• Recruiting and Retaining Cardiologists -- Five Different Models
  • May 17, 2007 | Author: Scott Becker
  • Law Firms: McGuireWoods LLP - Chicago Office ; McGuireWoods LLP - Richmond Office
  • Increasingly, large and small hospital systems are struggling to retain cardiologists. Cardiologists who are not part of a hospital-employed or hospital-owned practice can earn enough money through providing professional services and ancillary services in their own practices that it is becoming increasingly difficult for hospital-employed or owned practices to effectively pay cardiologists and remain competitive in recruiting and retaining cardiologists. This article examines five different models for retaining cardiologists.

    1. Group Practice with Ancillaries. A hospital can own a group practice and, if properly structured, can include ancillary services, such as diagnostic imaging, in the group practice. The group practice, like any group practice must meet the in-office ancillary services exception to the Stark Act [1] pursuant to which group practices can provide ancillary services. In short, to satisfy the exception, the group practice must qualify as a group practice under the Stark Act and must also meet a billing, a location, and a supervision test.[2]

    2. Provide Fairly High Compensation. Another possible means for hospitals to effectively compete for or retain cardiologists is to compensate the cardiologists based on the provision of professional services. Here, the compensation may take into account professional services revenues as well as other activities that the cardiologists perform on behalf of the hospital. This may include call coverage and other types of responsibilities, such as serving indigent patients and providing charity and Medicaid care. For example, the Boston Globe recently reported that Massachusetts hospitals have begun paying surgeons and other medical specialists up to $1,000 for “on call” emergency room shifts.[3] Sullivan, Cotter and Associates released its second annual survey of physician on-call payment rates and practice. A total of 109 healthcare organizations participated and 78% of those participants reported providing on call pay to at least some of the physicians who are required to take call.[4]

    The compensation for call coverage must still be fair market value in order to comply with federal and state healthcare regulations and hospitals should obtain a valuation of such payments to ensure they are within the fair market value range. However, compensating cardiologists within the range of fair market value, but on the higher end of such range, can make it possible to compensate physicians at levels that are almost competitive with groups outside of the hospital. Here, this can sometimes be achieved even if the group does not retain its own ancillary revenues.

    3. Joint Venture Contract with a Large Group. While it has become increasingly common for hospitals to enter into joint ventures with physician groups for technical services, in a few situations, smaller hospitals that may not want to take the full risk of bringing two to three cardiologists on staff full time or who are not able to provide sufficient cardiology services with physicians on staff have joint ventured with a large out of town group to provide professional cardiology services. In such arrangements, the hospital and the practice share the professional services fee and profits and losses related to the practice.

    4. Professional Services Contract with Large Group. Here, as compared to a joint venture for the professional services, a hospital simply pays a large group a certain amount per year for cardiology coverage, on the professional services side. For example, the hospital may pay the cardiology group $400,000 a year. Then, the hospital retains the professional services fees and all the collections related to the cardiologist and is at risk for the $400,000 per year that is being paid to the cardiology group.

    5. Joint Ventures for Ancillary Services. Hospitals are still pursuing a number of joint ventures for certain types of cardiology services, including whole hospital joint ventures (i.e., the traditional MedCath model), cardiac catheter joint ventures, and CT nuclear camera joint ventures. For example, Baylor Health Care System partnered with physicians and opened a full service heart hospital in 2002. Texas Heart Hospital of the Southwest is another a partnership between Baylor and 86 cardiovascular physicians that recently opened. Because the services provided by the joint venture arrangements are Stark services, the means by which one can joint venture these is heavily restricted. However, there are certain joint venture models that seem to have some longevity.


    1. 42 U.S.C. § 1395nn. The Stark Act prohibits, with certain exceptions, a physician who has a financial relationship with an entity from referring patients to that entity for the provision of "designated health services" if payment for those services may be made by Medicare or Medicaid. Radiology and imaging services are designated health services so in order to provide such services the group practice needs to satisfy an exception as noted above.

    2. See 42 CFR § 411.355(b). In-office ancillary services as those that are "furnished (i) personally by the referring physician, personally by a physician who is a member of the same group practice as the referring physician, or personally by individuals who are directly supervised by the physician or another physician in the group practice, and (ii)(I) in a building in which the referring physician (or another physician who is a member of the same group practice) furnishes physicians' services unrelated to the furnishing of designated health services, or (II) in the case of a referring physician who is a member of a group practice, in another building which is used by the group practice for the centralized provision of the group's designated health services (other than clinical laboratory services),...In addition, under (b)(2)(B), the services must be billed by the physician performing or supervising the services or the group practice of which such physician is a member under a billing number assigned to the group practice, or by an entity that is wholly owned by the physician or the group practice."

    3. Boston Globe, “In shift, doctors ‘on call’ get pay,” April 15, 2007.

    4. Sullivan, Cotter and Associates, Inc., 2006 Physician On-Call Pay Survey Report, “Press Release.”