Physician-hospital alignment models: An evolving lexicon

Methods of both traditional and contemporary affiliation pave the way for clinical integration 

A member recently submitted the following request to the MGMA Knowledge Center:

Q: What types of affiliation agreements exist and how do they work? MGMA knowledge center experts provided the following industry resources about alignment options to provide perspective on the issue.

Practices considering aligning with a hospital system often ask the MGMA Knowledge Center staff for resources on basic affiliation agreements, physician employment arrangements, and how they work. Although myriad traditional alignment and structural models exist, even newer forms are emerging in the new era of value-based reimbursement. 

MGMA member and author Max Reiboldt presents “newer options for contemporary alignment” on the path to successful integration. In the new book, Physician Alignment, (Greenbranch, 2015), he outlines these evolving models:

• Accountable care organization (ACO): An interdependent group of providers that delivers quality and cost-effective care for Medicare and other beneficiaries. 
• Clinically integrated network (CIN): A group of hospitals and providers who collaborate to improve the quality and efficiency of care for a defined patient population. The CIN typically deploys integrated information technology and data across multiple entities to achieve care quality outcomes.
• Patient-centered medical home (PCMH): A form of coordinated care achieved through designated primary care physicians and clinical teams in a focused ambulatory care environment; it can be part of an ACO/CIN model.
• Quality collaborative (QC): A consortium of providers who share information, research and methodologies for improving quality outcomes for a defined population.
• Reiboldt points out that traditional alignment models are the precursor to clinical integration. Many of these familiar, traditional models are defined below, ranging from limited to full integration. (Note: these descriptions are not all-inclusive; they are derived from several industry sources and variations exist depending on individual situations): 
• Call coverage: Payment to physicians for unassigned hospital emergency department care. 
• Clinical co-management/service line: An arrangement between a hospital and practice or other management entity for developing, managing and rewarding efficiency and quality outcomes of a particular hospital service line.
• Equity model (or captive group model): An arrangement in which a practice affiliates directly with a hospital. The group might be able to use its own compensation models and keep ancillary service revenues in the physician compensation formula. 
• Foundation model: An arrangement in which a not-for-profit hospital acquires a practice’s tangible and intangible assets; physicians then form a medical group that contracts with the foundation on an exclusive basis for services. 
• Independent practice association (IPA): A network of physician practices who form an entity to contract with health maintenance organizations (HMOs) and other managed care plans. 
• Joint venture: A contractual arrangement between two or more parties to cooperate in providing services or involving the creation of a new legal entity by the parties to provide such services.
• Management services organization (MSO): An organization owned by a hospital, physician group or other group of investors that provides management and/or administrative services to individual physicians or groups of practices; it is often used as a starting point for forming a relationship between hospitals, physician practices and/or medical group(s). 
• Medical directorship: An aspect of governance in which physician leaders are directly involved in management and operations of hospital services/service lines.
• Physician employment or staff model: An arrangement in which physicians are employed to provide medical services; and in which hospitals often acquire a practice’s tangible assets. 
• Physician hospital organization (PHO): An organization formed by a contractual relationship between a hospital and certain physicians or attending medical staff. The PHO’s full-service provider arrangement is advantageous when contracting with managed care plans and employers. 
• Physician recruitment: An incubation model in which a hospital supports the recruitment of a physician through income guarantees, tuition payments, provider plan development, etc. 
• Professional services agreement (PSA): A hospital purchases a practice’s ancillaries (technical component services) and compensates the practice’s physicians for professional services at the practice.

In the MGMA article, Structural changes: Build a healthcare delivery model that works for your practice, Mark Halley, MD, discusses structural changes in today’s environment, suggesting that health professionals consider operational governance with a shared vision toward sustainable integration. For more resources or information on physician-hospital alignment or governance models, contact the MGMA Knowledge Center.

Sources:

Coker Group, and HCPro (Firm). The Healthcare Executive’s Guide to Physician-Hospital Alignment. 2013. 

Goldman, C. Mitchell and Jones, Matthew C. “A Series of Unfortunate Events: Is This the End of the Physician/Hospital Joint Venture?" Web. 30 Mar. 2016.

Kongstvedt, Peter R. Essentials of Managed Health Care. Jones & Bartlett, 2013. 

Mayzell, George, and William R Breen. Physician Alignment: Constructing Viable Roadmaps for the Future. Boca Raton: Taylor & Francis, 2013. 

Reiboldt, Max, and CPA. Physician Alignment: Ensuring Success with Negotiations, Payment Systems, and Education of Stakeholders. Greenbranch Publishing, 2015. 

Todd, Maria K. Physician Integration & Alignment: IPA, PHO, ACOs and beyond. Boca Raton: Taylor & Francis, 2013.