Video Spotlight: Contract & Compensation Impacts

Transcription: 

We still don't know the full impact COVID will have on healthcare organizations in the long term or short term for that matter. We are hearing about 50 to 80 percent declines in patient volume in the short term and estimated annual declines of 15 to 20 percent depending on the specialty. However, I also think there will be long-lasting changes in how PSAs and a physician compensation are structured as a result of the crisis.  

Given the dramatic drop in volume over the past three months, we may see continued shifts away from independent practice and PSAs with clauses to protect against circumstances out of the physician’s control. The impact on value-based payments models is yet to be seen.  Although there may be pressure to move away from productivity-based payment and incentives, the financial pressure is being felt across the industry will make it difficult to significantly change the emphasis on productivity. I also think we will see a surge in physician retirements and mergers with larger groups.

Perhaps the most immediate and dramatic change is the integration and success of telemedicine. As physicians and patients have engaged in thousands of virtual visits, contracts and payment models have been evolving to respond. We expect to see a lot of analysis to set appropriate compensation and productivity standards as telehealth is more fully integrated into physician practices in reimbursement.

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2020 Salary and Productivity Benchmarks from Gallagher

MD Ranger is delighted to announce the publication of Gallagher's sixth annual Physician Compensation and Production Survey

WHATS NEW IN 2020 

  • Physician compensation and production data on 6 new specialties, including: 
  • Hematology/Oncology: Neuro 
  • Neurology: Neuromuscular 
  • Ophthalmology (Nonsurgical) 
  • Surgery: Plastic and Reconstruction (Oculo) 
  • Surgery: Transplant (Kidney) 
  • Surgery: Trauma (Burn) 

KEY STATISTICS 

Physician Specialties. The 2020 Physician Compensation and Production Survey represents data for 148 different physician specialties, up from 145 specialties in 2019. 

Number of Physicians. Data was received on 68,470 physicians, up from 56,625 physicians in 2019 (a 21% increase from 2019). 

Administrative Payments. Of the survey respondents who provided a breakout of total cash compensation by component, approximately 19.7% included a separate administrative component of cash compensation. Across all specialties, the average administrative payment was approximately 12.4% of total cash compensation for those who reported a separate administrative payment. 

Advanced Practice Provider (“APP”) Supervision Payments. For the survey respondents who provided a breakout of total cash compensation by component, across all specialties the average APP supervision payment earned by physicians was approximately $9,827. It is important to note that this figure does not take into account the number of APPs supervised, or the method of payment (i.e., fixed stipend, payment per Work RVU, revenue less expense, etc.). 

Call Coverage Payments. Of the survey respondents who provided a breakout of total cash compensation by component, approximately 12.9% included a separate call coverage component of cash compensation. Across all specialties, the average call coverage payment was approximately 7.8% of total cash compensation for those who reported a separate call coverage payment. 

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Video Spotlight: Leadership Best Practices

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We've seen firsthand how fast a situation has evolved over the course of the pandemic. So, your organization and its leadership should be ready to respond quickly, decisively and of course effectively to whatever changes could head your way. That being said, a methodical and consistent approach to COVID-related arrangements is very important.  

Consider the simplest policy or procedures to promote that consistency. Having the right resources at hand whether that be current market rate benchmarks or robust time reporting products, streamlined negotiations and monitoring. Everyone's situation is different so you need to evaluate what resources are needed to respond to the crisis and then, just keep reassessing to see if things are working for your organization. An official board-approved policy that enables management to act quickly and in the best interest of the community and organization can provide important structure and documentation for COVID-related contracts and amendments.

Other important ways to engage your board are frequent, regular reports to the board that itemize the organization's plans and actions.  We also recommend creating a board and management task force to monitor actions taken under COVID and provide oversight.  Leadership should consistently monitor the financial impact of COVID-related activities on the organization.  And lastly, hospital leadership should be communicating very clearly defined expectations of board members and of management to respond to situations that arise as a result of the crisis.

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Video Spotlight: COVID-19's Impact on Physician Arrangements

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We've seen arrangements ranging from adding completely new services to providing backstops for physicians whose office practice volumes fell precipitously. Let me share some examples.

A hospital I worked with created a series of new services to address COVID, including an urgent care and testing site, a mobile unit to visit senior care facilities and a dedicated hotline. The hourly rate for physician services was set approximately 20 percent over the standard rates paid for urgent care. But the physician’s PSA also had to be adjusted to include double payment if hours in the COVID site overlapped and reduced hours required in the PSA.

I've also seen increased ICU staffing needs resolved in different ways. In one situation, a contract amendment was needed for an intensivist group to allow per diem payments for additional staff while in another, an anesthesia contract was amended to repurpose anesthesiologists from outpatient surgery to care for critical patients in the ED and ICU.

I've also seen a number of medical groups amending PSAs that paid physicians based on productivity due to the 50 to 80 percent declines in patient visits. Compensation plans were adjusted in the short term, with some groups selecting a benchmark-based floor or guarantee and others looking back to historical compensation to stabilize income.

In each of these situations, contracts had to be amended with negotiated payments, performance and length of contract decisions, many of which will require ongoing discussion and revisions. The short turnaround required to execute contracts in response to the crisis was facilitated when organizations had ready access to high quality benchmarks and a designated contract manager who was familiar with existing contracts and could monitor payments and terms.

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