Healthcare Issues & Trends

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Posted on October 31, 2012 by Gallagher Integrated

"Hot off the press"

INTEGRATED Healthcare Strategies just released it's October 2012 eNewsletter.  It's packed with great articles from our consultant experts on issues you're hearing about today in the healthcare industry!



Paying Medical Directors for Performance

Posted on October 30, 2012 by Gallagher Integrated

As originally authored by Adam Schmidt, Senior Consultant in the Physician Services practice of Integrated Healthcare Strategies

The role of the Medical Director in today’s not-for-profit hospital setting is rapidly expanding.  Physicians acting in Medical Director roles can be found across the spectrum of facilities from Critical Access Hospitals to large systems/Centers of Excellence with service line revenue in the hundreds of millions of dollars.  Typically, the larger and more complex departments/service lines require a higher level of dedication from their Medical Directors.  Some Medical Directors also have responsibilities that span across several departments, and at times, across the entire organization.  Most of these positions are executive in nature and comparable to full-time positions.
Within the last several years, Medical Directors have become highly involved in such activities including acting as a liaison between the medical staff and hospital management, supervising JCAHO accreditation processes, leading new program development and implementation, assessment of capital equipment, etc.  The newest, not surprisingly, area of growing activity in terms of administrative services relates to clinical quality.
As organizations begin to understand the structure and implications of Accountable Care Organizations and their emphasis on quality and efficiency from both public and private payors with respect to reimbursement, they will depend more heavily on physician leaders who can design, as well as execute, quality programs.  The Medical Group Management Association’s most recent Medical Directorship and On-Call Compensation Report communicates an increasing trend of administrative duties in the area of quality, with an 11% increase in the number of respondents reporting activities in the category of "quality and appropriateness of care.”
The changing landscape of healthcare has put a focus on physician/hospital reimbursement.  Many not-for-profit hospitals are wondering how they can effectively incent physicians to be more productive and still deliver strong clinical outcomes.  This concern is pertinent for staff physicians who are providing care to patients, and even more pertinent for physician leaders (i.e., Medical Directors) who are ultimately responsible for quality across their respective departments and organizations. 
One method for promoting strong quality outcomes is to include a pay-for-performance component in their Medical Directors’ compensation plans.  Not yet prevalent, this trend is definitely on the rise; 26% of all respondents within Integrated Healthcare Strategies’ 2011 Medical Director Survey reported paying for performance in some capacity.  While this practice is becoming more popular, it is not yet know what will be the preferred structure and application of these incentives.
Given the critical nature of the topic of pay-for-performance, the Integrated Healthcare Strategies Physician Services practice is monitoring trends closely.  In September 2012, we released the most recent findings in Medical Director compensation, published in our 2012 Medical Director Survey.
The survey addresses pay-for–performance, as well as provides extensive data to keep organizations current in the area of Medical Director compensation.
For more information about the survey, including a sample position page and position list, or to download a questionnaire for future participation, please visit us online or email us at  The survey results are free to participating healthcare organizations.

Top 3 Third Party Contracting Challenges for Providers

Posted on October 29, 2012 by Gallagher Integrated

As originally authored by Chuck Gooder, Senior Advisor with INTEGRATED Healthcare Strategies.

Payers are becoming increasingly crafty with contract terms and language, all to the disadvantage of the Provider.  Here are our top three challenges for Providers when it comes to third party contract agreements. 

  1. Tricky Contract Language.  Watch our for phrases like “Payer rate is based on the lesser of the Provider’s Charges or the Payer fee schedule,” with no fee schedule attached to the contract or maybe the Payer provides a list of CPT codes which are general and often don’t address the CPT’s used by the Provider, particularly higher charge codes.  It is often times difficult for Providers to obtain the carrier’s fee schedule, taking multiple attempts within multiple levels of the organization.  Remember, the carrier has a huge advantage, knowing what each Provider in their network bills through years of building data base claims. It is not uncommon to see Payer methods that set fees to a percentage of Medicare.  Currently, they differentiate their category fees.   
  2. Contract Amendments. When a Payer allows additional provisions listed under the ‘General Provisions’ section, language such as “Payer retains the right to amend this Agreement.” are often used. 
  3. Contract Language vs. Policy and Procedure Manual Language.  The contract may contain the rate of payment, but the policy and procedure manual houses the operational tools required to obtain payment.  These tools may now be in a multiple page document found on the Payer’s website and can change without notice to the Provider.  The procedures often spell out requirements for the Provider to receive timely payments.  

