Blog Post

How to Implement Sticky PSAs

Implementing Sticky Psas Web

Last week we defined sticky PSAs and provided an overview of their characteristics, including the six key elements: provider network integration, care model improvement, clinical performance measurement and reporting, efficiency and financial performance, governance and financial control, and an optimized compensation methodology.

This week we will take a deeper dive into how to go about creating sticky PSAs, with actionable steps you can take at your organization.

How to Get Sticky

When looking at an inventory of a hospital’s existing PSAs, you would likely uncover the following:

  • Key terms and provisions that vary across arrangements
  • A lack of necessary control mechanisms
  • Inconsistent terms regarding compensation and performance across similar specialties and related groups of specialties
  • A lack of alignment with the hospital’s strategic direction and priorities

Health systems should be striving to develop the following:

  • PSA content and a development process that are standardized with templates that provide options to meet market needs
  • Guiding principles requiring a more integrated network delivering more efficient and higher-quality care
  • A compensation plan that follows a common and preferred philosophy
  • Contract development processes with established timelines from PSA initiation to approval
  • Care delivery models that rightsize the mix of physicians and advanced practice providers
  • Features that drive sustained “stickiness” and aligned incentives

Where do we start? The recommended approach to (re)structuring and (re)negotiating PSAs begins with a thorough understanding of current arrangements and their effectiveness and an internal discussion to answer key questions such as:

  • What are the standard contract elements and guiding principles that should apply to all PSAs?
  • What are the preferred physician compensation structures to generate efficiencies and high-quality patient care?
  • What physician participation requirements and incentives should be put in place to achieve greater integration, improve outcomes, and enhance system-wide performance?
  • What processes should be followed, who needs to be involved, and what supporting documents are necessary to optimize the development of new PSAs and the renewal of existing PSAs?
  • What are the system-wide best practices for contract management and coordination of the PSA negotiation process?

The answers to these questions and others will help direct the development of guiding principles and standardized features, terms, and templates for the health system’s PSAs. Then, a rollout strategy, management structure, and supporting tools and processes need to be put in place to ensure an effective transition and ongoing management of the resulting new relationships. Figure 2 summarizes five steps to transition from fragmented and loosely managed PSAs to consistent, goal-oriented, and integrated PSAs.

Figure 2: Approach to Transition to Sticky PSAs

Organizations should strive to follow the modeled approach to achieve optimal results. Using this approach, you can expect to see a shift in how you spend your time developing or renegotiating PSAs and relating to your physicians. Instead of sinking time into managing the complexity of widely varied PSAs, this approach allows you to spend more time collaborating with providers on ways to meet the needs of the communities you serve. Furthermore, the transition to sticky PSAs will give your provider network a competitive advantage based on the long-lasting, mutually beneficial partnerships you’ve established. If you aren’t getting this out of your existing PSAs, then it’s time to make them sticky.