As the implementation of the federal Affordable Care Act (ACA) continues in fits and starts, healthcare providers are scrambling to best position themselves to accommodate anticipated and developing payment models. Unfortunately no one really knows what these new payment models will look like or how they will ultimately work. It is apparent, however, that most of them (such as the accountable care organization model and bundled payment models) will require some level of increased clinical or legal integration between and among providers. Given the general state of confusion around payment reform, it is not surprising that many physicians and other providers are perplexed over how best to integrate. Despite the common thinking among many physicians, integration does not necessarily mean that all physicians must be employed by hospitals. In fact, there are a number of potential integration strategies worth evaluating before making the leap to hospital employment. Some of these models include the following:
1. Practice Lease. Under this model, a hospital or health system leases the entire medical practice including the space, equipment and personnel, and engages the physicians on an independent contractor basis to staff the leased office.
2. Clinical Co-Management. Under this model, a hospital or health system would engage the practice physicians to manage the clinical aspects of a department or service line of the hospital or system. In exchange for the management services, the physician may be paid through a fixed compensation component and perhaps some quality or performance component.
3. Professional Services Agreement. Under this model, a hospital or health system would lease the services of one or more of the physicians of a practice to see and treat hospital patients at the hospital or in hospital facilities. The hospital would pay the practice fair market value compensation and would be entitled to bill and collect payment for all services rendered by the physicians during the lease periods.
4. Medical Director Services. Under this model, a hospital or health system can engage practice physicians to serve as medical directors of a service line or department as a means of enhancing the delivery of care with close physician oversight and involvement. As with all of these arrangements, care must be taken to ensure that the services are necessary, commercially reasonable and actually performed.
5. Network Affiliation. Under this model, a medical practice or its individual physicians would sign participation agreements to participate in a hospital’s/system’s provider network (e.g., an accountable care organization). The participating network providers do not become employees of the hospital or network but merely agree to participate in the payment arrangements entered into by the network.
It goes without saying, of course, that all of these integration models are subject to much federal and state regulation and therefore must be carefully evaluated and structured to comply with applicable law. Nevertheless, it is important to know that a variety integration options exist for physicians who may wish to remain in private practice.