Global pricing for cardiac care: hard lessons for physicians and hospitals

The challenges associated with global contracting are becoming apparent as more experience is gained. Contracts held by an open medical staff hospital provide an ever-changing equation. High-cost physicians can join the staff and alter the cost and quality outcomes that the hospital and physicians may anticipate. Also, physicians want to have assurances on how fee distribution is determined. For these reasons, some physicians are developing private contracting vehicles that assure their future. Managed competition is encouraging these creative models to respond to the market demands of payers; in some markets, these vehicles are creating the demand. It is important for both physicians and hospitals to be open to new creative models. Hospitals that insist on controlling the situation decrease its potential success. Flexibility ensures the ability of both entities to respond to new market demands. From the payer perspective, global contracting represents predictability of price and dependability of service. It encourages an economic relationship of dependence between a hospital and its physicians. Utilization of service is no longer the payers' problem; instead, the provider is asking the questions and managing the situation to assure that both quality and economic efficiency outcomes are achieved.