fri 520 developing an effective, relevant, and brilliant ... f/12_fri... · primary care and...

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Exclusive to Healthcare. Dedicated to People. SM

Copyright 2013, INTEGRATED Healthcare Strategies. All rights reserved.

Developing an Effective, Relevant and Compliant

Physician Compensation Model in Today’s Challenging Market

Presented to:

Becker’s Roundtable

May 2015


Agenda

• About Integrated

• Relevant Effective Physician Compensation Plans

• Healthcare Trends Generally

• Physician Compensation Trends

• Compliant Physician Compensation Plans

• Compensation Philosophy

• Compensation Benchmarking

• Compensation Governance

• Compensation Administration

• Appendix

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ABOUT INTEGRATED

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Who We Are

INTEGRATED provides a range of interconnected solutions – compensation, employee, and physician engagement, labor, governance, physician services, and executive placement – that together help you align people, pay, and performance throughout your organization

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PHYSICIAN SERVICESMaximize performance and

physician affiliations

TOTAL COMPENSATION & REWARDSEnhance your organization’s success with complete compensation solutions

GOVERNANCE & LEADERSHIPGain confidence with the complexities of

healthcare governance

HR CONSULTINGEnhance the power of the people-

side of your business

MSA EXECUTIVE SEARCHConnect with the firm that specializes in

healthcare leadership placement

ENGAGEMENT SURVEYSQuantify and improve engagement

to drive business performance

MERGER & ACQUISITION ADVISORYMaximize your operational and

financial performance

ONE Source,YOUR Solutions


• We are the leading national physician compensation authority for healthcare organizations

– Clients in all 50 states that encompass the full spectrum of healthcare organizations from large integrated health systems to small rural community hospitals

– Largest client base of not-for-profit healthcare organizations including more than 350 major healthcare organizations with a total of more than 900 hospitals and over 500 physician groups

• We provide consulting services in many areas around physician practices:

– Cash compensation model design and implementation

– Conducting fair market value and commercial reasonableness assessments

– Development and review of various physician affiliation arrangements

– Conducting physician practice operations assessments

– Development and review of physician leadership/administrative positions

– Assisting in the development of physician governance and leadership structures

• Over the last 20 years, we have conducted over 35,000 assessments covering almost every medical specialty and in all types of practice settings; we have conducted more fair market value opinion assessments than any other firm in the country

Physician Services Overview

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HEALTHCARE TRENDS IMPACTING PHYSICIAN COMPENSATION

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Heath System’s Bottom

Line

Heath System’s Bottom

Line

Increase in self insured benefit

plan costs

Increase in self insured benefit

plan costs

Competitors participating in

ACOs and other shared savings

models

Competitors participating in

ACOs and other shared savings

models

Payers buying PCP groups

Payers buying PCP groups

Competitors buying PCP

groups

Competitors buying PCP

groups

Shift in payor mix – more

Medicare and Medicaid

Shift in payor mix – more

Medicare and Medicaid

Competitors advertising as low cost/high

quality alternative

Competitors advertising as low cost/high

quality alternative

Payers driving patients to a lower cost alternative

Payers driving patients to a lower cost alternative

Patients with high deductibles

and more access to

information

Patients with high deductibles

and more access to

information

Pressures on Health Systems

6

Healthcare Trends


Physician Shortfall Across Specialties• An Association of American Medical Colleges analysis shows a “critical shortfall” in the number of

physicians across all specialties, including primary care. This isn’t just due to coverage expansion under health reform, but also retirements and specialty choice.

