Build a process to manage all of your contracted services

Managing contracted services is required by both The Joint Commission and the Centers for Medicare & Medicaid Services (CMS) and if not managed well can be a huge risk to your organization. And as Frank Ruelas, MBA, principal of and director of compliance and risk management at Maryvale Hospital in Phoenix, says, "if it happens under your roof, you better know what's going on."

The Joint Commission requires an annual evaluation of whether to continue or terminate a contract. And CMS requires that a senior staff person be responsible for contracts, which led to a new element of performance this year for The Joint Commission, says Michael Troncone, FACHE, principal of Michael T. Troncone and Associates and administrator for patient intake services at Calvary Hospital in the Bronx.

Because it's a high-risk area, The Joint Commission may be looking closely at this, Troncone says. Can you imagine, he asks, going in front of a judge and saying "No your honor, I didn't know the person installing the new televisions on the pediatric unit was a sexual predator. No your honor, I didn't know what cleaners the window washer was using, and I didn't know he was going to use bleach and ammonia to wash our windows." He evens recounts a story of a surgeon bringing in his unemployed brother-in-law to assist in surgery.

Troncone says that, when thinking about contracted services, a hospital should ask: "Who is representing the hospital? Do those contracts you have in place meet all the appropriate regulatory and legal requirements? Are we getting our money's worth? Are we getting what we paid for?"

Getting started

Troncone suggests these steps to effectively manage all contracted services:

  • Do an inventory of all the contracts in your organization.
  • Establish a centralized process for managing them.
  • Ensure that there's a formal approval process for all of the different kinds of contracts (see box, below).
  • Have criteria for managing each type of contract.
  • Create performance measures for each type of contract.
  • Have a review and renewal process for each type of contract.
  • The Joint Commission requires a process for corrective action should a contract fail to meet required specifications and a contingency plan for contract termination.

Seven Types of Contracted Services

  • accredited onsite clinical services;
  • nonaccredited onsite clinical services;
  • accredited offsite clinical services;
  • nonaccredited offsite clinical services;
  • nonclinical onsite services;
  • nonclincial offsite services;
  • administrative contracts.

Who should be at the table?

Troncone suggests:

  • an expert panel to review the contracts;
  • a legal expert to review the contract language;
  • a privacy officer to approve business associate and confidentiality clauses;
  • subject matter experts, "people who are familiar with the performance of that particular clinical or nonclinical service so they can approve the services and methodology of the delivery of services and establish performance indicators"
  • an administrative authority who approves the contracts.

He also promotes using templates for your contracts and assigning responsibility for each contract to a senior lead, with the department head most closely associated with the particular service monitoring the contract day to day to ensure quality and delivery of services. That department head reports on the contract to the contract management group.

"By having that department head involved on a daily basis, problems are identified early," he says. Each department head may have up to seven contracts, but it's within his or her span of control, he says. They should have a checklist with the appropriate indicators, which could be supplied by the contract management company or by data already collected on that service line.

The contract management group should meet at least once a year to determine if a contract should be renewed or terminated, and if terminated where you are going to go to get the service. Troncone says you should be able to review 25% of your contracts at the meeting. The department head should make a recommendation for renewal or termination. The second item on the agenda, he says, should be any worrisome contracts and what you're going to do about them. And then look at whether you have identified a need for a new contracted service.

You also need to ensure your contracted services are oriented to your policies. For example, gardening services are spraying pesticides and fertilizers and using power equipment. Troncone says you should ask yourself: "Do they know where the oxygen lines are? Do they know where your air intakes are so they're not spraying pesticides in the air intake for the operating room? Are they following the appropriate infection control procedures? If you take anesthesiologists, he says, "What standards are they following? What are their outcomes? If an anesthesiologist call in sick, who do they provide as back up? Is it someone who's already been oriented and privileged by the hospital?"

With services accredited by The Joint Commission, you should be aware of their accreditation status. With those not accredited, you should do your own "tracer" of sorts, Troncone says. You should make sure they're fulfilling Joint Commissions standards. "So you need to do an onsite review. You need to review and approve their policies and procedures. You need to ensure that they're doing all the appropriate life safety things, and that means you need to get your infection control person, your safety officer, your privacy officer, and your clinical people to do an indepth review."

Medical staff should have the opportunity to review and comment on clinical services and performance data. Troncone says the corporate compliance officer should ensure that contract terms and bidding and awarding of contracts meet the organization's corporate compliance requirements.

Offsite services should meet the credentialing and privileging standards of The Joint Commission. "Clinical services require the most intensive orientation, and the organization has to ensure current competency, licensure, education, and continuous improvement of competency for contracted clinical staff," Troncone says. A personnel file for each clinical staff person should be maintained.

The Joint Commission is "not going to sit down and review individual contracts and [try] to identify a problem. If they identify a pattern or trend with contracted services, they will certainly start reviewing contracts," Troncone says.

They might ask to see a contracted person's competency and credentialing and privileging files. They might ask people on the floor if contracts are being monitored or if services are being delivered appropriately, Troncone says.

They might ask senior leadership if there is a process for managing contracted services, he says; or if someone is installing television, they might ask if he or she got an infection control and patient privacy inservice.

The most work-intensive part of the process is getting all the contracts together and creating your process for managing them. "Once the process is set up, ongoing compliance becomes easy," Troncone says.