3 Phases for Developing Co-Management Arrangements
Co-management arrangements have grown in popularity in recent years due to hospitals' desire to more closely align with physicians. "[Co-management is] growing as a method of physician integration in hospitals," said Dr. Colyvas, explaining that it is a popular option for independent physicians that want to align with the hospital without being employed.
Co-management arrangements are attractive because they can improve quality and reduce costs, and there are little start-up costs involved, he said. Typically, co-management arrangements have fixed and incentive payments (generally around 10 percent of the total contract, according to Dr. Colyvas), and contracts most often last one to three years.
Dr. Colyvas then outlined the basic steps required to create a co-management arrangement, breaking the steps into three phases.
During phase 1, the physicians form a limited liability corporation with all physicians as equal members. The start-up costs are usually low, averaging $2,000 to $4,000 per physician, said Dr. Colyvas.
During phase 2, the management LLC forms its board and sets its board meeting schedule. The group should also set up its operational "dashboard," as Dr. Colyvas calls it, which serves as the group's method for managing physicians time sheets, performance against benchmarks and physician compensation.
This phase represents a mature co-management arrangement. During this phase, the physician group and the hospital should renegotiate their contract and adjust performance improvement benchmarks as necessary.
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