Healthcare Trends

916,000

851,300

798,500

723,400

785,400

759,800

735,600

709,700

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000

2025

2020

2015

2010

Total

Shortage

91,500

Total

Shortage

130,600

Supply (All Specialties)

Demand (All Specialties)





TotalShortage

13,700

TotalShortage

62,900



Source: “Healthcare Trends and Issues Driven by Health Reform”, C-Suite Resources

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Increasing Demand for Advanced Practice Clinicians (“APCs”)

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With the shift to a value-based payment model, healthcare organizations will need to focus on efficiency, evidence-based treatment protocols, and coordination of care

Using more APCs to treat patients will allow for more physician time for patients with chronic illnesses (even with the physician’s supervision responsibilities) and encourage patient-centered coordination of care

Most hospitals have increased the size of their APC workforce in the past year, are planning to increase the number in the future and recruiting APC’s has become one of the biggest areas for recruitment firms

Healthcare Trends

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Healthcare Trends

Healthcare Reform Eventually Impacts Physician Compensation

• Financial pressure from reform significant:

– Patient responsibility for payment has increased from 9% in 2007 to 30% in 2012 and expected to increase to almost 40% with increase in high deductable plans and insurance exchanges

• This will make self pay the #3 payer behind Medicare and Medicaid

– Medicare and Medicaid reimbursement down estimated 1% per year for next 5 years with shift from volume to value

– Hospitals losing best customers (baby boomers) to Medicare

• 5,000 to 10,000 people move from commercial insurance rates to Medicare rates every day

• Restructuring healthcare delivery model through ACOs will place a greater emphasis on:

– Accountability

– Quality of care

– Effective cost management

– Reliable performance measures

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A Shift From Volume to Value

Healthcare Delivery is Moving from Volume to Value-Based Care:1

• Many payers and providers expect value-based reimbursement to overtake fee-for-service by 2020

• Seven current trends to value-based reimbursement:

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Reimbursement landscape changing faster than anticipated

• Roughly 90% of payers and 80% of providers already using some mix of value-based and FFS

Collaborative regions are more aligned with value-based reimbursement

• Regions where one or two payers stand out are more aligned than regions with multiple payers

Alignment with value-based reimbursement is influenced by the care delivery model

• ACOs are significantly closer to value-based reimbursement than non-ACOs

Pay-for-Performance Leads the Pack

• Of existing value-based models, the proportion of business aligned with P4P is projected to grow the most

Existing Healthcare IT Systems are Not Aligned with Value-Based Reimbursement

• Payers and providers characterize P4P as very difficult or extremely difficult to implement

• Additionally, they rate episode of care/bundled payment and others (e.g., shared savings) similarly

Primary Obstacles Needed to Address for Value-Based Reimbursement are Tech-Related

• Led by a need to integrate internal, vendor, and collaborative IT systems, as well as data collection, access, and analytics

Technology to Catalyze Clinician Engagement Will be Crucial to Value-Based Success

• Number one challenge to the success of value-based reimbursement is a lack of clinician buy-in and engagement with value-based reimbursement

1 McKesson Corporation, The State of Value-Based Reimbursement and the Transition from Volume to Value in 2014 (2014)



Why Isn’t Change Coming Faster?

• Most organizations don’t have the capabilities to manage population health or insurance risk

– Large provider organizations don’t have the infrastructure, and aren’t willing to invest in it

– Small organizations don’t have the capital to invest in it

– Change requires both the appropriate business units and culture change

• A payer cannot by itself manage population health

– Payers have good databases on members’ health, but have no ability to intervene to treat a condition or prevent it from becoming worse

– Payers focus is on cost management versus true population health management

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What Is Being Done

• Most organizations haven’t yet implemented population health management techniques and strategies, but many are taking this time to learn how to do it

– This will allow forward thinking organizations to adapt quickly when reimbursement methodologies change

• Employing physicians - particularly primary care physicians

• Implementing electronic health records

• Using self-insured medical plans as a proving ground for population health management techniques

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TRENDS IN PHYSICIAN COMPENSATION

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Trends in Physician Compensation

• Pay for Performance is critical:

– According to the 2014 Physician Compensation and Production Survey put out by the Medical Group Management Association (“MGMA”), approximately 40% of all medical practices reported in the survey compensate their physicians based on 100% productivity models

• Work relative value units (“wRVUs”) still dominant – although many organizations shifting to net professional collections or a “market” wRVU rate that is benched to professional collections

– “Quality” becoming a much bigger component of compensation as organizations move from volume to value

– Other incentives (e.g., expense management, network / system based incentives, service line incentives, etc.) becoming more prevalent

• Definition of “Performance” is changing:

– “Quality” compensation, bundled payments, etc., becoming more important and require performance in new areas including:

