12 Physician Alignment Contract Deal Types



Every healthcare executive should have a repertoire of doctor deals to draw upon. Contracts can be especially effective alignment devices because they can be deployed much faster and cheaper than acquisitions or joint venture deals.

1) Call coverage and medical directorships – The classic physician contracts are on-call arrangements for 24/7 emergency department call coverage, and medical directorships, to provide professional medical leadership and oversight of specific service lines.  Physician availability and expertise will always be needed.

2) Clinical management (co-management) – The next evolution of medical directorships involves pay-for-performances arrangements putting at least a third of compensation at-risk for achieving pre-defined qualitative goals.  Cardiology, orthopedic programs, and other surgical programs are commonly managed by physicians under these arrangements.

3) MSO (managed service organizations) – MSOs provide business services to physician practices including management (finance, accounting), billing, and outsourced human resources.

Young african-american doctor making notes at the medical meeting

4) Stipends, subsidies, & collection guarantees – Hospital-based physician specialists are often subsidized to provide continuous medical coverage for the emergency department, neonatology, anesthesiology, radiology, hospitalist coverage, pediatrics, and others. Onsite requirements and payor mix can contribute to the need for financial support.

5) 85% EMR Donations – In late 2013, the EMR donation Stark exception was renewed for several more years. Basically, hospital and health systems can subsidize up to 85% of ongoing EMR costs for independent physician practices without violating anti-kickback laws. The ASP model is common, whereby all systems are provided through the internet, with no servers in the physician practices.

6) Development Services – New program development generally always benefits from ample physician involvement. Buying equipment or building a surgery suite, imaging center, ED, ICU, or inpatient floor without physician input in design is a recipe for disaster.

7) Interpretation – It is pretty common to bill globally for imaging services and then negotiation an interpretive “read” fee with radiologists. Additionally, globally billed echocardiograms may be read by cardiologists and EKGs may be read by primary care physicians for negotiated fees.

8) Staff leasing – All sorts of situations may arise whereby one provider provides supplemental support staff to the other for a pre-arranged fee. Facility management, preventive equipment maintenance, information systems help desk support, and security are commonly provided to physician practices and ancillary businesses. More sophisticated arrangements may involve surgeons bringing their own credentialed operating room staff (scrub techs or first surgical assistants) on their surgery days.


9) Equipment leasing – Many urologists are owners in mobile lithotripter companies and some hospitals have stretched their capital budget by leasing MRIs and CTs from their radiology groups.

10) Real estate – Medical office building (MOB) space is not a designated health service under the Stark Laws. Monetizing MOBs by selling them to REITS and other real estate investment companies is often accompanied by physician investment.

11) PHOs (physician hospital organizations) & IPAs (independent practice associations) -PHOs, owned by hospitals, perform collective managed care contracting on behalf of the hospital owner and contracted physicians. IPAs, owned by physicians, perform collective managed care contracting on behalf of independent physician practice owners, and contracted hospitals.

12) PSAs (professional service arrangements) – The PSA is typically a guaranteed payment  to a physician on a service-unit basis (i.e., wRVU, visit, surgery). PSAs may be used as an alternative to time-based coverage arrangements. For example, a hospital may elect to bill insurance directly for screenings and treatment of retinopathy of prematurity (ROP) in premature infants covered by Medicaid and contract with pediatric ophthalmologists to provide the services on demand.