The alternative to hospital employment is a professional services agreement (PSA). PSAs are not limited to provider-based facilities and are often used by physicians to contract with other entities to provide healthcare services. Although physicians will continue to be bound by many hospital policies and procedures and must report directly to hospital administration, they often prefer a PSA because it may avoid the perception of hospital employment and affords them greater autonomy. Such arrangements usually involve multiple physicians. When the hospital pays the practice, a single check is cut, but the physicians can control the manner in which the compensation is distributed. In addition, in the event of an issue between the hospital and the physician practice, a PSA is often easier to walk away from than hospital employment. Although the physician may not receive benefits afforded to a hospital employee (e.g., malpractice insurance, medical insurance and vacation time), he or she may retain certain superior benefits of the physician practice, such as a specifically designed pension plan.
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Explore This IssueSeptember 2015
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Impact on patients. The goals of a provider-based conversion are to improve the quality of healthcare for patients and reduce provider expenses by spreading costs over a larger number of facilities. But what does this mean for the patients? There are certain negative impacts on patients that must be considered when contemplating a provider-based conversion. First, the patients will receive two bills as a result of the conversion—one from the hospital and one from the physician. Also, the patient will be responsible for a greater percentage of those bills than when the physician practice operated independently.
Patients will also realize definite benefits from the conversion. Patients of provider-based facilities benefit from an integrated health system. Medical records are fully integrated, and all records of treatment from any area of the hospital are easily accessible by physicians. This means that physicians know what tests and medications were ordered and what the results were and can easily consult with each other to coordinate care. Studies show that integrated healthcare can lead to better patient outcomes, which improve patient satisfaction. Also, in a provider-based facility, physicians must treat all Medicare patients the same for billing purposes. This means that physicians cannot treat some Medicare patients as hospital outpatients and others as physician office patients, depending on which method will lead to the higher reimbursement to the physician. This uniform billing requirement forces physicians to bill Medicare patients equally, regardless of more lucrative reimbursement methods.