Physicians on board
Co-management arrangements between hospitals and doctors grow as an alternative to joint ventures, but questions remain over whether the deals can deliver on their promises
An effort to curb surgical infections at the largest hospital in Tucson, Ariz., recently raised an awkward proposition: requiring nasal swabs for doctors at the Tucson Orthopaedic Institute.
Swabs detect bacteria that can cause harmful complications, pneumonia or bloodstream infections, which can be treated with an antibiotic. Screening doctors made sense to clinic and hospital managers as they considered ways to reduce avoidable infections, but presented the somewhat uncomfortable question of enforcement.
“Can you imagine?” says Greg Waters, CEO of the Tucson Orthopaedic Institute, of the unease among those left to police the policy among highly independent surgeons.
But as it turns out, surgeons themselves would handle the job under a management contract with 555-bed Tucson Medical Center. The orthopedic group receives hourly fees for management, plus additional payouts tied to quality and efficiency goals, giving its 38 doctors an incentive to prod one another to comply, he says.
Indeed, Waters notes it was a doctor who proposed the swabs and discussions are under way to adopt the quality-improvement strategy, which would put surgeons on the spot to remind one another “You’re part of the team,” Waters says. “This is what we have to do. Give us your nose.”
Such contracts, known as co-management agreements, have emerged in recent years as an alternative to joint ventures or employment for hospitals and doctors eager to reach deals to bolster efficiency and quality of care, healthcare lawyers and executives say.
The arrangements—under which hospitals contract with management companies jointly owned with doctors or wholly owned by doctors—may grow more popular since regulators further tightened the Stark anti-kickback law last October and health reform increases pressure to bolster efficiency, executives say.
But an expert on hospital and physician relationships warns there is scant research to show such deals are successful at curbing waste and improving quality, and lawyers say deals still risk running afoul of bans on physician self-referral.
Proponents say the arrangements allow doctors who don’t seek to become hospital employees to work more closely with the hospitals to improve quality and efficiency by giving physicians the authority to make changes in their work and operations.
The structure of the deals may vary, but all fall short of joint ownership of buildings, equipment or service lines that characterize a joint venture.
Sally Nelson, CEO of Huntsville (Texas) Memorial Hospital, says heightened scrutiny of joint ventures prompted the 88-bed hospital to opt for co-management of its outpatient surgery and imaging services. Nelson says she hopes to expand management to Huntsville Memorial’s inpatient services as well as seek increasingly ambitious quality and efficiency goals. “The first year you have to take baby steps,” she says of the year-old contract’s quality and efficiency incentives. “They will grow more sophisticated and will have to stretch more to get the goals.”
Thirty-five doctors own the co-management company, HMH Clinical Management, and two primary-care and two specialty-care physicians sit on its governing board.
The Tucson Orthopaedic Institute owns 45% of the co-management company created in July 2008 with the Tucson Medical Center, which owns a 32.5% stake and the Center for Neurosciences, which owns 22.5%. The governing board includes four members from the orthopedic group, three members from the hospital and the final two seats are held by the Center for Neurosciences.
Stuart Katz, the co-management administrator at TMC Orthopedic and Neuroscience Management on behalf of the Tucson Orthopedic Institute, says the contract, which includes
Co-management arrangements are being touted as a way that physicians can help improve both operational efficiency and quality of care.
Upamaka: Deal led to more authority and compensation.