Convincing your administration to change Physician compensation plan

Doctor, you need to work harder and harder to make the same or less

In the US, Physician compensation is declining in many respects as Medicare deletes some high volume codes. While it looks at the outset, like Physicians get paid a lot, the deeper picture is that physicians have to work much harder to get to a much higher productivity target for the same or actually less pay. Typically organization in the US hire Physicians at a “high” dollar but quickly realize that a Physician cannot entirely make money by his or her own billing. Then it leads to dissatisfaction for the Organization who then pressure the hired physician that he or she has to work much harder. This leads to conflict and the Physician is forced to look elsewhere.

In Neurology for example Medicare is slashing some billing codes, such that productivity measured in RVUs (productivity measured in Relative Value Units in the US) is going to dramatically decline. Thus organizations have to measure productivity in other terms and not just RVUs. Moreover, it is turning out that administrations in most places are never satisfied and has a culture of “do more”. The do more is like a bottom less pit and often Physicians in my organization feel not appreciated and has a constant pressure of “need to do more” which is leading to Physician burn out.

Questions are:

  1. How do you make the leadership (the bean counters) understand that productivity simply cannot be in RVUs in the future?
  2. How do we restructure Physician compensation (at least what do we tell them that is convincing) to account for declining RVUs but bring in other set of measures?
  3. What could the other measures be (patient satisfaction for example) ?


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Participant comments on Convincing your administration to change Physician compensation plan

  1. I will answer your questions one at a time:

    1. How do you make the leadership (the bean counters) understand that productivity simply cannot be in RVUs in the future?
    If you are working in academic institution will be different if you are working for non profit or for profit hospitals.
    So, everything go back to the mission statement of the institution you are working at.
    In academics, it is acceptable that physician RVU to be lower than private practice given the two extra roles that each physician have in their plate including research and teaching. And even some have administrative roles. So, even physician with different roles may have varying RVU in same subspecialty. If this is your situation, then you need to convince the administration and remind them about the mission of academic institution.

    2. How do we restructure Physician compensation (at least what do we tell them that is convincing) to account for declining RVUs but bring in other set of measures?
    Best trick that a lot of institution use is physician incentives. Meaning you can use RVU standards or other such as Time Value Unit (TVU). However, this is a sword with two edges; for example, few physician will increase their RVU on the expense of patient outcome quality which you can control by abiding solid to the Performance Indicator related to their jobs with accountability so include their patient satisfaction as a factor in their compensation.

    3. What could the other measures be (patient satisfaction for example) ?
    Patient outcome, patient survey and satisfaction, M&M, infection rates for surgeons and interventionist, readmission rate post discharge from CCU for cardiologist, patient recall in ED .

  2. Hmmm I like some of the suggestions. But may be I wasnt clear.My point is that administration even in a University setting is pressuring faculty to “make more” (for them I mean). The days of counting your teaching and research time have become a thing of the past. I dont mean to be cynical but seems to me that finance has become the driver even in teaching institutions. Unfortunately finance is measured in RVUs for Physician productivity. With medicare cuts, RVUs will decline and Physicians have to convince administration to measure productivity differently than just looking at RVUs. Physicians understand this precarious situation they are in better than a non-physician administrator I suppose. I am just trying to get ideas on how I could convince the non-physician administrator to value a Physician differently than just in the RVUs they make.

  3. The best way to change the minds of the “bean counters” is to educate yourself on how coding actually works, and what things your physicians can be doing to get the appropriate reimbursement for their work. Many times physicians are not putting the appropriate documentation into their charts, largely because of time issues and number of clicks it takes. Scribes have worked in our practices to improve productivity, reduce documentation errors, and increase reimbursement. I understand wanting to move away from RVUs but showing a willingness to try and solve the current problem will help you with the next suggestion: moving away from RVUs and focusing more on value. Focusing on value is very important, especially if your organization is contracting with ACOs. Again, this is where you will need to educate yourself and ask questions about what those value based contracts entail. There are many opportunities in the shared saving or value based contracts that you and your fellow physicians can take advantage of, you just need to understand the measures and get buy-in.