• Improved health status for the defined population being served

• Percentage of patient care delivered within accepted clinical care protocols

• Patient satisfaction scores

• Physician satisfaction scores

• Reduction in readmissions

• Volume measures – panel size / p

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• Focus on a few key performance areas with multiple metrics

• Typically range from 5% to 10% of a physician’s compensation

– Most organizations “phase in” and start with smaller amounts (e.g., $15,000 to $40,000 per physician for surgeons) and gradually increase amount over time

• These incentives are generally not additive, and must be “covered” (at least in part) with physician productivity, and/or are only paid if group financial triggers are obtained

• These incentives can be “goal” oriented (e.g., only paid if goal is achieved, or process oriented)

• Data and measurement systems will be critical to plan success

Must be a material part of

physician compensation

plan & equitable across system

Must be a material part of

physician compensation

plan & equitable across system

Must be “real” ,

actionable, and

measurable

Must be “real” ,

actionable, and

measurable

The incentives must be

developed with input by

physicians

The incentives must be

developed with input by

physicians

Quality Incentive Key Criteria:

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Exclusive to Healthcare. Dedicated to People. SM 16

Quality / Citizenship

Production Incentive

Overhead

PhysicianTargeted

Compensation

Patient Satisfaction

Other (e.g., org.

needs)

CodingClinical Outcomes/Quality

Typically wRVUs

Based on market

Base Salary

“Typical” Compensation Model

Recognize the value of “non-productive” factors such as quality outcomes and patient satisfaction


• Reimbursement Issues Impacting Physician Income

– Reduced reimbursement for physician services pushing more physicians to employment

– Payments shifting to “qualitative” areas and requires physicians to pursue new sources of revenue (e.g., Meaningful Use Funds, payer quality incentives, etc.)

– More healthcare organizations are reviewing their “investment” per physician and are basing compensation on their ability to pay competitively and what is best for the long term viability of the network

• Compensation Models Becoming More Complex/Have More Components:

– Clinical, administrative / medical directorship, call, teaching, research, APC supervision, recruitment, etc. typical in many models today

– Co-Management, shared savings, PCMH, bundled payments, etc. becoming more prevalent

– While this may be appropriate, “multiple” contracts/payments for services has increased compliance / fair market value issues e.g. “Stacking Compensation”

• This is a major area for outside regulators

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Some have simplified their models such as Geisinger which utilizes the following primary care and specialty care compensation models:1

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1 Health Affairs, How Geisinger Structures Its Physicians’ Compensation to Support Improvements in Quality, Efficiency, and Volume (2012)

80.0%

78.5% 8.0%

20.0%

13.5%

Specialist Compensation

Primary Care Compensation

Base Salary Participation in PCMH Incentive Bonus

Primary Care Compensation Model:

• Base Salary determined based on:

� Experience

� Specialty market rate

� Whether past performance is consistently above or below expected wRVU productivity

• Participation in PCMH paid on the basis of active participation in the hospital’s medical home model of care delivery

• Incentive Bonus determined based on:

� Quality (60%)

� Citizenship (6%)

� Financial performance (34%)

Specialist Compensation Model:

• Base Salary defined based on expected work effort including:

� Teaching

� Research

� Administrative services

� wRVU productivity

• Incentive Bonus determined based on:

� Quality (40%)

� Innovation (10%)

� Legacy: education and research missions (10%)

� Growth: increasing population hospital serves (15%)

� Financial (25%)


Challenges in Shifting To “New” /Future Compensation Models

• Strategically it is difficult to manage the “straddle” between volume and value based payment. Misaligned physician compensation (e.g., wRVU based compensation) is a key component that inhibits change

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Today’s Culture Tomorrow’s Strategy



1. Reimbursement - In most locales, reimbursement patterns haven’t changed enough to matter. The amount of revenue from risk-based contracts amounts to only 2.4% for the median hospital

2. Risk Adverse - Many hospitals and systems have chosen to wait and watch, rather than experiment. They have decided that they will be able to learn from others’ experience what works best, without having to invest or risk much in the early stages of learning

3. Infrastructure - Most hospitals and systems don’t have the information systems or data bases they need to measure or manage risk. Some are developing systems and data bases but not yet using them for measuring performance, others are acquiring or merging with health plans (or other non-traditional partners), or experimenting with their self-insured populations

4. Cost - Many hospitals and systems don’t have the resources needed to make the changes necessary to manage population health. Many can’t afford the information systems they would need and are exploring other alternatives—mergers, sales, affiliations instead.

