Medical Staff

When Time Is Money

Medical Staff Affairs Monthly, May 15, 2006

Dear Colleague,

Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that! - Lewis Carroll , "Through the Looking Glass"

In this decade, more than in those past, time is money for physicians. Like Alice in Wonderland- most doctors are working harder than ever to keep their practices financially afloat.  The impact on hospitals, is a growing realization that physician time that was freely given in the past will not be so forthcoming in the future. Hospitals increasingly find that they must pay something for "quality time" from physicians if they want them to serve as medical staff officers, sit on committees, take emergency department call, participate in peer review, or engage in other time consuming activities.
This year the government has been aggressively scrutinizing above or below market value payments by hospitals to physicians for services of all kinds. According to the OIG, in such circumstances "an inference arises that the remuneration may be in exchange for generating business". Payments for physicians of any kind must be carefully justified and the fair market value of the service ascertained. How do you put a fair market value on serving as a medical staff officer?  What's the value of the effort made to participate on the peer review committee?  One method is to see what other hospitals are paying for similar work. A simple survey of ten other similarly situated hospitals can provide evidence that the stipend given for such work is reasonable.

Doctors are also interested in capturing some of the revenue stream previously commanded solely by hospitals but created by physician referrals. Thus we see the proliferation of physician owned ambulatory diagnostic centers, surgi-centers, and niche or boutique (single-specialty) hospitals. Doctors sometimes complain that hospitals are not willing to share their profit stream with the physicians who are critical to the institution's success. They push for lucrative joint ventures and gainsharing arrangements. In this context, physicians do not always understand the limits on hospital payments to doctors. Hospitals should educate their medical staffs on the fact that it is generally illegal for hospitals to pay money to doctors unless such payments fit into very narrow exceptions provided for in the law. A presentation on these limitations at a medical staff meeting can go a long way to tempering demands from doctors that may appear reasonable, but are nevertheless illegal. Such education is also a proactive tactic to maintain good relationships between hospitals and physicians.

In this light, a growing number of hospital boards are working to establish up front the conditions under which they would consider joint ventures with physicians and the kinds of joint ventures they will engage in. This is sometimes done in conjunction with the creation of 'conflict of interest' policies which make clear the hospital's position regarding medical staff members who compete with the institution. When such policies are created with broad participation and are communicated adequately, they provide all parties notice of the hospital's stance on this issue. They also make clear to physicians the avenues that are open to them for collaboration with the hospital.  When such collaboration occurs, all parties win something and costly and destructive battles are avoided. When physicians go their own way and compete aggressively with hospitals, medical staff communities can be split, resources can be wasted in duplicative services and in expensive lawsuits, and rancor and ill-will frequently haunt the landscape going forward.

Many years ago, W. Edwards Deming, the guru of quality service commented about organizations:
"What we need to do is learn to work in the system, by which I mean that everybody, every team, every platform, every division, every component is there not for individual competitive profit or recognition, but for contribution to the system as a whole on a win-win basis."

Given the diverse interests in medicine today it may be too much to hope that we will see this kind of harmony unfold in our hospital communities in the decades ahead. But if there is one place we need it, it is in the medical activities that comprise the delivery of health care.

Best Regards,

Todd Sagin, MD, JD
Vice President and Medical Director
The Greeley Company

Most Popular

Related Articles