Prac​tice Organizational Structure and Governance

When analyzing a practice: 

1. list the administrative positions and who fills each;
2. determine the process used in establishing leadership roles; and,
3. inquire as to the process by which each of these practice leaders interacts with the practice associates, seeks input, and gets feedback.

Ideally, practices should have the ability to select or evolve their leaders. In some situations, the directorship may come with an additional stipend or may be hired separately by a hospital or group. In this situation, there should be an identified means for administrative accountability. Lastly, each practice should have a predetermined schedule of meetings to address practice governance, personnel issues, conflict resolution, quality improvement, and future planning. Many practices may use such meetings for clinical purposes and find that important governance issues, especially conflict, only come to attention after serious consequences are likely or already have occurred. For that reason, designating specific time for non-clinical issues can be very productive. [See also “collegiality”]

Employee or shareholder

The first year in most private-based or physician group practices is arranged under an employment contract. This allows for both parties the opportunity to test the relationship and can establish timing for communication regarding the future. If all goes well, subsequent years may continue in an employed position, or equity (shareholder or partnership) status may be offered or required. If an employed status is maintained, the process for performance review and discussion of advancing compensation should be included in the employment contract. If the practice involves becoming a partner, understanding the process toward shareholder equity is important. In pediatric practices or multispecialty group practices with outpatient facilities, the practice may own real estate and/or equipment such that a new partner must buy in over time, and this may be costly. Buy-in is less common in neonatal groups, because many of the practices are based in hospitals and office space, practice equipment, and the like are leased rather than owned. Partnership may come all at once, or be gradually vested over a period of time. Often the vesting is in the form of gradual advance in compensation to a full partner’s share and gradual vesting into retirement programs; both work together as incentives to make the relationship work out. 

In academic practices, the requisites for continuing in the practice should be known from the beginning. In traditional academic practice, this may be tied to faculty rank, publications, or securing grant support and may or may not involve academic tenure. Academic practices often provide a start-up package for scholarly endeavors. Junior faculty members should be assured that sufficient time is protected in their schedules to allow them adequate opportunity to establish their basis for support within their area(s) of scholarship. In clinical track faculty positions, understanding the process of and criteria for academic advancement and/or retention in one’s position are key.

Personnel issues

Management of a group of adult workers goes well beyond schedule making, determining duty assignments, and granting time off. Practices should have established means to assure that interpersonal relationships among colleagues are valued. Initially introduced in the business world, the 360 degree process, a performance review with input from superiors, peers, other professionals,, and often with input from outside the practice, including parents, is now a part of many practices. Although the process can be anxiety provoking, knowing your strengths, weaknesses, and progress toward resolving past concerns can be very reassuring. These issues are discussed in more detail in the section on collegiality. 

Practice income

Few practices are about to divulge their “bottom line” to applicants for positions, but, evaluation of a practice’s potential should include some understanding of how the practice secures its revenue.

In the academic faculty world, individual compensation comes from the negotiated faculty salary. Coding for the services provided in the NICU and the requisite documentation are essential daily activities. Within pediatrics, neonatal care is among the most lucrative sources of income for the pediatric department and may contribute to subsidies for some of the less productive, yet necessary, pediatric subspecialties. Neonatal associates should not expect full access to the returns from their billing, although some income may come from the practice plan and some from the university. As mentioned earlier, academic salaries may include remuneration resulting from grants. Many faculties have a practice plan, with reimbursement schedules determined for members. Some places pay “extra” for night call or weekend coverage, allowing faculty members to barter for more money by trading call for free time (and less money) and vise versa.

In private or corporate practice, practice income comes from patient billings for fee-for-service (often at negotiated rates), contracts for services (directorships, etc), or from other professional activities (eg, legal reviews, books authored, inventions). Practices should be able to disclose their major sources of income and the method used to determine physician compensation.

Compensation and benefits should be carefully laid out and understood. In a salaried situation, base salary should be negotiated. The contract should address duration (term) and timing of discussions regarding renewal, advancement or amendment. Items relative to the benefit structure include insurances (health, liability, life, disability), medical and maternity/paternity leave, educational benefits (in time and money), vacation, and retirement. A relocation allowance is included in many contracts. If the employer is a professional corporation, discussion of salary advancement and of the criteria for and terms of advancement to shareholder status is important. The group may contribute to a retirement plan. Details of plan eligibility, vesting, and benefits should be discussed.

Individuals entering practice in multi-specialty groups should understand the salary structure applicable. Total salary may involve a portion derived from the overall group, a portion from the subset of the group, and a portion based on productivity. The benefits discussed above are relevant as well.

Physicians employed by hospitals should review carefully the salary and benefits plan of the institution. Due to the large and varied number of employees, the breadth of retirement benefits may be less than can be provided by private groups. On the other hand, group health and liability insurance coverage by larger group plans may have relatively lower premiums. Hospitals and other institutional employers generally have employee regulations applicable to employed physicians. These should be reviewed and understood in detail.

Insurance coverage

Liability insurance is essential. Most practices provide coverage for activities described in the contract. If activity outside the practice occurs (such as volunteering at a neighborhood clinic), determine if the practice-provided insurance covers the activity. The policy should be reviewed by a qualified insurance professional, and institutional-employed physicians should get legal advice as to whether individual coverage is needed beyond that provided by the employer.

