Professional Services Agreements as an Alternative to Employment: A Contemporary Option for Alignment and Integration

Integration of physicians and hospitals continues to be a major area of strategic and tactical consideration for organizations within the healthcare delivery system. How can you know what opportunity is best for you or your organization?Private practices and health systems alike continue to evaluate their options for working together during the progression of the healthcare industry. Over the past five years, many physicians from all specialties and practice structures have entered transactions with health systems. Many, but not all, of these arrangements are through employment vehicles.

A growing number of physicians are electing professional services agreements (PSAs), which are now the model and structure of choice for thousands.The basic premise of one-size-fits-all is not supportable in the case of PSAs (also called employment lite models). Given their varied structures, PSAs can be customized to fit the specific needs of the partners. Thus, PSAs present an alternative to employment that may be the best option for alignment for many organizations. The PSA model comes with advantages and disadvantages. In most cases, the cons, which include potential less stability than employment or the inclusion of a non-compete or exclusivity, are seldom untenable. The negative aspects can be addressed through productive discussions and negotiations between the parties. One major benefit of PSAs is that physicians maintain their independence from the hospital by remaining either an employee of the practice or controlling their management infrastructure, which enables them to go back into private practice smoothly, if necessary. While these models are more complex than direct employment, their structures offer high flexibility, and some physicians prefer entering such an alignment arrangement, at least initially.

Coker Group’s whitepaper, “PSAs as an Alternative to Employment: A Contemporary Option for Alignment and Integration”, details how PSAs can be a viable option for alignment. We have completed hundreds of PSA transactions over the past five years. With our extensive experience as our foundation, and recognizing that PSAs are well-suited to support the emerging landscape of volume-to-value reimbursement, we can help you work through your alignment decisions.

Coker Group works with hospitals, health systems, and physicians groups to develop customized solutions in four main service areas: Strategy and Operations, Finance, Technology, and Executive Search.If you would like to learn more about PSAs and other services Coker providers, please contact us to speak with Aimee Greeter, MPH, senior vice president.