Physician integration is a journey along a continuum of relationships with the medical staff. The most recent phase is the exploding phenomenon of paying for ED call coverage.
A CEO recounted his orthopedics ED call coverage negotiation. “It was a real chore getting the deal done. The senior physician of the group had just returned from a national conference where he learned that the current daily rate we were paying was about half what some of his colleagues were making. This did not sit well with him, and we spent nearly six weeks in constant back-and-forth negotiations. We finally agreed to a stipend of $4,300 per day, 365 days per year—a pretty large ransom, but one we felt that we had to pay. I thought we had put this to bed until I received a call the very next day from the senior physician. He wanted to thank me for all of the work we had done to put in a “fair” rate for general ortho call and felt we should waste no time starting to discuss the rate for spine call. He thought that $4,300 was a good starting point.”
The biggest mistake organizations make when contemplating the need to pay for ED call coverage is not recognizing that the demand to be paid is driven by the same market dynamics that led to the development of other relationships along the integration continuum. While physicians will raise a litany of reasons justifying payment for providing ED call coverage (e.g., intensity of call burden, smaller rotations, non-reimbursed care, and malpractice exposure), the fundamental problem is that the economics of running a private practice have seriously deteriorated physicians’ ability to manage their time, generate a competitive income, and provide sufficient economic security for themselves and their families.
Responsibility for addressing these medical staff issues may not seem to be the hospital’s domain, but if the physicians cannot earn a competitive and secure income in the market in which they practice, they will migrate to other markets and leave larger holes in medical staff coverage. Hospitals need physicians, so hospitals must address these issues.
These issues are not the exclusive domain of the independent medical staff. Successful physician employment models encourage career employment through a combination of cash compensation and benefits. The benefit programs designed for the employed group leverage the size and sophistication of the organization and are superior to programs available to independent physicians in terms of cost and benefits provided. Extension of these benefits to the entire medical staff in combination with cash payment is a better value proposition than cash payment for ED call coverage alone.
By offering a combination of cash, disability, and retirement benefits to the entire medical staff, the hospital system demonstrated a long-term commitment to both the employed and independent physicians. The value of the benefits provided was so significant that the organization was able to decrease the amount of cash compensation in excess of 35 percent, a savings of more than $9 million dollars annually.
To succeed long-term, hospitals and hospital systems must focus on partnering opportunities that integrate physicians into their organization. Identifying and understanding the needs of independent physicians can establish trust and provide sustainable long-term solutions.
For specialty physicians, cash is not the primary issue. Far more important is the ability to prepare for retirement and guard against income drops due to disability. By solving these issues, hospitals and health systems can build a sustainable ED call coverage program that ties physicians closer to the organization, bridges the gap between employed and independent physicians, and promotes a smooth transition along the continuum to integration.
As always, I welcome your input to improve healthcare collaboration and get it done.
Kenneth H. Cohn
© 2011, all rights reserved
Disclosure: I have not received any compensation for writing this content.