Co-management agreements have risks. Beware.

Co-management agreements are growing in popularity as health care shifts to outcomes-based reimbursement models.  Physicians and hospitals contract with one another in quality-oriented pay-for-performance arrangements, in which physicians oversee and manage service lines (most commonly orthopedics, oncology, and cardiology).

The overarching goal of these agreements is quality improvement, which benefits all parties involved — especially the patient.  The hospital benefits financially in part from reducing costs and physicians receive a base fee and/or incentive bonuses for accomplishing quality measures and benchmarks.

But is this as easy as it sounds?  Is quality improvement something that just happens once legal arrangements are put into place?

The technicalities of co-management agreement execution are complex in themselves (considering Stark, fair-market-value and other legal considerations that go into these agreements).  And yet the real difficulty lies in implementing the processes that allow clinical improvements to happen.

For hospitals and physician practices that have experience in successfully running quality improvement teams, co-management agreements are no-brainers that help bridge the chasm between hospital administration and physicians.  These agreements encourage true integration between the C-suite and the doctors in day-to-day operations.

On the other hand, hospitals and physicians looking for easy cost savings need to be practical and realistic.  Sustainable quality improvement and waste reduction do not happen without intentional process improvement practices.  The foundation for these processes should be built before the ink dries on the co-management contract.

Key pieces that should be in place in order to execute a successful co-management relationship include an experienced quality improvement steering team, an operational plan (project management skills are extremely helpful here) and a culture of accountability.  The steering team (made of administrators and physicians) is responsible for educating and relaying a clear vision to the front-line clinical staff.  The operational plan keeps the improvement projects on track, and the culture of accountability keeps the overall mission on track.  If no one has accountability for the processes required for improvement, initiatives are likely to fail.

A final vital piece of the puzzle is actionable data.  Many co-management agreements base their quality measures and benchmarks on those monitored by CMS and other agencies, which makes sense.  The challenge is that these data points alone are often too superficial to show whether changes being made to clinical practice are actually improvements.  Furthermore, the lag of data abstracted to what is actually happening on the front lines is a barrier to rapid cycle improvement.  Hospitals and physician groups need access to fast, detailed and reliable data to drive meaningful clinical improvements.

How easy does it sound now?  Don’t get trapped in an arrangement set up for financial gain rather than true quality improvement.

Alexandra S. Brown is associate director, Healthcare Delivery Institute, HORNE LLP.

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