From Many Pieces to One Program: Building an Employed Physician Compensation Plan.
At one Medical Group, Warbird was engaged to set a new course and ensure a consistent approach to a new employed physician compensation plan. The process began with an assessment of the client’s current state, contrasted it to benchmark data and began to build a comprehensive compensation plan for employed providers (physicians and others). A key goal of this engagement was to help Renown Health create a standardized model of physician compensation (all aspects) to improve their ability to recruit physicians successfully.
Renown Health is a Two-Hospital Health System, with an owned, multi-specialty medical group and a Medical School affiliation with University of Nevada, Reno College of Medicine.
Renown Heath’s medical group CFO and CEO positions were vacant for over a year. When the System CFO was eventually hired and arrived, he did not have a VP Finance/CFO for the Medical Group. As the CFO was new to the organization, he needed experienced, practitioner support and someone that could assess the practice with depth from both an operational and financial point of view to determine exactly what type of support was needed going forward. Warbird was engaged by Renown to assist the new CFO to evaluate and manage the Medical Group from a CFO’s perspective.
Within a few months, it became very clear that a comprehensive restructure of the compensation plan for the group practice was required. Warbird’s Medical Group CFO worked alongside an Interim CEO, MD to study, build and implement a new compensation model. Physician recruiting was clearly more difficult due to the inconsistent compensation plan, no common benefit structure and failure to close contracts with intended physician recruits. The Renown HR Director worked closely with Warbird CFO, and Interim CEO, MD to help develop policies, new contracts and guidelines for the medical group.
Rebuilt the Medical Group’s compensation plan by development of models of compensation to match the various medical specialties
Production 90/15 – paid providers at specialty specific conversion midpoint factors to wRVU levels. 15% quality metrics potential
Shift Pay – pay for mainly hospital-based positions paid at shift rate per shift worked; plus, opportunity to earn wRVUs quarterly for excess coverage above midpoint work. Providers in this category were: hospitalists, intensivist, trauma support teams; nursing home/SNF teams
Guarantee 100% – used primarily for new recruits targeted compensation paid as salary between 25th and 50th percentile based on specialty
Guarantee 90/15 – paid to providers based on population served i.e. rural areas and Medicaid clinics. Providers paid 90% of midpoint compensation for specialty as a salary with 15% potential quality metrics
Pooled RVU – paid primarily to OB group for consideration of practice to cover each other for call, deliveries and surgical cases, plus support of midwives
PMPM – select providers who supported HMO clientele with limited panels. Providers were paid on a per member per month basis; plus, quality on a PMPM on achievement of goals
Developed new policies and standardized contracts for providers
Transitioned to CARTs* model for pay. All pay category types had to fit into one of the following. Elimination of call pay, supervision pay, phone stipends etc. Pay that was non-productive was all paid at specialty specific midpoints at an hourly rate supported by time schedules. All positions were 1.0 except shift pay providers
*C = Clinical pay, patient generated
*A = Administrative pay for Medical Directors, Leadership positions within group; academic positions greater than .20 FTE
*R = Research pay
*T = Teaching pay for rotation of residents through the various specialties
*S = Strategic pay for special projects with duration of up to one year; i.e. building out new specialty practice
Developed quality thresholds KPIs for incentives paid
Assessment and fact finding. Since the group lacked employment details by provider, Warbird helped define who had been hired, by specialty, and develop job descriptions/ titles in order to match benchmarking titles for future identification. Also, Warbird performed analysis to determine and define the various types of work performed by each provider
Create and maintain a leadership role for operations support and financial advisory
Successful closure rate for new contracts presented to new providers improved to exceed 80% from an original rate of less than 50%, which was the closure rate prior to development of the new plan.
Three lessons were learned:
Develop and hold standards for the value metrics. Stay true and apply consistently.
Appoint a dedicated project manager to this project. This would have been very beneficial. In this engagement, the project manager was shared between Finance and Human Resources and this individual already had a heavy workload.
This is difficult work. One cannot underestimate the complaints that will be received when changing or standardizing physician compensation. In the end, the Medical Group Leadership Team held the line and reinforced the new compensation policies and guidelines to the benefit of everyone, including, in particular, the recruitment of new physicians.
Although areas of compensation are still in development, (e.g., value metrics for holdout areas), Renown Health now has a unified and standardized approach to provider compensation which resulted in a stable, sustainable and predictable system for future success.