Transcript Physician Compensation & Productivity

PHYSICIAN COMPENSATION
AND PRODUCTIVITY
MODELING
Marvin Berkowitz
BHC Consulting
October 24, 2011
PHYSICIAN PRODUCTIVITY AND
COMPENSATION MODELING
• Why benchmark physician compensation and
productivity?
• Key components of benchmarking programs
• Benchmarking approaches for alternative types
of practices
Physician Compensation and
Productivity Modeling
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Why Benchmark Physician Compensation
and Productivity
– Assess fairness and effectiveness of
compensation plans
– Align compensation with performance
– Increase practice volume and revenue
– Improve practice efficiency
– Improve patient access
Physician Compensation and
Productivity Modeling
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Key Components of Compensation And
Productivity Modeling
• Type of practice – private vs. academic
• Understand physician job roles
– Full time clinician
– MD combines clinical work with other roles:
• Administration,
• Teaching,
• Research
– Understanding MD’s work effort critical to
understanding productivity
Physician Compensation and
Productivity Modeling
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Key Modeling Components
• Compensation Benchmarks
• Productivity Benchmarks
• Approaches to link compensation to
productivity performance
Physician Compensation and
Productivity Modeling
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Compensation Benchmarks
• MGMA – private practice and academic
surveys
• AMGA – private practice survey
• AAMC – academic survey
• Individual specialty surveys
Physician Compensation and
Productivity Modeling
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Compensation Benchmarks –
Endocrinology – 2010 Data
Survey
Mean
Median
75/80
%ile
AMGA –
Private
Practice
$250,542
$233,000
$299,794 $360,859
MGMA –
Private
Practice
$224,580
$206,340
$256,085 $315,929
MGMAAcademic
$163,211
$152,000
$197,999 $251,807
Physician Compensation and
Productivity Modeling
90%ile
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Productivity Benchmarks
• Alternative Benchmarks Exist to Measure
Productivity
– Gross charges
– Net collected revenue
– Work RVUs
– Gross charges difficult to benchmark
– Net collections driven by payor mix and different
payor markets
– Work RVUs consistent across payors and markets
Physician Compensation and
Productivity Modeling
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What Do Work RVUs Measure ?
• Relative Value Units (RVUs) are
components of the Medicare RBRVS
physician payment system
• RVUs consist of 3 components:
– Work RVUs – Physician Patient Care
– Practice RVUs – Practice Support Operations
– Malpractice RVUs – Professional Liability Ins
Physician Compensation and
Productivity Modeling
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Work RVUs – An Example
CPT
Code
Description Work
RVU
PE
RVU
Malpractice Total
RVU
RVU
99213
Outpatient 0.97
Visit – Est
PatientLow
Complexity
0.99
0.07
Physician Compensation and
Productivity Modeling
2.03
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How to Calculate an MD’s WRVUs
• Calculating an MD’s WRVUs includes 3 steps:
– Capture physician’s billed units, i.e., number of visits
and procedures actually billed
– Classify all volume into individual CPT codes
– Assign Medicare work RVUs to each CPT code
– Calculate total weighted work RVUs associated with
billed volume.
