Contract Management Groups

Emergency Medicine Contract Management Groups
By Shahram Lotfipour, MD, Henry Ford Hospital, Detroit, MI

The corporate practice of Emergency Medicine (EM) is still a concept not well understood by many EM residents. Contract Management Groups (CMGs) also called Physician Practice Management Organizations (PPMOs), began out of a business need. This practice model was created because of the growing demand for around-the-clock emergency department (ED) coverage, thus filling staffing gaps for hospitals. Though CMGs saw their start in physician staffing, they rapidly expanded to include coding and billing services. Some estimate more than 50% of the nation's EDs are under the management of CMGs.

Many CMGs have shareholders and are publicly traded companies or corporations with an eye on their bottom-line. Some argue that this "corporatization" of EM is a natural, market-driven process. Others have questioned whether these large corporations really serve the best interest of emergency physicians and their patients. Though the CMGs provide the convenience of billing, collecting, and paying taxes, in some cases physicians have lost a considerable amount of autonomy.

Central to much of the debate in EM today is just how far professional societies can or should go to promote one practice model versus another. As a resident it is important to grasp the issues at the core of this matter. The debate can be most simply framed in a question: what kind of future do you want? Do you want to work for someone else, or yourself? The former choice has advantages in that the corporation/owner runs the business and your main role is to see patients. The latter choice, as an owner of your practice, entails the headaches of running your own business but ensures that you control your work situation and the flow of your fees.


When evaluating a job consider these points:

Open books - It is the right of every physician, independent contractor, or employee, as mandated by the Health Care Financing Administration (HCFA), to see every dollar billed in his/her name and the responsibility of each physician to be accountable for those bills. A physician can be held criminally responsible for any inappropriate professional fees charged on their behalf.

Corporate profits - Estimate the "fair market value" for the services the CMG provides. Take into account the business risk the CMG took to start up and the other services provided (billing, administrative responsibilities, etc). This can ideally happen if open books are in place and practiced.

Board Certification - With the maturation of EM as a specialty, American Board of Emergency Medicine (ABEM) or American Osteopathic Board of Emergency Medicine (AOBEM) board certification has become the gold standard, to ensure adequate knowledge and skills for patient care beyond state licensure. Calculate the percentage of physicians in the group who are EM ABEM/AOBEM board eligible or certified and use this as a tool to identify the mix of physicians the group seeks to employ.

Ownership - Ask for an equal vote on operational issues. In addition, some physicians seek to become a partner in the group with equal profit sharing, decision-making and a share of potential future risk in the fate of the company. This is in sharp contrast to the employee status of many physicians today.

Termination without cause - This clause both undermines the physician and the future stability of the group. The American Medical Association (AMA), Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and many state laws support fair hearing policies and equal due process as any other specialties in the hospital in the event of termination of medical staff privileges.

Non-competition clauses - This clause can limit competitive business situations and severely limits physician geographic flexibility. Many states have abolished restrictive covenants such as this. It would be to the advantage of the community and the patients to keep appropriately trained physicians in the area and not to be forced to hire outside physicians.

Originally published in the February/March 2001 issue of EM Resident

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