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Practical Steps Organizations Have Used to Get Started

• Begin tying physician compensation to new metrics that work as well under pay-for-volume as under pay-for-value

– Define productivity as caring for more patients, not doing as much work as possible on fewer patients

– Physician compensation must reflect reimbursement patterns

– Link compensation to improving the health of the community

• Begin introducing advanced practice clinicians or expanding their use in primary care practices

• Introduce patient centered medical homes staffed to manage care of people with chronic diseases

• Develop IT capabilities for pinpointing care needs and begin tying physician pay to use of electronic health records

• Introduce access to care as a metric for primary care compensation

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PHYSICIAN COMPENSATION PHILOSOPHY DEVELOPMENT

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Development of a Compensation Philosophy

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• The process used to transform an organization’s compensation program is as important to the success of the plan as the plan design

• Peer group market data must be reflective of the physicians being measured

The compensation philosophy should:

Comp Philosophy

Guide all compensation

planning decisions

Guide selection of an

appropriate peer group

Be consistent with the

organization’s mission and

strategy

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Elements of a Well-Defined Philosophy:

• Roles of the Board/Committee and management

• Definition of peer group(s)

• Statement of principles underlying the compensation philosophy

– Support charitable mission, ensure rebuttable presumption, etc.

• Competitive positioning of total compensation compared to peer organizations

• Positioning and mix of individual compensation components:

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Who are the peer group(s)? Should the rate of pay continue to be linked to survey data and/or based on local market factors?

• National, regional, state comparisons

• Specialty groupings

How competitive is the compensation program relative to peers? Consider:

• Hospital strategic and operational challenges

• Organizational culture

• Recruiting and retention requirements

• Costs

Given variations in specific physicians’ contributions, to what degree should individual versus group performance drive compensation strategy?

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Group PerformanceIndividual

Performance



What specific goals should be included ?

• Ensure external competitiveness

– Enhance recruiting ability

– Assist in retention of talented individuals

• Ensure internal equity

• Maintain financial affordability

• Align compensation with organization’s business strategy, mission, and culture

• Achieve the appropriate balance between each element of total compensation (e.g., salary, incentives, benefits, etc.)

• Provide the foundation for compensation decisions

• Ensure compliance with legal and regulatory guidelines

• Reward top performance

• Statement of principles underlying the compensation philosophy

– Support charitable mission, ensure rebuttable presumption, other goals, etc.

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Total Compensation Philosophy Drives Compensation Plan Design

• The “mix” of goals, and what an organization values, greatly impacts the structure of the compensation program

– Some clients very focused on productivity/collections

• Models almost exclusively based upon individual physician productivity and found in FFS environments

– Some focused on “quality” and outcomes

• Models tend to be found in more “managed” markets and in larger integrated health systems

– Some clients don’t use compensation models to be main driver of physician behavior but rather have a culture that drives physician behavior

• e.g., Cleveland Clinic, Mayo, Kaiser, etc. less likely to use incentives to drive performance. They have well defined “expectations” to support physician compensation (which generally is lower than other hospitals)

Physician Compensation Caps

• Many organizations place a cap on physician compensation to ensure compliance and appropriate alignment with incentives

• In many instances, the compensation cap does not limit cash compensation but instead triggers a review of cash compensation and productivity by the Board

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PHYSICIAN COMPENSATION BENCHMARKING


Regulatory Framework and Fair Market Value Reviews

• Current legislation (Stark, Anti-kickback, Private Inurement) calls into question practically all physician/hospital financial arrangements

– FMV is a fundamental requirement under all of this legislation

• FMV is always a “facts and circumstances” situation

– Just because a competing health system “supposedly” offered the same deal does not make it fair market value

• IRS Section 162 provides guidance to include:

