Fig. 1 Hartford Healthcare Bone & Joint Institute organizational structure
Courtesy of Hartford Healthcare Bone & Joint


Published 4/1/2019
Courtland G. Lewis, MD; Theodore A. Blaine, MD

Co-management Agreements Prove to be Viable Models for Physician Input

Value-based models of health care have evolved over the past 10 years. During that time, it has become clear that sustainable improvements in quality and reductions in the cost of care require close coordination of stakeholders.

Early efforts to provide incentives to surgeons through gain-sharing cost savings were met with variable success, particularly for total joint arthroplasty. The “cost” of changes in implant selection derived from loss of surgeon control and comfort level regarding both outcomes and techniques. Successful from a financial perspective, gain-sharing dollars have often been used for arthroplasty program development. Yet, after one (or occasionally two) cycles of cost reduction with shared benefits, changes are typically locked in, precluding further collaborative improvements in clinical care.

Recent gain-sharing programs sponsored by the Centers for Medicare & Medicaid Services, such as the voluntary Bundled Payment Care Initiative (BPCI) and the mandatory Comprehensive Care for Joint Replacement models, have taken these concepts to the next level. BPCI Advanced is the most recent bundled payment model; it began in October 2018 and continues through 2023. Eligible musculoskeletal conditions include:

  • back and neck, except spinal fusion
  • cervical spinal fusion
  • combined anterior posterior spinal fusion
  • double joint replacement of the lower extremity
  • fracture of the femur and hip or pelvis
  • hip and femur procedure, except major joint
  • lower extremity/humerus procedure, except hip, foot, femur
  • major joint replacement of the lower extremity
  • major joint replacement of the upper extremity
  • spinal fusion (noncervical)
  • BPCI Advanced also includes one outpatient clinical episode:
  • back and neck, except spinal fusion

These programs are designed to optimize value by decreasing costs and improving outcomes throughout the episode of care. As cost savings to the Medicare program are realized and cost targets are reset, however, they do not necessarily promote long-term collaboration among physicians, ancillary providers, and hospitals.

A long-term solution: the co-management service line agreement

Co-management agreements are quality-oriented, pay-for-performance arrangements. A physician contracts with a hospital to manage a service line—such as orthopaedics, oncology, or cardiology—and ensure it runs smoothly, effectively, and at high quality. The hospital continues to oversee administrative duties, such as budgets, marketing, and personnel issues. The physician is paid on an hourly basis to manage daily operations and may receive incentive payments for reaching or exceeding agreed-upon quality metrics. Any contractual agreement must specifically note the internal mechanism for setting quality-improvement targets, as well as how performance is to be adjudicated.

To avoid allegations of healthcare fraud and to ensure compliance with anti-kickback laws, consult the Office of Inspector General’s Advisory Opinion No. 12-22. A key component is fair market value determination for physician compensation by a recognized third-party authority. A contract should designate specific duration in years.

The benefit to the physician in a co-management agreement should be a balance between “working for the hospital” and retaining control over his or her practice environment. The physician assumes little financial risk, does not have facility overhead, and is paid fair market value for his or her time and effort dedicated to managing the service line.

A case study: Hartford Healthcare Bone & Joint Institute

In October 2012, the leadership of the Orthopedic Associates of Hartford and Hartford Hospital met to discuss the potential for a collaborative relationship. Physician involvement included planning and managing a standalone orthopaedic hospital and a comprehensive musculoskeletal service line. The facility opened in January 2017 with 10 operating rooms; 60 inpatient beds; and a co-located, co-owned ambulatory surgery center in a developer-built facility, along with imaging, rehabilitation, and private practice office space. A Center for Musculoskeletal Health, which included physical therapy, a wellness gym, a biomotion lab, a demonstration kitchen, and exercise physiology resources, was designed as the “laboratory” for program development.

Fig. 1 Hartford Healthcare Bone & Joint Institute organizational structure
Courtesy of Hartford Healthcare Bone & Joint
Fig. 2 Comparative surgical volumes service line agreement (SLA) year 1 and SLA year 4 Larger image(PDF)
Courtesy of Hartford Healthcare Bone & Joint
Courtesy of Hartford Healthcare Bone & Joint

Inherent to the success of the project was the development of a co-managed service line agreement (SLA) that covered all aspects of planning and managing hospital-within-a-hospital services prior to and following opening of the new facility. A separate limited liability company, consisting primarily of 28 partners in Orthopedic Associates as well as both private practice and employed physicians specializing in musculoskeletal radiology, anesthesiology, rheumatology, and hospital medicine (n = 38), was the physician contracting body. Courtland G. Lewis, MD, was designated physician-in-chief and retained under a separate professional services agreement between the practice and Hartford Hospital; that role was recently assumed by Theodore A. Blaine, MD.

Specialty-based service lines with designated directors have been established for inpatient spine, level I trauma, arthroplasty, sports health, hand, foot and ankle, rheumatology, and hospital medicine. The medical director oversees all service lines and is responsible for tracking outcomes and process improvement metrics. The physician-in-chief is accountable at the hospital vice president level for all cost centers, with directors for operations, nursing, perioperative services, research and quality, strategic planning/marketing, and performance improvement. Liaisons from major hospital-based departments, including finance, facilities/environmental services, information technology, and health information, provide monthly accountability for functions not assumed under the SLA (Fig. 1). Governance oversight is provided by a Joint Advisory Council, which includes Orthopedic Associates’ president, vice president, and chief executive officer. The hospital is represented by its president, vice president of patient care services, and chief financial officer.

In the first four years of the SLA, Orthopedic Associates’ efforts to formalize a collaborative relationship where both parties are incentivized to work toward mutually advantageous goals have been successful (Fig 2). Surgeon autonomy has been maintained; the hospital’s outcomes have improved; and, most importantly, patients have benefited (Table 1). The agreement was recently renewed.

Courtland G. Lewis, MD, is physician-in-chief emeritus of the Hartford Healthcare Bone & Joint Institute, a comprehensive musculoskeletal health program based at Hartford Hospital in Hartford, Conn.

Theodore A. Blaine, MD, is physician-in-chief of the Hartford Healthcare Bone & Joint Institute.

They are partners in Orthopedic Associates of Hartford, PC.

Lessons learned from the Hartford Healthcare Bone & Joint Institute

  • Fair market value for services must be provided by an outside, mutually trusted source.
  • Physician and hospital buy-in to performance-improvement targets is essential.
  • Performance-improvement targets must be negotiated annually but closely managed and tracked monthly.
  • Reporting of physician hours must be timely and rigorous.

Lessons for the physician leadership:

  • There is a fine line between fiduciary responsibility to the hospital and allegiance to one’s practice under a co-management relationship.
  • With authority comes accountability for service line performance.
  • Orthopaedic surgeons will respond to opportunities to improve the care of their patients.
  • Operationalizing a new orthopaedic hospital is hard work.


  1. Centers for Medicare & Medicaid Services: BPCI Advanced. General Frequently Asked Questions (FAQs). Available at: Accessed February 15, 2019.
  2. Becker’s Hospital Review: 5 Things to Know About Co-management Agreements. Available at: Accessed February 15, 2019.
  3. Department of Health and Human Services Office of Inspector General: OIG Advisory Opinion No. 12-22. Available at: Accessed February 15, 2019.
  4. Thompson M: Clinical Co-management Agreements. Available at: Accessed February 15, 2019.
  5. Healthcare Appraisers: The Next Evolution of the Service Line Co-management Arrangement. Available at: Accessed February 15, 2019.