The Case for Comanagement

Private practice economics are becoming increasingly complex and daunting as reimbursement models shift with healthcare reform.  Hospitals and healthcare providers are seeking stability and security in the form of highly integrated arrangements that formally align hospitals and physicians.  As a result, comanagement is emerging as an attractive alignment option.

Under typical comanagement arrangements, hospitals or health systems contract with independent community physicians to oversee day-to-day operations and conduct long-term planning for a specified service line.  By sharing both management and financial responsibilities through a comanagement model, the goals of the hospital and physicians can be aligned to enhance care delivery and quality, as well as to develop new service line opportunities.  The most successful of these arrangements are born out of a clear understanding of the perspectives of and benefits to each participant in the arrangement.

Hospital Perspective

Comanagement agreements present an opportunity to increase physician participation in decision making, improve the patient care experience, and enhance the operational and financial reporting capabilities of a service line.  While these benefits can be accomplished through employment, physicians in key specialties are often fiercely independent and averse to employment discussions.  Further, many hospitals are discovering that employing specialists is exceedingly expensive, and thus are seeking alternative methods for alignment.

Enhanced integration through well-designed comanagement agreements helps establish a direct line of input from physicians into service line growth strategies, quality initiatives, and performance improvement ideas.  When successful, the execution of a comanagement arrangement has the potential to foster collaboration and alleviate mistrust between physicians and hospital administration.  It can also lay the groundwork for future integration efforts (possibly including employment or other initiatives).

Independent Physician Perspective

Physicians are increasingly interested in aligning with hospitals for a variety of reasons, including mitigating a declining revenue base. Comanagement is one of a few models that provide economic benefit to physicians while also allowing them to preserve practice independence (physician professional billing practices are generally not affected). Such an arrangement also provides physicians with greater influence over service line strategies and hospital operations, which can enhance efficiency and physician satisfaction.

Health System Perspective

As reimbursement is increasingly tied to performance and the coordination of care for both physicians and hospitals, the comanagement model may serve as a tool to jointly improve care delivery and enhance value. This is particularly true for health systems engaged in value-based purchasing and risk-sharing/ACO models for which reimbursement is tied to specific performance metrics. Comanagement compensation mechanisms can be designed to align physician incentives and improve performance across these metrics, positively affecting both technical and professional revenue.

Stronger Ties and Performance

With the right case for development in mind and the proper components in place, comanagement arrangements represent an opportunity to better engage independent physicians and significantly strengthen service line performance, quality, and leadership.

To learn more about comanagement, read the Diagnostic on our Web site.

This entry was posted in Network Development, Physician Alignment, Physician Strategy, Strategic Planning and tagged , , , , , by Len Henzke. Bookmark the permalink.

About Len Henzke

Len has consulted for 15 years to a variety of leading hospitals, health systems, and medical groups nationwide. He directs consulting engagements pertaining to a broad range of complex healthcare issues, including system and organizational strategic planning, hospital/medical group affiliations and transactions, physician organization development and design, and clinical service line planning. Throughout his career, he has advanced numerous engagements as a facilitator between hospital executives and physicians in designing creative and effective alignment vehicles to further mutual goals. In addition, he has designed dozens of physician compensation plans, including value-based plans that incorporate quality, efficiency, and other metrics, to help organizations succeed in the era of accountable care. Len possesses a bachelor of arts degree from The College of William & Mary and master of business administration and master of health administration degrees from the University of Washington.

2 thoughts on “The Case for Comanagement

  1. Pingback: Four Key Components of Comanagement Arrangements | ECG Management Consultants, Inc.

  2. Pingback: Five Steps for Developing Comanagement Arrangements | ECG Management Consultants, Inc.

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