– Nature of the individual’s duties

– Individual’s expertise and background

– The size of the business

– Time devoted by the individual to the business

– The amount paid by similar sized businesses in the same area to equally qualified employees for similar services

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“Fair Market Value” is defined as the

value in arms-length transactions consistent with the general market value. General market value means the price an asset would bring as a result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party on the date of acquisition of the asset or at the time of the service agreement. Usually the fair market value is the compensation that has been included in bona fide service agreements with comparable terms at the time of the agreement, where the price or compensation has not been determined in any manner that takes into account

the volume or value of anticipated or

actual referrals 25th 50th 75th 90th

25th

50th

75th

90th

Productivity (Per FTE) Percentile

Co

mp

en

sati

on

(P

er

FT

E)

Perc

en

tile

30

Factors that influence FMV:

• National/regional market data

• Productivity

• Overhead

• Payor mix

• Reimbursement

• Quality/Performance



“Commercial Reasonableness”is defined as an arrangement that would make commercial sense if entered into by a reasonable entity of similar type and size and a reasonable physician of similar scope and specialty, even if there were no

potential designated health services

referrals

“Reasonable Compensation”

as described in Section 162 of the Internal Revenue Service (“IRS”), reasonable compensation is generally considered to be "...only

such amount as would ordinarily be

paid for like services by like enterprises under like

circumstances."

Productivity (Per FTE) Percentile

Co

mp

en

sati

on

(P

er

FT

E)

Perc

en

tile

25th 50th 75th 90th

25th

50th

75th

90th

Factors that influence commercial reasonableness:

� Duties of physician

� Practice profitability

� Community need

� Market competitiveness

� Training

� Experience

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$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

wRVUs

Cas

h C

om

pen

sa

tio

n (0

00

s)

New Physician

Lower than Expected

Compensation

Lower than Expected

Compensation

P50 = $194.3

P25 = $162.0

P75 = $238.5

P90 = $295.1

P25 = 4,059 P50 = 4,882 P75 = 5,852 P90 = 6,980

Higher than Expected

Compensation

Higher than Expected

Compensation

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Physician Benchmarking Example

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Fair Market Value Reviews

INTEGRATED’s FMV Philosophy:

• FMV is not a single number but a range of values and, for physician compensation, is generally considered to include:

– How the physician is paid (compensation model structure)

– The process that is followed to determine physician compensation

– What the physician is paid (compared to similar physicians)

– On-going management of the contract (e.g., documentation, benchmarking future compensation to market, incentive payments, etc.)

• FMV is primarily considered to be based upon comparisons to survey data – more data driven

• Commercial reasonableness relies more heavily on “facts and circumstances” and factors impacting determination of reasonableness include:

– Market competitiveness – other offers; history of recruiting/retaining physicians; competitive environment

– Community need – staffing requirements; rural access

– Supply and demand for particular specialty

• FMV and commercial reasonableness are intertwined

33


PHYSICIAN COMPENSATION GOVERNANCE

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Role of the Board

• Best practice to establish a separate and entirely independent compensation committee (typically the same committee that oversees executive compensation)

– Charged to oversee compensation for disqualified individuals (i.e., employed physician leaders, but not all physicians) and those agreements that are outside of the policy

– Charged to develop and oversee a physician compensation philosophy for those that are not disqualified

– Required to meet at least two or more times a year

– Required to report periodically to the whole board

• Oversight of the organization’s physician compensation program

– Ensure regulatory compliance (i.e., compensation model design, review outliers and highly compensated individuals)

– Ensure adequate linkage between the program’s objectives and the mission, vision and values of the system

– Ensure appropriate administration of the physician compensation program

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Board Governance Best Practice

• Establish a clear and explicit Physician Compensation Philosophy and policy statement to be followed in overseeing compensation and to guide decision making

– Document rationale for exceptions to policy

• Develop and maintain a physician compensation program consistent with Hospital’s compensation philosophy and policies, prevailing market conditions, and ensure physician compensation provided is at fair market value and commercially reasonable

– Conduct regular audits to ensure processes are consistent with organizational policy

