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Multi-Facility Physician Contracts: Tips for Health Systems

An MD Ranger On-Demand Video

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Objectives

• Advantages• Call arrangements• Directorship/administrative arrangements

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Advantages to Multi-Facility Contracts

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Benefits are many

• Control costs• Increase operational efficiency• Centralize physician leadership• Decrease duplicative coverage payments in

some cases (depending on volumes, demand)

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Payments are higher, yet costs may be lower

• Multi-facility contracts typically cost more than single facility arrangements

• However, they are less costly than individual facility payments when considered in aggregate

• Our data demonstrate that though there is decidedly more work to cover 2+ facilities, the amount of work (measured in hours and annual payment rates) is not proportionate to the number of facilities covered under the agreement

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These arrangements are becoming more common

In 2014:• 8% of MDR call agreements were multi-facility

arrangements • 10% of administrative agreements were multi-

facility arrangements

Note: these numbers are increasing year to year

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Determining FMV for Call Arrangements

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When it’s appropriate

• When two facilities within the same health system are physically nearby and the emergency department volume is such that call burden for one physician is not overwhelming, it may be possible to have one physician covering both facilities

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What’s needed

• Physician(s) on panel must have privileges at both facilities

• Second call position may be needed to address infrequent conflicting demands

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How much it costs

• Adding a second campus to one coverage position on average increases the cost of the agreement by 26%

• Example: if two hospitals each pay $100 for coverage to two physicians, the estimated appropriate rate if they consolidated contracts to have one physician provide coverage of both campuses would be $126. This is 37% savings per campus!

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FMV for multi-facility call arrangements

• Use market data to determine appropriate payment ranges for a single position

• Use MD Ranger’s formula for multi-campus coverage service (each campus brings a 26% increase)

• Document market rates and justification for negotiated payment rate

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Determining FMV for Administrative Arrangements

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When it’s appropriate

• When two or more facilities within the same health system can rely on the same physician to complete the same duties for both hospitals, a multi-facility medical directorship or administrative position may be advantageous

• We seen these for facilities in the same region or across multiple regions in unique situations such as training or system-wide implementation programs or quality initiatives

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What’s needed

• Physician must have available hours for the position

• Though there is no significant difference in hourly rates of pay for physicians with multi-facility administrative positions, there is a significant difference in the average number of hours required

• As with all medical direction and administrative positions, the job description must warrant the required number of hours, and timesheets are essential for compliance

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How much it costs

• On average, a single physician contract for the same service across two campuses costs 37% more than a single campus position, with the difference largely driven by hours required not hourly rate of pay

• Each additional campus in the contract commands an average 10.7% increase in the number of hours up to five or more campuses

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Impact on rates

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FMV for multi-facility direction/administrative arrangements• Use market data to determine appropriate

payment ranges for a single position• Use MD Ranger’s formula for multi-campus

administrative positions. Note that hourly payment rates typically do not increase, but rather annual hours and annual payments for the position are higher

• Document market rates and justification for negotiated payment rate

• Require and monitor timesheets

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Contracting Questions?

MD Ranger, Inc.650-692-8873inquiries@mdranger.com