms. Bolduc noted. “Each physician, therefore, will need to carefully consider whether or not he or she has the capacity, capability, and desire to perform some or all of these duties,” she stressed.

Compensation
Clinical comanagement agreements typically last 3 years, with physician compensation adjusted annually, Ms. Bolduc explained. Compensation includes a fixed portion (usually 50 percent to 70 percent of the total payment) for base management services, and a variable portion contingent on the performance of predetermined incentive metrics. Both parties work together to define and weight the metrics, which typically focus on quality, efficiency, patient satisfaction, and program development.

For example, quality metrics may include reductions in hospital-acquired infections and postoperative complications. Efficiency metrics may include block utilization compliance, supply cost targets, and clinical pathway standardization and compliance. Patient satisfaction metrics could be met with improved patient satisfaction scores, while program development metrics may include outreach, research, or education targets.

“Shared savings can also be included in the incentive bucket, which complements the bundled payment model. Or, a one-time lump sum payment linked to new program development can be created,” Ms. Bolduc explained.

She cautioned, however, that measures should be established to guard against reduction or limitation of services and inducement of referrals.

According to Ms. Bolduc, implementing a clinical comanagement agreement typically takes 6 to 8 months and involves five essential steps (Fig. 1). When structured properly, she noted, the CCM is a very effective physician-hospital alignment tool that is becoming increasingly popular in orthopaedics.

“In addition to enabling physician groups to retain their independence, clinical comanagement agreements have the potential to align disparate groups, to establish an economic relationship that creates a foundation to pursue value-based payments, and to drive improvements in quality, patient satisfaction, and cost efficiencies. Essentially, they are a win-win for physicians and hospitals,” she said.

Mr. Fink added, “Another important takeaway is that clinical comanagement agreements are not one-size-fits-all. Each one is unique because each is based on a shared vision for the service line by the participating physicians and the hospital.”

Maureen Leahy is assistant managing editor of AAOS Now. She can be reached at leahy@aaos.org