A growing trend in physician-hospital alignment is related to professional services agreements (“PSA”). A PSA is generally defined as a financial relationship between a physician practice and a hospital in which the physician practice remains an autonomous entity but the physicians are compensated by the hospital at fair market value compensation for their professional services. The basic components of a traditional PSA include:
Many physicians find that PSAs are advantageous (in comparison to practice acquisition) because they provide a high level of self-governance and decision making over physician coverage and compensation distribution. PSAs can also alleviate physician administrative burdens associated with managing and operating a full-service physician practice as well as provide physicians with more flexibility over their retirement and other benefit options. For hospitals, PSAs can be an effective first step to integration when they are hesitant to completely acquire a physician practice.
Other key points to know about PSAs include:
Although the strategic goals of each practice and hospital will vary and should be taken into consideration, PSAs can provide a viable option for hospitals and physicians to accomplish their strategic objectives. If you have additional questions or would like more information on PSAs, please contact the experts listed below at (800) 270-9629.