Coding

Clinical care is charged using the CPT Coding process. Definitions of specific clinical activities have been written and relative value units (RVUs) assigned to each. Practice groups need to evaluate their assignment of codes and their associated charges to establish conformity with current definitions. This need is part of the overall topic of compliance, but realization that even a pattern of unwitting coding errors may be viewed in hindsight as fraud requires heightened attention to compliance in the areas of coding and documentation. Each practice’s compliance program should include a periodic review of the application of specific codes and their associated documentation. The Section on Perinatal Pediatrics has a Coding Trainers Committee which presents regular forums on the use of codes in the nursery. The text, Quick Reference Guide to Neonatal Coding and Documentation, 1st Edition (2010), provides updated guidance. Integral to coding is documentation. The Health Care Financing Administration has emphasized the need for the services to have been directly provided by or directly supervised by the physician whose name is used in billing (see “corporate compliance” below), and that the documentation in the record verify the physician’s role. 

Corporate compliance

A compliance program is a set of procedures within a practice to ensure adherence to laws and regulations associated with either federal or privately insured health care programs and thereby to prevent or reduce improper conduct. Although the size (e.g., number of employees) and type of practice or organization will determine in large part the extent and formality of its compliance program, even small physician practices are expected to implement one. Compliance programs establish and communicate standards of conduct, provide channels of communication to inform employees and to answer questions, enforce standards through the consistent application of disciplinary measures, and require ongoing auditing and monitoring to test compliance and to ensure that identified errors are corrected and future similar occurrences are prevented.

The rapid rise in healthcare costs in the US during the past two decades has prompted a significant increase in government scrutiny. The result of the government’s audit findings created a dramatic change in public opinion regarding the level of fraud, abuse and waste in the healthcare system. This led to the passage of legislation that not only created a trust fund for investigations and expanded the government’s enforcement and prosecutorial powers, but also markedly increased penalties for non-compliance. For instance, a claim deemed to be “fraudulent” under the False Claims Act (31-U.S.C. 3729) requires repayment of three times the amount of the overpayment PLUS a mandatory $5,000 to $10,000 fine PER CLAIM. Since each individual patient charge is a claim under the definitions used in the statute, penalties can become enormous. On the other hand, “erroneous” claims (i.e., those resulting from innocent errors) require only the return of the amount of the overpayment. Fraudulent claims result from three circumstances: actual knowledge that the claim is false; reckless disregard of the truth or falsity of the claim; or, deliberate ignorance of the truth or falsity of the information. In order to mitigate the potential and corresponding penalties for non-compliance, voluntary compliance programs have not only become commonplace, but a necessity in the healthcare world. 

The voluntary compliance programs recommended for healthcare providers are designed to detect and/or prevent illegal activity through self-policing. A detailed description of the “Draft Compliance Program Guidance for Individual and Small Group Practices” prepared by the Office of the Inspector General can be obtained at the internet site http://oig.hhs.gov/fraud/complianceguidance.asp. Providers meeting the seven requirements of an effective compliance program of the U.S. Sentencing Guidelines demonstrate their commitment to creating an environment where claims are accurate, fraudulent behavior does not occur, improper practices are prevented, detected or rectified, wrongdoing is reduced, administrative liability is mitigated, and the mental state of reckless disregard is negated. Although all compliance programs need not be alike and the degree to which each element needs to be addressed varies among practices, compliance programs should address seven basic elements. 

• Establishing written standards of conduct, policies and procedures.
• Designating a compliance officer or contact.
• Providing mandatory training and education.
• Creating and publishing accessible lines of communication.
• Auditing and monitoring compliance with guidelines.
• Enforcing through clear disciplinary guidelines.
• Responding to violations and taking corrective action.

An effective program also can significantly reduce the potential for qui tam (whistleblower) suits in which a third party initiates a false claim suit against the practice on behalf of the government (alleging that fraudulent claims have been submitted). Such allegations often net the claimant up to a 30% share of the settlement or judgment against the offender.

Although neonatal practitioners are not expected to be experts in law or regulation, they need to have a good working knowledge of relevant legal and regulatory requirements that relate directly to their duties and responsibilities. Regulations often are complex, ambiguous and sometimes silent on key issues. Whenever in doubt about a legal or administrative issue, it is keenly important for the practice or practitioner to consult with an expert before proceeding. Further, it is important that compliance deals with all laws and regulations (not just submitting claims). A list of areas of law and/or regulation which the practitioner should understand includes, but is not limited to, the following: 

• Billing and coding.
• Patients’ rights.
• Healthcare anti-fraud and abuse laws.
• Medicare/Medicaid anti-kickback statutes (e.g., illegal inducements for referrals).
• Conflicts of interest.
• Harassment in the workplace.
• Environmental protection laws (e.g., disposal of hazardous materials and medical waste).
• Health and safety programs and OSHA regulations (e.g., standard/universal precautions).
• Gifts, gratuities and other business courtesies.
• Credentialing requirements, including sanction screening.
• Insider information and securities laws.
• Patents, copyrights and intellectual property laws.
• Record retention requirements.
• Professional standards of care.
• Stark legislation (e.g., physician anti-referral statutes).
• Privacy act.

Each medical practice exists in this complex area of business, law and society. Members of the practice should be aware of and involved in required activities to assure compliance. This may be much more than you ever wanted to know, but be assured it is less than you wish you’d have known if your practice is accused of violation(s)!​

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