With ever-shrinking margins and pressure to decrease costs, many hospitals and health systems seek the clinical and operational advantages that centralization creates. MD Ranger data strongly suggests the benefits of multi-facility physician contracts as an important strategy for controlling costs. Hospitals and health systems with more than one campus or facility can save money and streamline both physician emergency coverage and administrative services through multi-facility agreements.
Replacing single facility physician contracts with multi-facility arrangements can have positive, measurable impacts. Although payments to physicians whose duties span multiple facilities are higher than single facility contracts, they are less costly than separate, individual facility arrangements when the duties are assigned to a single physician. MD Ranger's subscriber-based comprehensive reporting system provides an unparalleled opportunity to evaluate the frequency and benefit of these types of arrangements, providing insight into the payment rates and time differentials of single versus multi-campus contracts. These data can be helpful in providing guidelines for documenting fair market value and commercial reasonableness for situations that, on the surface, appear to exceed common benchmarks.
MD Ranger subscribers include numerous multi-campus hospitals and multi-hospital health systems. These contracts include medical directorships and administrative services agreements that span two or more facilities, as well as call coverage arrangements when facilities are located close to one another.
Determining fair market value (FMV) for these types of multi-facility contracts can be a challenge. Most published benchmarks, and most physician contracts, are for a single hospital or campus. Our data demonstrate that although there is decidedly more work to cover multiple facilities, the amount of work (measured in number of hours and annual payment rates) is not proportionate to the number of facilities. Furthermore, multi-campus roles can be designed to streamline operations and reduce costs across the system. After analyzing the MD Ranger database and reviewing all multi-facility contracts, our statistical findings provide guidance that hospitals and health systems can use to determine appropriate compensation for coverage, medical directorships, and administrative service agreements that span two or more facilities.
Call Coverage Agreements
When two facilities in the same health system are physically nearby and when the emergency department volume is such that the call burden for one physician is not overwhelming, it is possible to have one physician covering both facilities. The physicians in the call panel must have medical staff privileges at all of the facilities. This can be financially advantageous, especially when contracting with specialties that are infrequently called. At times a named second call position is desirable to address infrequent conflicting demands. After analyzing the MD Ranger database, we have found that adding a second campus to one coverage position increases the cost of a single agreement by 26%. For example, if two hospitals are each paying $100 for coverage by two physicians and they decided to only have one physician cover both campuses, the appropriate rate would be $126, a 37% savings per campus.
Medical Directorships and Administrative Agreements
Medical directorships and administrative positions that span multiple facilities also save time and money. MD Ranger analysis found that although there is no significant difference in the hourly rates of pay for physicians with multi-facility positions, there is a significant difference in the number of hours required for multi-campus arrangements and in the annual payments. These findings apply to hospitals with more than one campus, whether as a distinct licensed facility or a single consolidated license with emergency departments on different campuses (note that for MD Ranger one campus is considered a facility with a separate emergency department within the MD Ranger database, regardless of license status). We have found that, on average, a single physician contract for the same services across two campuses costs 37% more than a single campus position. Each additional campus commands an average 10.7% increase in the number of hours up to five or more campuses.
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