As physicians and providers transition from first-generation compensation and alignment contracts to second-generation models, there are several factors to consider.
Max Reiboldt, president and CEO of Coker Group, and Bashar Naser, CFO of Alamogordo, N.M.-based Gerald Champion Regional Medical Center, discussed key considerations and trends affecting these second-generation models during a panel discussion at Becker's 16th Annual Future of Spine + The Spine, Orthopedic and Pain Management-Driven ASC Conference June 14 in Chicago.
Here are three considerations the two experts discussed:
1. Payment reform and value-based care is here. As a result, reimbursement structures are evolving, and it is important to adjust compensation and alignment models accordingly. But it is not necessary to change everything.
"We are in a wave of payment reform. But no, the sky is not falling. We don't need to overreact, we just need to be responsive … and gradually change," Mr. Reiboldt emphasized.
2. Ensure an organization's productivity and revenue goals are being met with some sort of productivity incentive; however, begin tying them with other incentives such as cost savings or quality.
Fee-for-service is still the most prominent form of reimbursement in the healthcare industry, said Mr. Reiboldt,, so incentives tied to productivity will be important for the foreseeable future.
"However, it is important to also implement incentives with organizational goals … [such as] cost savings to provide incentives beyond productivity," he added.
Mr. Naser discussed the idea behind the second-generation contract he implemented at Gerald Champion Regional Medical Center.
"We didn't want contracts to just be driven by work [relative value units], which is driven by productivity," Mr. Bassard said. "And once you work with physicians to confirm the mission is there and they have a chance to profit, then you better improve quality and they see bonus pay that aligns with the hospital."
3. Hospitals are moving away from directly employing physicians. As a result, professional services agreements are becoming more popular in second- generation contracts.
PSAs serve as an alternative to the primary employment and alignment structure. Under the agreement, the hospital will contract with physicians for certain outlined professional services, and the hospital directly employs the group staff and takes care of the administrative costs. In other words, the physician is not directly employed and still has some control.
"While PSAs are employment-light, spine surgeons often prefer the element of independence these agreements provide," Mr. Reiboldt said.