– Typically focus on highly productive physicians and physician leaders

• Develop policy guiding physician compensation program

• Charge the Committee with establishing a rebuttable presumption of reasonableness for all disqualified individuals

– Identify all disqualified physicians

– Review all items submitted on the Form 990, and understand what they are

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Establishing a Presumption of “Reasonableness”

• Ensure that all parties considering the compensation have no conflict of interest with regard to the physicians pay

– Exclude anyone from the process who may have a potential conflict, and document the exclusion

• Obtain and rely upon appropriate comparability data

– Determine whether that comparability data is truly appropriate for the position, and for the circumstances, and document

• Articulate the rationale for the Committee’s compensation decisions, and document

• Consider the long-term impact of the compensation package and positioning, and document

• Determine whether the physician’s compensation is reasonable and within FMV and commercially reasonable, and document

37


Role of Hospital Management

• Obtain recently published market data

• Update internal market comparisons annually

• Ensure compensation models are competitive

• Identify potential compliance concerns, highly compensated individuals, etc.

– Obtain all relevant background information

• Seek outside review when appropriate

• Facilitate compensation philosophy, model development

• Establish & administer new hire guidelines

• Prepare annual report for the Committee

– Compensation relative to market

– Outlier analysis

– Update on physician program issues/changes

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Hospital/Management Governance

Hospital/Management Responsibilities:

• Establish a solid, defensible process that relies on documented compensation policies, procedures and philosophies

– Defines review process and when outside evaluation is necessary

• Establish a defined oversight process and committee structure

• Annually review compensation to ensure compensation within FMV

• Document the process and the findings for each physician and pay particular attention to those issues that can create problems including:

– Conflicts of interests

– Internal benchmarking

– Inconsistent application of defined process

– Lack of internal knowledge

– Poorly constructed contracts and/or job descriptions

– Poor read of the “facts and circumstances” involving the Agreement e.g., what is the intent of the contract?

– Ensure there must exist a legitimate business purpose e.g., cannot reward physician referrals

– Watch for “stacking” of economic financial agreements with physicians e.g., pay for clinical, administrative, call coverage, etc.

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Best Practice

Preventative Measures:

• Always ask these key questions before initiating an economic relationship with a physician:

– Why are we entering into this arrangement?

– How was the need determined?

– Did we utilize the defined process in establishing the compensation?

– What is the market position of the proposed compensation?

– Are the duties/services well defined e.g., measureable, actionable and of value?

• Use the established process

• Limit the number of “negotiators” in the process e.g., no side negotiations

• Ensure that all parties understand the reason for the process

• Conduct routine reviews of the value for services versus the payment provided

• Have qualified health care legal counsel and involve them throughout the process

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PHYSICIAN COMPENSATION PLAN ADMINISTRATION

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Physician Compensation Plan Administration

Compensation Review Processes

• Healthcare organizations entering into, modifying, or renewing financial relationships with physicians and other providers must comply with multiple federal and state laws

• INTEGRATED recommends that every organization:

– Conduct an annual audit of their physician compensation to determine any potential compliance risks that may require further review

– Implement a clearly defined process for entering into or modifying physician contracts

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YES

YES

YES

YES

NO

NONO

NO

Total cash comp1 is < P50?

No outside review

Productivity clinical payout rate ≤ P75 and other

cash components are at FMV?

Outside review for FMV and commercial

reasonableness

Outside review conducted

within the past 2 years, no change to cash

model and other cash components

Total cash comp is < P90?

Internal audit of practice:1. Chart audit2. CPT coding audit3. Patient satisfaction4. Malpractice claims5. Admin time log audit if

receiving admin stipend

(1) Total cash comp includes all cash components:a) Clinicalb) Administrativec) Teachingd) Researche) Call Payf) Other

1 – with sufficient full time work effort demonstrated via hours, call coverage, productivity, etc.


Sample FMV Audit Framework


Contract details finalized

(i.e., compensation, term, duties, etc)

Renewal or New contract identified

Accountable Executive takes

contract to appropriate

management committee for

decision

Contract completed and

reviewed by Accountable

Executive

Accountable Executive to obtain

physician(s)signature(s)

Accountable Executive executes contract, distributes originals to physician, Legal & File

and initiates any necessary payrollprocess

Updated / NewContract added

to database

YES

NO

Approved?