Physician Compensation and
Productivity Modeling
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Physician Work RVU Calculation
CPT
Description
WRVU
# Units
99203
Office/outpatient visit new
1.42
150.00
213.00
99204
Office/outpatient visit new
2.43
255.00
619.65
99205
Office/outpatient visit new
3.17
76.00
240.92
99211
Office/outpatient visit est
0.18
20.00
3.60
99212
Office/outpatient visit est
0.48
235.00
112.80
99213
Office/outpatient visit est
0.97
1,388.00
1,346.36
99214
Office/outpatient visit est
1.50
765.00
1,147.50
99215
Office/outpatient visit est
2.11
209.00
440.99
99231
Subsequent hospital care
0.76
255.00
193.80
99232
Subsequent hospital care
1.39
134.00
186.26
99233
Subsequent hospital care
2.00
89.00
178.00
3,576.00
4,682.88
Total WRVU Calculation
Physician Compensation and
Productivity Modeling
Total WRVUs
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Work RVU Benchmarks
– MGMA – Academic and Private Practice
– AMGA – Private Practice
– UHC – FPSC - Academic Practices
Physician Compensation and
Productivity Modeling
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Work RVU Benchmarks
Endocrinology – 2010 Data
Survey
Mean
Median
75/80
%ile
90%ile
AMGA –
Private
Practice
MGMA –
Private
Practice
4,446
4,632
5,605
6,410
5,013
4,678
5,847
7,228
MGMAAcademic
4,991
5,041
5,849
7,567
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Combining Compensation and
Productivity Benchmarking
MD
Actual Comp
AMGA Median Comp
Comp % BM
#1
$255,000
$233,000
109%
#2
$210,000
$233,000
90%
#3
$270,000
$233,000
116%
MD
Actual WRVUs
AMGA Median WRVUs
WRVU % BM
#1
5,335.20
4,446.00
120%
#2
4,001.40
4,446.00
90%
#3
4,668.30
4,446.00
105%
MD
Comp % BM
WRVU % BM
Productivity Adjusted Comp
#1
109%
120%
91%
#2
90%
90%
100%
#3
116%
105%
110%
MD # 1 - Underpaid for her level of productivity
MD # 2 - Paid correctly for his level of productivity
MD # 3 - Overpaid for her level of productivity
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Incentive Compensation Program Combining
Compensation and WRVU Benchmarks
Compensation
WRVUs Compensation/ WRVU
MGMA Academic Practice Benchmark
$
152,000
5,041.00 $
Sample MD
$
145,000
5,200.00
Variance from Benchmarks
$
(7,000)
Base Salary Increase
$
7,000
New Base Salary
$
152,000
30.15
159.00
Productivity Bonus
Excess WRVUs
Compensation Per WRVU
159.00
$
30.15
Productivity Bonus Paid to MD in Current Year
$
4,794
Total Annual Compensation for the MD
$
156,794
The MD's actual WRVU output exceeds the benchmark of 5,041 WRVUs.
The MD's base salary is increased to $152,000, the benchmark level.
The MD also receives a bonus of $4,794 for generating 159 WRVUs
above the benchmark target level. These excess WRVUs are paid at the
amount of $30.15 per WRVU.
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Productivity BenchmarkingDocumenting Physician Effort
Academic Percent Effort for Sample Department
Physician
ClinicalBillable
MD #1
MD #2
MD #3
MD #4
60%
60%
40%
70%
ClinicalNonBillable
0%
10%
0%
10%
Teaching
Research
AdministrationHospital
AdministrationPractice
20%
30%
20%
0%
10%
0%
0%
20%
10%
0%
30%
0%
0%
0%
10%
0%
Physician Compensation and
Productivity Modeling
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Measuring Physician Productivity–
Normalizing The Clinical Work Output
For A Sample Physician
•
•
1-Physician A FTE Status
(Based on 40 Hour Work Week)
1.00
1-Physician A Total Annual
Work RVUs
3,109
•
2-Billable Clinical Effort %
60%
2-Physician A Clinical FTE
0.60
•
•
Physician A Clinical FTE 0.60
(Line 1 X Line 2)
Physician A WRVUs
5,182
Normalized for
1.0 Clinical FTE (Line1 / Line 2)
Physician Compensation and
Productivity Modeling
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Measuring Physician Productivity –
The Importance of Accurately Documenting
Clinical Effort Work Percentage
•
•
Physician A Total Annual WRVUs
Physician A Billable Clinical Effort %
3,109
60%
3,109
50%
•
•
Physician A WRVUs Normalized for
1.0 Clinical FTE
5,182
6,218
•
Percent Variance- Change in % Effort
Physician Compensation and
Productivity Modeling
+20%
3,109
70%
4,441
-14%
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PHYSICIAN PRODUCTIVITY AND
COMPENSATION MODELING
• Some takeaways from presentation:
– Understand what you want to accomplish:
• Compare staff compensation levels;
• Calculate staff productivity;
• Assess fairness of staff compensation and alignment with
productivity levels;
• Create an incentive compensation plan
– Work RVUs is commonly used productivity metric;
– Multiple benchmarking data sources are available to
practices
Physician Compensation and
Productivity Modeling
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