Accelerating Clinical Integration

Transcription

1 Accelerating Clinical Integration A collaborative white paper written by: Kenneth H. Cohn, MD, MBA, FACS, CEO of Healthcare Collaboration Peter A. Pavarini, J.D., partner at Squire Sanders (US) LLP, Executive Committee member of the American Health Lawyers Association For additional information, please contact the authors at: Kenneth H. Cohn, ken.cohn@healthcarecollaboration.com, Peter A. Pavarini, peter.pavarini@squiresanders.com, Introduction Numerous studies show that quality and safety medical care outcomes in the United States are not as high as they could be. Yet, the use of defined processes and strategies to improve collaboration and integrate the efforts of clinicians and hospital leaders can result in better medical outcomes. A number of forces are accelerating the need for clinical integration in the US, including the: Unsustainable rate of increase of healthcare expenses Increasing public pressure to improve quality and safety and decrease readmissions Blurring of clinical and administrative lines, especially with regard to quality and safety system improvement issues Physicians who work in separate practices are considered competitors of one another. Unless they join together in a legitimate joint venture, as defined by the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ), joint negotiations by a physician network or other provider organization may be seen as price fixing which is per se illegal under federal antitrust law. In 1996, the FTC and DOJ issued a joint release stating that a joint venture that is clinically integrated might pass antitrust scrutiny even though its physicians do not share substantial financial risk. The definition of clinical integration has evolved in the ensuing years from a series of rulings and supplemental policy statements from the federal enforcement agencies. The FTC report on healthcare competition (Chapter 2, pp.36-7) defines four aspects of clinical integration: 1) use of common information technology to ensure exchange of all relevant patient data 2) development and adoption of clinical protocols 3) care review based on the implementation of protocols 4) mechanisms to ensure adherence to protocols 1

2 Clinical integration represents an approach to working more interdependently to improve clinical and financial outcomes. A spectrum of activities can facilitate clinical integration, as summarized below from the recently published ACO Handbook. The spectrum of clinical integration for physicians who want to remain independent Physician recruitment: most recruitment agreements include an income guarantee for a limited period of time which the physician is expected to repay unless the physician remains in the community as an active staff member in good standing for a specified time period. Medical director and personal service agreements: hospitals pay fair market value (FMV) for time devoted to performing contracted services. Management service organization (MSO): A physician practice and a hospital or hospital affiliate enter into an agreement where a jointly owned entity provides management services to the physician practice. These services can include billing, coding, compliance, support staff services, marketing, strategic planning, facilities management, research support, compensation and benefits planning, and information technology (IT) support. Center of Excellence/ Clinical Institute: The hospital prioritizes a service with space, staffing, administrator, and physician leadership. The center may have clinical, teaching, and research missions. It typically includes: a full range of clinical services related to the service line; inpatient and outpatient facilities, staff, and equipment; brand-building marketing activities; joint planning and equipment selection. This model offers a way for independent and employed physicians to provide services to the community under a common umbrella. Common types of service lines include orthopedics, neurosciences, cardiovascular, oncology, bariatric, and women s (and often children s) services. Co-Management: In this type of service agreement, the hospital pays a physician group a base fee for administrative services and (usually) a bonus for meeting or exceeding quality and safety related benchmarks. These arrangements generally replace traditional medical directorships with a coordinated effort among various physicians practicing within a medical specialty, many of whom would otherwise be considered competitors. Joint equity venture: A legal entity jointly owned by a hospital, physicians, and other investors that offers clinical services. The parties provide startup capital and share in profits and losses to the extent of their ownership shares. Joint payor contracting: The hospital and physicians particpate in a common provider network that accepts risk based on capitated performance or putting reimbursement capital at risk. In the messenger model, the hospital and physicians negotiate separately with payors but represent themselves as a common provider network, for example, an Independent Physician Association (IPA) or a Physician Hospital Organization (PHO). Under a Clinical Institute Model, the hospital and participating physicians develop clinically integrated and/ or pay-for-performance (P4P) relationships to support joint contracting with participating payors. 2

