Four Key Components of Comanagement Arrangements

Comanagement strategies are growing more prevalent as hospitals and physicians seek to strengthen alignment. Yet many physicians and health system administrators lack a complete understanding of the essential structures and components for the development of these agreements. Although the specific details of comanagement agreements differ widely across hospitals and specialties, effective agreements will include and address four key components, as discussed here.

1. Scope of Services

Without a defined service line strategy, physicians sometimes act in the interest of their independent practice, paying insufficient attention to overall hospital service line quality, service, and costs. Effective comanagement agreements incentivize physicians to enhance performance through activities such as:

  • Providing physician leadership over the service line, frequently working in a dyad with the service line administrator.
  • Participating in the hiring and managing of nonphysician clinical employees.
  • Assisting in implementing, monitoring, and managing quality assurance activities.
  • Developing, implementing, and updating patient care protocols, pathways, and guidelines.
  • Assisting in managing supply chain activities, the purchasing/leasing of medical equipment, and costs.

2. Compensation

Compensation mechanisms vary widely across comanagement agreements, but both fixed and variable compensation components are universally included. The fixed portion of compensation is a payment made based on an hourly rate for documented physician time spent on medical directorship duties or committee participation. The variable portion consists of performance incentives paid based on achieving specific quality, operational, and financial goals.

3. Service Line Governing Board

The governing board (or similar leadership body) acts as a strategic planning committee and decision-making body for the service line.  With representation from both the hospital and participating physicians, the board’s responsibilities include (but are not limited to):

  • Developing the service line plan and monitoring management company performance.
  • Reviewing clinical quality and service line performance.
  • Developing recommendations regarding the annual budget.
  • Reviewing arrangement payouts and adjustments.

For larger service lines, it is common to form additional committees to support the board through more frequent monitoring and facilitation of specific agreement components.

4. Management Company

Comanagement arrangements typically involve creating a new management company composed entirely of physicians, although hospitals sometimes contract with an existing physician group or with multiple individual physicians. In most cases, the management company is solely a legal entity without a dedicated facility, equipment, or staff. The management company provides administrative rather than clinical services, and physicians continue to see patients and bill payors through their independent medical groups.

Putting the Right Pieces Together

Given the potentially complex design and high reward of comanagement arrangements, it is important to understand and address the key components of these agreements. Additionally, it is essential to execute an inclusive and organized planning process to increase the probability of successful implementation.

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

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

About Jason Peterson

Jason’s extensive project management, healthcare operations, and information technology (IT) experience enables him to take a holistic approach in addressing issues from physician compensation mechanisms to information systems integration. At ECG, Jason has worked on a variety of engagements, including strategic business planning, physician/hospital alignment development, physician compensation planning, managed care contract analysis, and provider-based billing implementation. Before transitioning to the Healthcare – Northwest practice, Jason worked in ECG’s Healthcare IT practice, implementing electronic health record (EHR), practice management, and patient portal systems. Prior to joining ECG, Jason worked as a Quality and Operational Improvement Consultant for Kaiser Permanente and as a System Engineer for a healthcare IT vendor, managing interface implementation and device integration projects. Jason has master’s degrees in business administration and health services administration from the University of Washington and a bachelor of science degree in biomedical engineering with a minor in economics from Washington University in St. Louis.

2 thoughts on “Four Key Components of Comanagement Arrangements

  1. Pingback: The Case for Comanagement | ECG Management Consultants, Inc.

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

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