Physician contracting is a complex process and it is challenging to engage physicians to assist in administrative and quality initiatives that benefit health care facilities. From properly leveraging market data to composing legal agreements, it is resource-intensive. A dimension that often gets overlooked is evaluating whether your organization has too many physician contracts. An annual or periodic review of all contracts against industry benchmarks can help identify risky situations or opportunities to save costs. It also helps to document commercial reasonableness of the positions you have in place.
How do hospitals end up with too many medical directors?
Hospitals don’t intend to have too many medical directors, but a lack of checks and balances can result in such a situation. Some examples of situations that could lead to too many medical directors:
- Negotiating individual contracts without considering the organization’s broader goals.
- Challenging physician relationships that lead to expectations for pay.
- Not having a centralized physician contracting process.
- Not requiring timesheets or having poor coordination with accounts payable.
How many is enough?
MD Ranger collects data on all of a subscriber’s physician contracts which allows us to produce a distribution of the number of paid administrative positions per hospital by service. Some services have a higher frequency of multiple positions than others, as illustrated by this sample from 81 administrative benchmarks reported by MD Ranger:
A good compliance practice is also to review the total number of paid medical directorships and administrative positions at your organization. Larger and more complex organizations generally have more positions, and there may be times when more is justified, such as during an EHR implementation. However, if you are on the high end of the scale, you may want to review your list of positions more carefully.
How much is too much?
Too many medical directors could put your organization at a compliance risk based on either paying too much or not meeting a commercial reasonableness test. Many organizations have a handful of contracts that are paid at or above the 90th percentile, due to the hours required or the credentials of the individual physician. However, if individual or aggregate payments are routinely high and/or there are a larger than average number of positions that is a compliance red flag. MD Ranger publishes total spending by contract type to provide organizations with some guidelines of reasonable payments. Based on MD Ranger’s 2017 Facility Totals Benchmarks, the total expenditure on medical direction and administration is:
Ways to Avoid Having Too Physician Administrative Contracts
A few best practices to minimize the risk of paying too much for administrative positions:
Require and check timesheets
Be meticulous about collecting and reviewing physician timesheets. Take the time to cross-reference the duties outlined in the contract with the duties listed on the timesheet.
Centralize the physician contracting process
By keeping track of your physician contracts in a single location and having a team responsible for drafting, negotiating, documenting, and renewing these contracts, you lower the risk simply by knowing what’s going on. Think critically to ensure that duties are not being duplicated amongst physicians.
Conduct Periodic Audits
Annually or more frequently review all physician contracts for compliance with market rates and hours. MD Ranger provides reports and tools that allow subscribers to easily identify more risky contracts compared to benchmarks, review number of positions by service and compare total expenditures for a hospital or a system to other subscribers.
A Case Study
MD Ranger can be extremely helpful to organizations who might suspect they have a systemic compliance issue. One subscriber suspected it had too many medical directors. We showed them how to use our tools and benchmarks to compare their administrative positions with comparable organizations.
The organization found that they had 120 medical directors across the organization compared to comparable organizations which were closer to 70. That’s a lot of medical directors! The number alone does not make them non-compliant, but we advised them to further investigate and document the need for so many positions.
We strongly recommend that organizations perform this kind of analysis. Our whole hospital, service line specific and specialty specific benchmarks that can help with this. There are some services that by nature will have more than 2 or 3 medical directors – for example, cardiology of has directors for different program components. However, there are many other services where multiple positions are not typical, hence documentation of hours and rationale is important to comply with commercial reasonableness standards. We help our subscribers investigate situations like these so they can better mitigate compliance risks.
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