Accountable Executive requests

contract from Legal Department

Note: Recommended to develop a master database that tracks all

contracts (i.e., Employment, PSA, Medical Director)

Contract details (Term Sheet or Letter of

Intent) communicated to Internal Resource or External Consultant for Fair Market Value (FMV)

Review

Proposed Compensation represents Fair Market Value?

YES

NO

Note: This is where a Compensation Committee would sign-off on

Economic Relationships per policy


Recommended Process for New Contracts or Renewals

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APPENDIX

45


Current Physician Clinical Compensation Models

The four models typically found in the market today are defined as follows:

• Access - Access compensation model will apply to physicians whose primary objective is to provide access to care either within a low volume specialty or at outreach locations (e.g., forensics, genetics)

• Hospital Based – Hospital Based compensation model will apply to physicians who are primarily shift based within the hospital (e.g., hospitalists)

• Productivity – Productivity compensation model will apply to physicians whose primary objective is to provide clinical services or surgery/procedures (e.g., orthopedics, cardiology, GI)

• Group Productivity – Group Productivity compensation model will apply to departments whose primary objective is to provide group based services where individual physicians work in a team environment (e.g., neurology, nephrology, Ob/Gyn)

46


Model Option 1: Access Physicians

Access - Access compensation model will apply to physicians whose primary objective is to provide access to care either within a low volume specialty or at outreach locations

47

Compensation Model Components Model Characteristics1. Total compensation opportunity is determined by physician

experience/qualifications and market dynamics related to the specialty

a. Base salary is the primary compensation componenti. typically between 40th and 75th percentiles depending

upon level of performance incentive

2. Annual Performance Incentivea. Typically 5% - 10% of base salaryb. Primarily “quality” and “service” goals rather than

production

1. Base Salary

2. Annual Performance Incentive

Total Compensation Opportunity

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Model Option 2: Hospital Based Physicians

Hospital Based – Hospital Based compensation model will apply to physicians who are primarily shift based within the hospital (e.g., hospitalists)

48

Compensation Model Components Model Characteristics1. Base Salary defined as “X” work = 1.0 FTE

(set by Division Chief and specialty specific). Base salary targeted around market median, but can vary based on experience.

2. Production incentive pool is funded based on group productivity over group threshold, The incentive pool can be allocated by any of the following metrics:

• FTE level/experience• Quality• Production (individual)• Other (night shifts, etc.)

3. Annual Performance Incentive• Typically 5% to 10% of base salary• Typically based upon service line clinical

outcomes, quality and satisfaction

# of FTEs 50th Percentile1. Base

Compensation Pool

Group Work RVUs over Threshold

Conversion Factor

2. Production Incentive

Compensation Pool




Model Option 3: Individual Productivity Physicians

Productivity – Productivity compensation model will apply to physicians who are expected to be clinically productive and have ability/patient volumes to support competitive incomes with productivity

Compensation Model Components Model Characteristics1. Based on individual productivity

• Can be measured on wRVUs, collections, panel size, etc.

• Conversion factor typically targeted around the market median

2. Annual Performance Incentive• Typically 5% to 10% and can be carved out or

additive to conversion factor, but must be examined in total cash

• Typically based upon individual clinical outcomes and satisfaction


Work RVU

Production

Conversion

Factor

1. Production Compensation


49


Model Option 4: Group Productivity Physicians

Group Productivity – Group Productivity compensation model will apply to specialties whose primary objective is to provide group based services where individual physicians work in a team environment

50

Compensation Model Components Model Characteristics1. Based on group productivity

• Can be measured on wRVUs, collections, etc…• Conversion factor typically targeted around the

market median• Production compensation pool is distributed to each

physician based on measures (such as): – FTE level– Production (individual)– Outreach/programmatic initiatives

2. Annual Performance Incentive• Typically 5% to 10% and can be carved out or

additive to conversion factor, but must be examined in total cash

• Typically based upon individual clinical outcomes and satisfaction

Work RVUProduction

Conversion Factor

1. Production Compensation Pool



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