    In the negotiation for a new pay structure, I would suggest asking them to lower the $/RVU rate, increase the base amount, and begin shifting more compensation to value based measures over a period of time (years). Not many administrators would make the quick leap away from RVU, so a gradual change would likely be more palatable.

    Understanding what measures would be acceptable from the administrative point of view is key. Patient satisfaction would be acceptable to administrators, but is most often attacked by physicians. Again, the measures in value based contracts and MIPS/MACRA are the easiest way that administrators can measure their ROI in changing the reimbursement structure. These measures are already put in place and do not require you or admins to reinvent the wheel.

  4. Although an RVU system of compensation has its own merits and tries to quantify and measure a person’s productivity , it can fall short with regards to compensation as the value attributed to an RVU is somewhat variability and not necessarily uniform. It has been my observations that some organizations do not treat the RVU value equally when it comes to RVUs earned and RVUs paid, meaning that a person is held to a different standard when expected to earn the RVUs and paid on a different RVU value if they exceed the expected RVU goal.

  5. The academic centers are changing their approch, RVUs are becoming the major criteria, the bean counter does not take in consideration all the other activities that do not produce RVUs, consume time and energy and but add value and quality to physician’s work and as a result improve patient care.
    Asking physician to do more in academic setting will affect negatively teaching and research.
    Perhaps one solution will be educating bean counters about all the ancillary things we do that add value. So make the compensation value based.
    We need good leaders in our field to convey the message to administrators.
    we can re-organize academic centers in a different way and create two different pathways a different career paths for physician in academic center the ones that do most of the workload do not have to teach or do research and would be promoted based on that criteria
    So researchers can do research and teach But I think it is a partial solution
    but I have the feeling this new trend is here to stay until the bean counter will realize it is not working and quality is compromised.

  6. There are multiple components to any financial equation…revenue and expense. The suggestion to know, understand and appropriately document for appropriate coding is a valuable one. That is one way to potentially increase the revenue side of the equation. As you know for inpatients, the MD’s documentation can impact hospital revenue too.

    More and more these days, payor contracts have risk and value associated with them, so it’s important for Docs and hospitals to find common ground on the opportunities of focus and develop a compensation plan to incorporates and shares risks and reward with the docs too. For the docs, in some situations they may have the leverage to negotiate departmental goals with the hospital where they can achieve cost savings that puts more money towards the bottom line, and in return is shared with the docs. MDs also have power in negotiating implant pricing and creating standardization across care plans and programs which typically lower costs.

    Hospitals aren’t usually making higher profits just to pay their administrators more, they simply have to balance the books to keep the organization growing, because scale in the key to their future, and the MDs. Look for ways to help them achieve their goals (reduce costs/waste) and any good organization will do the same for you.

  7. We recently change the full compensation model of our physicians. Some context information: we merged 2 hospitals in 2000, but there was no real merging of the physician Financial associations. Since 1st of January we change this, meaning forcing (of course after long negotiation run between board and medical counsil) all physicians from 1 specialty to merge financially, coming from both hospital sites. In addition we change the complete perception model:
    From the revenus from the medical acts from a specific medical specialty we withdraw:
    – a % for central billing (to cover our billing costs, processes, teams, …) –> Remark: this amount is the same for all physicians in the hospital group
    – a % for our medical investment fund (to buy all medical devices) –> Remark: this amount is the same for all physicians in the hospital group
    – a % for a Quality fund to support qualitative projects/initiatives –> Remark: this amount is the same for all physicians in the hospital group
    – a X% which is specific for each specialty –> objective here is to cover the direct and indirect cost of the medical specialty
    – or + a Y% which is for the solidarity mecanism between specialities which are better or less paid depending on the price list per medical act
    + a Z % which is a sort of bonus if quality indicators are fulfilled

    For specialties, for example like neurology they have a positive Y%, so they benefit from other speciality solidarity.
    On top of that we guarantee a minimum compensation fee.
    By having this model in place you stimulate work, growth but definitvely quality –> multidisciplinary work, quality indicators, …

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