Working with Providers on carrier contracts requires solid data, the expertise to break the data down into E&M categories such as surgical, imaging, and laboratory codes, and playing the negotiation game - an “across the board” strategy that has long been left behind.  Some Provider groups that are not part of a larger system have not looked at their Payer agreements and just allow renewal, year after year.  Others have never seriously negotiated their contracts.  Rollup language allows the contract to automatically renew; and often, Providers don’t even know the deadline, let alone remember the conditions.  The language typically reads, “After the initial term, this Agreement shall automatically renew for subsequent one year terms unless either party provides written notice 180 days prior to the end of the initial term.”  Even in hospital-owned Provider models, the hospital is the negotiator and is mostly focused on the hospital agreement, allowing the carrier to short the Provider side of the equation.
If physician groups and health systems want to protect their interests, then they should regularly review their commercial provider agreements.

Leaders Wanted, No Healthcare Experience Needed

Posted on October 24, 2012 by Kevin Haeberie

Not too long ago, someone with no nursing background running a nursing unit or a Director of Radiology who has not ever been in a radiology department would not be heard of. But today, more and more hospitals are realizing the difficulty in finding the skills needed for today’s healthcare environment from the talent available in the clinical ranks.

It's becoming a growing trend in healthcare to place a Director or Vice President operational-level leaders with no healthcare experience. Hospitals across the country are beginning to look for leaders for clinical responsibilities with no underlying clinical experience or knowledge. 

Hiring non-clinically experienced leaders leverages the concept that professional leadership is something that develops first as an inherent ability, and then through experience and skill development.  This concept says that inherent leadership skills cannot be created, but that sufficient clinical knowledge can be obtained in order to effectively lead a nursing unit or a laboratory.  This approach clearly has detractors and it’s controversial, but through a methodical and collaborative change process, many hospitals are overcoming the obstacles and find that taking this different approach to leadership recruitment has fundamentally and positively changed their leadership ranks.
Take high-performing athletes; without the rare inherent natural ability to perform, the skill development, training and experience of an individual will still only result in a knowledgeable average athlete – no matter how willing the individual may be to practice and train.  As a result, looking for that natural athlete (leader), needs to be the first step, whether they even know how to throw a ball (are clinically experienced) or not.
So what's persuading hospitals to consider non-healthcare leaders?  It's simple - the pool of potential applicants is significantly reduced.  The more leaders available, the better the chance for the best leader to be selected.
It is important to note that this trend does not preclude inherently talented clinically trained individuals to become effective, even superstar leaders.  But as the competition for positions expand to non-clinical and non-healthcare experienced individuals, a nurse or radiology tech that has ambitions to be a department director may start to consider actually looking to gain some leadership experience outside of healthcare before coming back to the hospital.
Hospitals’ leadership development programs may need to consider adding an internship or “lending” program to large non-healthcare organizations.  UPS might be an example for exposing future leaders to effectively manage logistics, a key component of the “efficient” hospital of the future.  Hilton Hotels could be an example of how to provide the highest level of services while still being profitable.  A Registered Nurse who clearly would become a excellent healthcare leader could look to gain experience at Delta airlines to gain new skills on the movement of people through a process.
These same non-healthcare organizations will also be recruiting grounds for future healthcare leaders.  Companies have always recruited by first looking at leadership talent and then underlying knowledge of the service or product second.  Healthcare organizations are just now finding out that this same approach can lead to a more professional leadership group, which is clearly necessary as we move through the next decade of healthcare reform.

1 in 3 Medical Directors in Line for Bonus Pay

Posted on October 12, 2012 by Gallagher Integrated

The following article appeared in HealthLeaders Media, as written by Joe Cantlupe.  In it, we share insights on current trends in Medical Director pay, and provide data from our 2012 Medical Director Compensation Survey.

Adding a medical director to a hospital's staff is costing some healthcare institutions about $1 million each year, while creating a lucrative career path for the physicians who are hired in that role.

This year, nearly 35% of medical directors are getting bonuses, 8% more than last year, a compensation survey shows.
These medical directors aren't in the C-suite, but they are running service lines or filling  other administrative roles. For the most part, they are not also considered chief medical officers.
The findings were revealed in the 2012 Medical Director Compensation Survey published by Integrated Healthcare Strategies, a healthcare human resource and compensation consulting firm headquartered in Dallas. The survey included data on 179 organizations and more than 3,000 medical directors. For the most part, CMOs were excluded from the survey, which examined 94 medical director positions.
At least 60% of hospitals reported spending at least $500,000 in medical director compensation in 2011. Psychiatry, general, emergency medicine and family medicine were among the most common medical director positions, the survey showed.

Read the full article

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