{"id":3050,"date":"2014-03-12T10:43:51","date_gmt":"2014-03-12T14:43:51","guid":{"rendered":"http:\/\/n2value.com\/blog\/?p=3050"},"modified":"2014-03-12T10:45:33","modified_gmt":"2014-03-12T14:45:33","slug":"things-to-think-about-in-transitioning-from-a-private-practice-to-hospital-owned-practice-productivity-pay-and-metrics","status":"publish","type":"post","link":"https:\/\/n2value.com\/blog\/things-to-think-about-in-transitioning-from-a-private-practice-to-hospital-owned-practice-productivity-pay-and-metrics\/","title":{"rendered":"Things to think about in transitioning from a private practice to hospital-owned practice – productivity, pay, and metrics"},"content":{"rendered":"

Browsing the other day I came across a question asking about salary metrics. \u00a0A multi-specialty group (MSG) was looking at a sale to a hospital. \u00a0All providers were on flat salary. \u00a0(uh oh) \u00a0\u00a0<\/span>
\nPaying everyone a flat salary in a single specialty group (SSG) communicates that you are being paid for your time, not necessarily productivity. \u00a0This may work in some models (dept. of health clinics, clinics targeting the underserved, etc\u2026) but in a SSG with multiple physicians, it will eventually cause problems as 1) different physicians have different productivity naturally and 2) paying a flat salary regardless of income is fiscally dangerous – you can\u2019t spend more than you earn. \u00a0 This approach may flatten productivity in a ‘lowest common denominator effect’. \u00a0<\/span><\/p>\n

At the other extreme, is \u2018eat what you kill\u2019. \u00a0This creates a vicious practice environment where partners fight over high RVU & highly paid work, and \u2018dump\u2019 the unpaid or poorly paid work on each other, other clinicians, anyone they can! \u00a0Younger, less connected members of the group are taken advantage of by older, savvier partners. \u00a0This kind of practice (and they do exist!) is where medicine gets its reputation of \u201ceating its young.\u201d \u00a0It is an anti-collegial system, and results in high turnover, a lower level of overall care, possible legal risk, and ultimately a lawsuit when the providers split up.<\/span><\/p>\n

So, how to resolve this problem?<\/span><\/p>\n

1. \u00a0Its important that you KNOW your provider\u2019s productivity. \u00a0How many RVU\u2019s? \u00a0How many patients seen? \u00a0How many procedures? \u00a0What are their charges? \u00a0What are their receivables? You need to measure these items. \u00a0Billing records may give a reasonable approximation. \u00a0Consider basing productivity on charges, not revenue, as different payor mixes may have different reimbursement, and swapping a provider to another site\/shift might account for differences in recovered revenue. \u00a0Also see discussion below in #3 for philosophy.<\/span><\/p>\n

2. \u00a0 Once you know the average productivity of the providers, then you can establish the level of salary from MGMA for a group of that % of productivity. \u00a0Consider establishing the base salary at a slightly lower level (i.e. if average group productivity is 65%tile – 85%tile, set your base salary at the 65th%tile not the 75th%tile mean) so that less productive members of the group are not dismissed at the first opportunity if they are not meeting productivity measures. \u00a0In a MSG setting, it might be better to treat it as a bunch of single specialty group contracts negotiated under a master agreement.<\/span><\/p>\n

3. \u00a0 Establish a bonus based upon excess RVU\u2019s to encourage productivity. \u00a0Be careful here, as solely basing the bonus on RVU\u2019s can cause the group to lose cohesiveness and collegiality. \u00a0Even better, if you can model it correctly, use a hybrid model of RVU\u2019s, # of patients seen, total $ amount of charges. <\/span>\u00a0 This last part is important, as one of the big advantages of being a hospital-owned group is the ability to be separated (in theory) from accounts receivable. \u00a0Bottom line – providers are doing the work, and the hospital is doing the collection. \u00a0You (the providers) need to be paid for your work & the hospital needs to collect. \u00a0If the hospital is not able to collect, that is beyond your ability to control in a hospital-owned practice, and ultimately not your responsibility (although you must do everything in your power to help them collect by coding properly & compliantly). \u00a0It is a shift in thinking from shareholder to employee. \u00a0One neat thing that you can do here as a MSG is set a \u2018group bonus\u2019 tied to the overall productivity of EVERYONE now in the MSG swept into the hospital group and a separate \u2018individual bonus\u2019. \u00a0That might go a long way to maintain the culture which existed in the MSG and keep the providers happier.\u00a0<\/span><\/p>\n

4. \u00a0Nobody likes to do work that they are not paid for. \u00a0So for administrative duties (chairmanships, committees, etc\u2026) negotiate a small(er) bonus for that specific work.<\/span><\/p>\n

5. \u00a0There are quality measures that need to be met under meaningful use criteria, and the hospital leadership may have set their own performance measures. \u00a0There should be a small bonus for meeting these measures as well as a small demerit for not meeting them. (+\/- 0-2%?) \u00a0This should modify the overall group and individual productivity bonus to discourage folks from boosting RVU\u2019s at the expense of quality measures.<\/span><\/p>\n

6. \u00a0For call, you might be wise to negotiate a flat rate per call with the hospital (specialty-specific). \u00a0That way, those who hate call can \u2018sell\u2019 their call to those who like to take call or who are hungrier for earnings. \u00a0If you do so, you MAY need to hold the call earnings out of the RVU pool as otherwise those who take more call will have more RVU\u2019s and skew the bonus pool. \u00a0However, the calculation may be difficult to do. \u00a0<\/span><\/p>\n

7. \u00a0Finally, once you go through this process you can standardize a day\u2019s pay, and those who want to work less can buy vacation days from those who want to work more. \u00a0This is a nice option if available.<\/span><\/p>\n

8. \u00a0 Be really clear about the metrics established for performance evaluation, promotion, and bonuses. \u00a0Try to make it fair but don\u2019t provide incentives for uncollegial behavior, substandard care, etc… \u00a0It will save money and heartache later. \u00a0See previous post on \u201cThe measure is the metric.\u201d \u00a0Solely basing employment on RVU targets is risky.<\/span><\/p>\n

Z.B. \u00a0While I think its fine to ask on the net about options, there is no substitute for specific, expert advice from someone who has gone through this process before – preferably multiple times! \u00a0Being that a MSG has the income of multiple physicians, I think that it would be wise for them to hire a consultant who has guided groups through this kind of transition and can evaluate the practice intimately under a NDA and provide specific recommendations (which this post is emphatically NOT). \u00a0Perhaps the questions and comments above may serve as a very rough beginning of a process which will lead to a successful cash-out and transition from private practice to hospital-owned practice.\u00a0 <\/span><\/p>\n

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