3 Clinical integration models for employed physicians Physicians within an organized model sharing a common employer (e.g., a hospital or hospitalsponsored group practice) are generally not seen as competitors by the FTC and DOJ; therefore, clinical integration is not as necessary from a legal perspective as with networks of independent medical practitioners. Even so, the economic and quality benefits of clinical integration can be as effective in a clinically integrated employment model as one of the aforementioned structures. In addition to the recent growth of direct employment relationships between hospitals and physicians, a variety of hybrid employment models have been introduced that allow physicians to retain ownership of their practices or enjoy a high degree of self-governance: 1) Subsidiary/ Affiliated Entity Models: a hospital establishes one or more subsidiaries or affiliated entities and sets physician compensation based on the practice s financial success. Examples include: Physician Enterprise Model: A hospital or health system employs physicians through a separate but affiliated legal entity. Physician compensation is generally based on the work relative value units (RVUs) each physician produces and on revenues from a management services agreement with the hospital. The hospital leases physicians practice assets through a medical services organization (MSO). The fee structure may include incentives for achieving legally appropriate quality and safety metrics. Affiliated Professional Entity Model: A hospital or health system customarily establishes a new, nonprofit, taxable corporation as a wholly owned subsidiary. A variation of this model involves a captive professional corporation, with the sole sharelholder being another full-time hospital employee that employs physicians. Compensation is principally based on the difference between the subsidiary s revenue and expenses. The compensation model includes incentives to grow revenue and limit expenses. The fee structure may include incentives for achieving legally appropriate quality and safety metrics. Physician Leasing Model: A hospital or health system contracts with large group practices for consolidated service lines, such as orthopedics, cardiovascular, and oncology, to provide clinical and administrative services. The practice entity leases its employees to the hospital to provide billable services, which collections the hospital or health system retains and pays fixed fair market value (FMV) fees to the practice entity. The fee structure may include incentives for achieving legally appropriate quality and safety metrics. 2) The Foundation Model: A hospital or health system establishes, but does not own, a nonprofit medical foundation, which owns and operates physician outpatient clinics. The outpatient clinics arrange for physician services through professional service arrangments. The physician practices, rather than the foundation or hospital, employ physicians. This model is seen predominantly in states whose laws prohibit a hospital or health system from directly employing 3

4 Conclusion physicians. For more information on which states prohibit the corporate practice of medicine, please visit Clinical integration requires: Transparency A commitment to developing a shared mission, vision, and values Authentic engagement based on mutual respect Systems that support the development and implementation of clinical protocols, especially in information technology As such, clinical integration involves an ongoing journey. It may involve physician employment in states where that is permitted, but differs from it in the following areas: Employment Integration Role Hired hands Co-owners Work type Shift-work Build enterprise Horizon Days-weeks Years Authority Linear/ vertical Dotted-line, horizontal Advantage Fleeting Sustainable Regardless of the Supreme Court decision on the constitutionality of the individual mandate in the Patient Protection and Affordable Care Act of 2010, healthcare professionals will experience increasing pressure to provide more interdependent, coordinated, and cost-effective care: it is the right thing to do for patients and their families, something that we wish for our loved ones who need care, and well within the scope of duty for healthcare leaders, Board members, physicians, and hospital employees. The silos of clinical and administrative operations are eroding. Increased transparency can be a bridge to building trust. All parties can benefit from increased understanding of the systemic implications of their day-to-day decision-making. The discussion and analysis of legal issues in this article are for educational purposes only and should not be seen as a substitute for obtaining advice from qualified legal counsel which is based upon the specific factual and jurisdictional circumstances of the reader. 4

5 For additional information, please contact the authors at: Kenneth H. Cohn, Peter A. Pavarini, References Cohn KH. Harlow DC. Field-tested Strategies for Physician Recruitment and Contracting. Journal of Healthcare Management. 2009; 54(3): Cohn KH. Bethancourt B, Simington M. The Lifelong Iterative Process of Physician Retention. Journal of Healthcare Management. 2009; 54(4): Cohn KH. Berman J, Chaiken B, Green D, Green M, Morrison D, Scherger JE. Engaging Physicians to Adopt Healthcare Information Technology. Journal of Healthcare Management 2009; 54(5): Pavarini PA. The ACO Handbook: A Guide to Accountable Care Organizations, 1st ed. Washington, D. C.: Lexis-Nexis, 2012, Pavarini PA, New Economics of Accountable Healthcare and Legal Implications for Providers, BNA Health Care Policy Report, May 9,