The solution turned out to be a business model called co-management. Basically, a hospital hires a specialty practice to run their department or service line, gaining the focused investment of the entire practice in the hospital’s success. In return, the practice gains an influential relationship with a hospital without losing its independence, just as practice-crippling bundling reimbursements loom on the healthcare horizon.
BHC formed their agreement with St. Vincent’s East, and it started February 1. But their co-management model has a twist. They hired an out-of-state cardiovascular practice with ten years of co-management experience to oversee the agreement process and manage BHC.
Cardiovascular Institute of the South (CIS), based in Houma, Louisiana, currently has agreements of their own in place with ten hospitals from Lafayette to Baton Rouge. “We figured out long ago that to be successful in a smaller community, you had to partner with a hospital,” says David Konur, CEO of CIS.
Konur says co-management is less expensive for hospitals than employing physicians, and physicians do better work, because they remain independent versus feeling constrained by an institutional employer. “But when you enter into a co-management agreement, there has to be a philosophic change in your practice mindset to working toward everyone’s best interests, including the hospital’s,” he says.
For the physicians, co-management avoids the employment danger of diminishing cardiology-based reimbursements to hospitals. Currently, hospitals get reimbursed twice as much for the same diagnostic test performed in the cardiovascular physician’s office, because they’re categorized as outpatient procedures rather than office visits. “This is what has funded all of these cardiology practice acquisitions,” Konur says. “But Medicare is wising up and getting ready to reduce reimbursements. And then guess what happens to those hired physicians?”
Sester says CIS guided them through a lot of internal changes to better fit the new business model. “One is that we created a six-member team of nurses and NP’s that always stays at the hospital to help with rounds and consults as they come in,” he says.
The new attention on the hospital’s success also means BHC now schedules two physicians to be at St. Vincent’s East every weekday. “Then if something happens, there’s a cardiologist immediately available,” Sester says. That’s changed their whole clinic schedule.
Before co-management, the cardiologists split their weeks and even days between clinic, hospital and cath lab. “Now we have consistency in place,” Sester says. “They spend a whole week in clinic taking care of patients. It’s like having our own internal hospitalist taking care of our patients, but it’s our own physicians.”
As a result, BHC cardiologists have regained more balance in their lives. “They’re not yo-yoing their schedules. So they have a better quality of life,” Sester says. “Now when a doctor is done at clinic, he’s done. He doesn’t have to go to the hospital, because our other cardiologists have handled that.”
“What changes immediately for a practice with a co-management agreement is having a responsibility for the hospital,” Konur says. For instance, hospital cath labs tend to schedule patients at the physician’s convenience. But in a co-management agreement, the physicians reap financial rewards when the hospital meets budget or patient-care benchmarks. “So when the hospital explains that scheduling after three p.m. costs a ton of overtime, you work with them,” he says.
“Without the co-management agreement, those are dollars that never would have happened for the cardiologist or the hospital, because physicians control so much of what happens in the treatment of patients at a hospital,” Konur says.
“The relationship with the hospital is different now. We’ve got a dog in the fight,” Sester says. BHC cardiologists are more amenable to hospital suggestions, like marking things differently in charts. “They’re part of that culture now, rather than just using the hospital’s facilities.”
“In a co-management agreement, you have to focus on what’s in the best interest of the patient,” Konur says. “Then we (the practice) and we (the hospital) have the best chance of being individually and collectively successful — and all to the benefit of the patient.”
Practices throughout Alabama have contacted BHC about their co-management business model with St. Vincent’s East. “We tell them, don’t sell yet. Look at all the options,” he says. “That’s the message — not every practice has to sell. This is a great option. It aligns you with a hospital and allows you to maintain independence.”
