Exclusive Contracts

Exclusive Anesthesia Contracts Under Attack

January 27, 2010

Fear of rising healthcare costs is being used to attack exclusive anesthesia agreements.  Similar arguments can be used to attack other service department agreements:  exclusive radiology agreements, exclusive pathology agreements and exclusive emergency medicine agreements.

The argument goes as follows:  Hospital exclusive contracts are anticompetitive and therefore allow one group to control pricing.  Hospital coverage stipends paid to groups under exclusive anesthesia agreements, exclusive radiology agreements, exclusive pathology agreements and exclusive emergency medicine agreements contribute to the high cost of healthcare.

Of course, this ignores the fact that exclusive contracts with provider groups are necessary to obtain 24/7/365 coverage, that contracts are required to provide care for all patients on a face-sheet neutral basis, and that a market for services exists such that unless a coverage stipend (which is within FMV bounds) is received, the group will not be able to recruit and retain qualified providers.  It also ignores that payment for physician services is almost always dictated by the payor, not the group, and that hospital stipend payments have little to no impact on the scope of reimbursement received by the facility for the technical components of anesthesia, radiology, pathology and emergency medicine services.

But playing to fears makes for good sound bites.  And, hospital administrators might attempt to take advantage of them to gain leverage in their negotiations with you.  Good groups will be prepared to address them.   Strategic groups will be proactively engaged in countering these mistaken assumptions well before the face to face stage of negotiations begin — this takes time and effort.  (See Hospital Based Groups Must Get Aggressive, It’s All Related, Group Message Requires Consistent Language, and many of the articles here.)

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

www.weisspc.com

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