Our Unique Advantage:  Hospital Contracting Expertise

As outlined in our CEO’s biography, our group has a unique advantage with our CEO having negotiated hospital-based contracts for Physicians and Physician groups both as Hospital General Counsel and as a Practice Administrator for Physician Groups.  As CEO, CFO, and COO of several hospitals, she fully comprehends the flexibility necessary to structure and negotiate the best overall contract to be able to achieve a competitive and equitable agreement.  In her prior role as Compliance Officer, she gained a keen understanding of how to avoid the possible pitfalls of Anti-Kickback or Stark Law issues.

We Negotiate:

  • Hospital Service Agreements/Professional Service Agreements

  • Group Stipends/Subsidy Arrangements

  • Medical Director Agreements

  • Joint Venture Agreements

  • Income Guarantees/Revenue Guarantees & Repayment Obligations

  • Hospital buy-out of practices (and asset valuations)

  • Independent Physician Associations and Medical Service Organizations

Reasons Why Physicians Get Paid Less Than Fair Market Value

Often Physicians don’t have or take the time to conduct a due-diligence assessment because they don’t know how to extract the information that sets the “gold standard”, and they don’t feel confident in negotiating for themselves or their group.  This is common across myriad industries.  While you can be a very effective advocate for others, when it comes to negotiating for yourself, you need a professional with a fresh perspective that can be objective yet fair.  That’s where we come in.  You’ve worked so hard to become a Physician; don’t allow a hospital determine your financial future below what you deserve.

Our Approach in Working with Hospital Administrators

We endeavor to a win-win philosophy when working with Hospital Administrators.  Hospital administrators are complex problem solvers.  Managing a hospital or healthcare system is not easy; individual physicians or physician groups’ interests can be neglected or overlooked altogether. Reimbursement (or the lack thereof) is becoming more challenging and confusing every day, and hospital administrators must make decisions based on incentives that keep the hospital running, not whether a particular physician group contract will enable a practice to be fiscally sustainable.

If a department (or contracted service) is bringing in sufficient revenue or serving an organizational mission, often the hospital administrator assumes that there is a fair exchange for both the physician(s) and the hospital. However, more often than not, this is not accurate. ‘No margin, no mission’ applies to both the hospital and its physicians. Engaging the hospital in a mutually beneficial collaboration yields results in which both parties emerge victorious and not at each other’s expense.

Fair compensation is in the community’s best interest; a comprehensive set of services viable to sustain itself in the community is to the benefit of all, and ensure that physician services continue to be available to the core community.

Due Diligence Approach in Working with Physician Groups

We utilize a due diligence approach when defining which key parameters to negotiate and leverage a symbiotic agreement between hospitals and physicians.  The data we incorporate is a catalyst for defining why the current contract terms or the proposed terms are at risk and could result in a below-market outcome.  As part of our due diligence approach, we utilize each hospital’s data to demonstrate how the hospital is performing versus how its physicians are performing.  This allows us to successfully strategize ways that physicians can avoid shouldering all or a significant portion of the responsibility or risk.

The following are examples of hospital contract terms not tied to fair market value:

  • Required staffing levels that are inequitable (e.g. “staffing up” for more operating rooms than there are patients scheduled or underutilized or unutilized surgical block times)
  • Compensation below fair market value, which most often should be between the 50%ile and 75%ile depending on the specialty
  • Contracts that result in reimbursement that is unreasonable given the scope of responsibility
  • Unpaid duties (sometimes undefined duties keep being added without commensurate compensation)
  • Unreimbursed patient care (nonprofit hospitals must accept uninsured patients but that doesn’t always mean that should apply to its Physicians for non-emergent care)
  • Cross-coverage for other Physicians or groups required by the Hospital but without commensurate reimbursement
  • Excessive on-call coverage for the ER (the hospital may need to hire Locums or Hospitalists to ensure fair on-call requirements)
  • Expensive malpractice requirements (e.g. high-risk patient populations)
  • Federal and State funding for disproportionate share reimbursement not being shared with the Physicians

Managed Care Pitfalls

A common issue we see with hospital-based physician groups is that hospitals often require them to accept all managed care contracts that the hospital itself accepts. While a contract may make sense for the hospital (e.g. the money they “lose” on services like inpatient care is made up on diagnostic testing), it may put a huge burden on the physician’s practice. Many of our physicians/physician groups have never negotiated a managed care agreement, let alone have an in-depth understanding of the contracting rates and changes in reimbursement that have become more prevalent with all the ACO changes and health care reform.

We frequently negotiate these rates for physicians and physician groups – and this is important because hospitals often negotiate excellent rates for their reimbursement, but rarely do they offer assistance to the physicians and groups to negotiate equally competitive rates.  It is imperative to negotiate a reciprocal agreement, as both share a common interest in serving the community, which includes a mutual duty to ensure the best practices and industry protocols are being implemented and followed. This is compromised when a practice’s financial viability is at issue. Both should be able to negotiate their reimbursement rates independent of each other to protect their own interests, or should those rates be too low, hospitals should allow the physician/physician group to opt out of any unreasonable contracts.

Cookie-Cutter Hospital Contracts

Hospitals typically require physicians and groups to utilize their templated contracts for Professional Service Agreements, Hospital Service Contracts, and Employment Agreements.  They have their attorneys draw up these contracts so that they are employing contact language that favors them throughout.  Beginning with a version most beneficial to them, how often does that contract favor the hospital or employer when deciding whether the physician or group meets the terms – especially for a bonus?

We make sure that productivity formulas and other contractual obligations start with a good foundation that is based on fundamental fairness.

Payor Mix Concerns

It is important for physicians/physician groups to understand challenging payor mix ratios before signing a hospital contract.  In areas of the country where there are access to care issues, physicians often end up seeing a higher ratio of patients that are emergent or who need stabilization because these patients lack insurance and it’s a requirement of EMTALA (i.e. ER Physicians, OB/GYNs, and other specialties).  Sometimes it’s common for a payor mix stipend or various types of subsidies that make up the difference between uninsured rates or under-reimbursement rates.  Additionally, if a Specialist sees an adversely large number of uninsured patients, there should be a stop-gap that reimburses that provider with at market rates in that geography and specialty.

This ensures no one provider or group sees more than their share of low or non-paying patients.




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