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Why Standardization Matters in Provider Contracting and Compensation Processes

Managing provider relationships is complicated. From initial contract negotiations to ongoing compensation, healthcare organizations must wrangle an array of workflows, data, and regulations that can make everything slow and unwieldy. These roadblocks can make new recruits less inclined to sign contracts and existing providers more likely to resign – while simultaneously placing the organization at increased risk of legal or regulatory vulnerabilities.  

Standardized, streamlined processes will address these challenges. Managing provider relationships in a clear, repeatable, reliable, and scalable way requires technology that simplifies the steps for all stakeholders. The right system will pay dividends in lower turnover, greater efficiency, reduced variation, and decreased risk (financially and operationally).  

Let’s take a closer look at what’s possible when you achieve smooth, standardized processes across provider contracting and compensation: 

 Improved provider satisfaction and retention  

One of the greatest struggles facing healthcare organizations today is provider retention. A 2022 study from the Mayo Clinic conservatively estimates that 25% of physicians will likely leave their current employer in the next 24 months. Such turnover can range from $500,000 to more than $1 million per provider, so there is an enormous financial incentive to keep your providers happy and on board. “Many specialties have essentially become revolving doors,” says Alex Gindin, a Senior Consultant for Heisenberg II at Hallmark Health Care Solutions. “Limiting that revolving door starts with improving provider engagement.”  

Gindin says when individual providers do not have consistently good experiences with the organization – whether the problem is in contract execution, compensation, or both – their dissatisfaction will erode the relationship. Similarly, when the organization inadvertently treats providers differentially, it can result in resentment and grievances.  

These problems are especially acute when organizations handle contracting and/or compensation at a regional or departmental level. Exceptions get made in some instances but not in others. Onboarding happens one way in one location and another way elsewhere. This variation can breed physician abrasion and, ultimately, attrition. 

 Established process management and standardized workflows eliminate such inconsistencies. “Standardization itself can become a great selling point for a physician to join or stay at a healthcare organization, if they know there’s a system in place that treats them fairly and works well,” says Gindin. “That’s what fosters trust and loyalty.” 

 Streamlined processes that work faster  

To get providers to sign on the dotted line, getting contracts in front of them as soon as possible is crucial. Then, healthcare organizations must execute provider pay accurately, transparently, and promptly to get them to stay. Both functions become much more difficult as organizations grow and add more providers. 

 Unwieldy, inconsistent, and manual processes add to the difficulty and introduce delays, risk of error, and a less-than-ideal experience for both the provider and the administrator. After all, why would a provider sign with an organization whose contracting process was disjointed and full of delays? How can administrators be as effective as possible when dealing with dozens of contracts or compensation plans but no formal processes to govern their efforts? 

 Standardization – especially if enforced through a technology platform that automates workflows – can improve processes by streamlining and executing these functions much faster. For example, one Idaho-based medical group that implemented Heisenberg II Provider Compensation to help simplify and standardize compensation reaped as much as 30% time savings just from reduced data entry.   

Improving compliance and reducing legal risk  

Even with healthy provider relationships, the organization must still be rigorous in maintaining regulatory compliance. “Healthcare is one of the most highly regulated industries in the world right now,” says Gindin. “It’s incredibly important that the systems in place are accurate, with adequate checks and balances guarding against non-compliance.” 

 For instance, compliance with the Stark Law – which requires that physicians receive only fair market value for services delivered – can be burdensome to an administrator, especially if handled manually. According to one review of Stark Law compliance in the healthcare sector, CMS has enacted nearly three dozen exemptions, “each of which has its own set of complex rules and requirements with which providers must comply if they wish to be protected.”   

Here again, technology-enabled standardization – a platform that automates enforcement of workflows and rules – is a game-changer when it comes to compliance. For example, when Heisenberg II encounters exceptions that signal potential non-compliance in contract terms or compensation, it can outright disallow them and/or generate alerts to appropriate administrators to investigate and resolve. As a result, the organization can be confident that every contract and transaction is executed accurately with as little legal risk as possible.  

How do you get started with standardization? 

 “The first step is always mapping and assessing the existing process and understanding who’s responsible for each step,” says Gindin. If a contract is taking longer than it should to be executed, mapping the process will reveal the causes of the delay. 

 The second step is finding the right technology solution. Standardization is virtually impossible if processes rely on manual effort and multiple third-party systems like Outlook and Excel-based reports. When assessing a platform, ensure the solution’s functionality covers all essential functions. For example, splitting up process management between contracts and compensation will instantly increase variability and complexity. 

 With a software platform that can standardize processes on both sides, like the combined power of Heisenberg II Contract Management and Heisenberg II Physician Compensation, your organization can create an intelligent, integrated process that benefits everyone. Providers will enjoy greater job satisfaction due to an improved experience, while patients will benefit from satisfied physicians who provide better quality work. And ultimately, your organization will reap the benefits of efficiency gains, reduced risks, and lower overall costs.