We recently spoke with Gail Peace, CEO of Ludi, about how hospitals are managing physician contracts from both an operational and finacnial perspective. Gail helps us understand why management is so important and what can happen if you aren't paying careful attention.
1. Ludi helps hospitals operationally and financially manage agreements, what does that mean exactly?
Gail: When hospitals and physicians sign a contract, the real work begins! In all seriousness, the care that was taken to setup that contract needs to be taken to be sure the contract is followed exactly as written over time.
Contracts usually have all duties and compensation clearly outlined, but these details can be hard to keep track of by the physicians completing the work, the service line leaders, approvers and finance. Managing all these details is critical to paying physicians correctly and keeping hospitals out of trouble.
2. Hospitals have so many fires to put out daily, why is it important to operationally and financially manage physician payments?
Gail: Physicians are referral sources to hospitals which means they can’t legally contract with a hospital unless certain conditions are met called safe harbors. There are 7 safe harbors where 5 happen at the time of contract execution-those are easier to setup right in the first place. The other 2 safe conditions need to be monitored over time and are absolutely the easiest to break. If you break these 2 conditions, you have a Stark Law and potentially an Anti-Kickback Statute violation. Perhaps even a False Claims violation. The aftermath is frequently a costly settlement.
3. What are the 2 most common violations?
Gail: The payment needs to be made at fair market value and should only be paid for services defined in advance in the contract. These 2 things are usually responsible for compliance issues. Just to give a bit more detail on this, if the contract says the doctor can be paid up to $2,000 a month, but you’ve approved payment at $2,500 for a time log, that’s a Stark Law violation. The second example is related to the more common issue, the physician is writing down duties that aren’t in their contracts and these are being approved anyway. You have to keep close watch of the amounts and the duties being paid, they have to match the agreement. Currently we see that so much of this tracking is done manually, that’s a recipe for disaster.
4. This kind of sounds like a contract management system’s capabilities, how does your automated solution differ?
Gail: Good question, we get this one a lot. Contract management systems are really important for housing a hospital’s vendor agreements, everything from linens to device companies and physician contracts. These systems are critical to help manage the workflow involved in setting up and renewing contracts, but they can’t make sure parameter of contracts are followed to a T. You can’t document the work being performed or the calculation of the payment within a contract management system, because of that, storing them in a contract management systems just isn’t enough. When you manage your contracts operationally and financially, automation is really a necessity to keep executives and physicians within law.
5. What’s your recommendation to hospitals related to paying physicians?
Gail: People, process and structure need to support accurate following of agreements. It’s important to recognize this entire function is a huge area of risk for hospitals, one of the top four. The work process should include checking the duties being performed and the actual payment against the contract every time a payment is made It’s also important to assign an executive to oversee the entire function and then provide that person with the people and structure to appropriately manage. 5 years ago, software in this space was cutting edge. Today, it’s rapidly becoming imperative to have software to ensure success.
About Ludi
Ludi works with healthcare organizations to strengthen physician alignment and administer the complex financial arrangements that are the infrastructure of healthy physician integration strategies. Pairing technology with deep industry knowledge, Ludi offers software as a service (SaaS) solution, DocTime Log®, as well as consulting services to build the trust and efficiency into the relationship between organizations and their physician partners.
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