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Physician C&ompensation
Recruitment
January
20092009
January
Vol. 10Vol.
No.171 No. 11
INSIDE
Specialty compensation
■■ Learn
about trends in
psychiatric compensation
and recruitment on p. 4.
CMS
■■ Find
out how the CMS
2009 Final Physician
Fee Schedule differs
from the proposed rule
on p. 7.
Ask the experts
■■ Experts
discuss
compensation
disclosure on p. 9.
Column
■■ Phillip
Miller asks
whether the medical
home can save primary
care on p. 10.
Index
■■ See
a list of articles that
have appeared in PCR
during 2008 on p. 11.
A HealthLeaders
Media publication
MGMA confirms that costs outpace revenues:
What does it mean? And what will it mean?
A recent report from MGMA confirms that operating costs are rising faster than revenue in many
medical group practices. Although the findings are
not surprising, the effect of the costs-revenue disparity is continuing to unfold, and how practices
and health systems are responding could have serious implications for the practice of medicine.
MGMA Cost Survey: 2008 Reports Based on 2007
Data reports that although multispecialty group
practices reported a 5.5% increase in median total
revenue in 2007, median operating costs rose by
6.5%. Many single-specialty practices reported a
similar trend. For example, cardiology practices’
median total medical revenue decreased 0.61%,
and operating costs rose 6.3%.
MGMA also reports that during the past
decade, operating expenses have risen from 58
cents per dollar of revenue to 61 cents. According
to MGMA, the drivers of the trend include the:
»» Drug supply. In multispecialty groups, drug
supply costs leapt 17% in 2007, compounding
a 33% increase from 2006.
»» Support staff. Family practices reported a
15.8% increase in support staff costs in 2007.
OB/GYN and pediatrics groups reported
similar hikes—17.2% and 10.1%, respectively.
»» Professional liability. This varied by specialty.
Cardiology groups reported an 8% increase in
malpractice insurance premiums in 2007; the
increase since 2000 is 132.3%.
No surprise, but …
None of this should be a surprise to anyone
who has been running a practice. A declining
economy and escalating pressures from Medicare
and other payers mean practices must work harder
to maintain the status quo. What is news is that
physicians, consultants, hospitals, and others are
growing more concerned, and problems that have
been brewing for years are receiving more attention, says Mary J. Witt, vice president of The
Camden Group in El Segundo, CA.
“We’ve got a pretty good mess on our
hands. Ultimately, it is broken.”
—Allen Dye
Allen Dye, vice president of marketing at
Merritt Hawkins & Associates in Irving, TX,
says margins have been diminishing during the
past decade, and hospitals have been particularly
hard hit.
But now that practices are affected, the problem is gaining more notice, Dye says. “People
are more inclined to listen to doctors than to
hospital administrators,” he says. “As if anything else was needed to suggest that healthcare
is far from recession-proof.”
Too many eggs in one basket?
Physicians and groups offset practice overhead and add revenue streams when they expand
into ancillary areas, such as imaging, lab services, and surgery centers. Although this works
for diversified groups, it may have the opposite
effect in subspecialty practices, says Dye.
continued on p. 2
A HealthLeaders Media publication
MGMA
continued from p. 1
Subspecialization may contribute to some of the financial
woes practices are facing, especially with surgical subspecialties, as there isn’t the same opportunity to spread out the risk
as in a more diversified practice. “They are not as insulated
from market change,” Dye says. Moreover, as the practices
add surgery centers and make other attempts to “look and feel
more like hospitals, they are going to see what [hospital] margins have been doing for a long time,” he says.
Practices are—or should be—questioning the role of services and procedures, says Steven A. Nahm, vice president of
The Camden Group. Such questions include:
»» Are ancillary services covering variable expenses and contributing to fixed overhead?
»» Are the ancillary services offered in the practice the highest and best use of office space?
»» Are there ancillary services that the practice should be
offering in-house?
»» Is it financially worthwhile to continue to perform inoffice procedures?
Comp models
Although it makes sense to review how compensation models are structured, “restructuring compensation arrangements
or agreements is not the primary response or solution to an
economic imbalance,” says Nahm.
“For many years, groups have been forced to adjust compensation models to [ones that are] production-based.
Most groups offer a fair base salary for a short term—one
to two years maximum—and then change to the production
model,” says Jim Fuller, marketing vice president of Delta
Physician Placement in Dallas.
So what’s left to do? Expect more emphasis on practice style
and resource consumption. Practices are becoming more sensitive to the expense side of the equation, say Witt and Nahm.
One critical question for practices is simple and complex,
says Nahm. “In a multiple-physician practice, how should overhead be allocated among physicians, especially when there are
large variances in their usage of office space and staff?” he says.
The issue isn’t restricted to full-time physicians. Practices
are also considering whether compensation models should
“take into account part-time or underperforming physicians
or midlevel providers who do not fully maximize the overhead allocated to them,” Nahm says.
Witt is working with practices that have a few resourceintensive physicians, which directly affects overhead. Eventually,
it will have to be factored into compensation, she says, but
addressing the issue may be a challenge: “They are having some
interesting conversations.”
Recruitment concerns
Recruiting efforts remain dependent on location, says Nahm.
For example, in California, reimbursement is low, causing practices to be at a competitive disadvantage, he says, adding that
many practices are reluctant to recruit.
Nahm says practices are asking themselves questions such
as, “Will adding a new associate be a financial drain or benefit to the practice? Can a new physician add ancillary volume, add a new profitable service line capacity, [and] share in
overhead expenses?” This is especially true for solo practices.
Many of these physicians are not bringing in associates and,
accordingly, they are not thinking about succession planning.
“How do you replace those older physicians who don’t
want to recruit anybody? That becomes another challenge for
hospitals trying to stabilize their medical staff,” says Witt.
From the physician alignment perspective, hospitals and
health systems are trying to create other employment vehicles
that will recruit new residents without hurting the existing
medical staff. And hospitals (as well as organizations such as
Kaiser Permanente) have increasing appeal, especially in areas
in which reimbursement is low. They are paying well, providing benefits, and insulating physicians against expenses.
Hospitals buying practices
One way to ensure a steady supply of physicians is for hospitals to purchase practices. And that’s what they are doing,
says Fuller. Hospitals often feel compelled to purchase the
groups to maintain community stability. Many hospitals that
purchase and manage practices are willing to accept a practice
loss for the offsetting benefits, such as ED coverage, he says.
Nahm and Witt report a similar trend. A major issue for
practices considering selling to a hospital or health system is
figuring out how their compensation models would change,
say Nahm and Witt. (Look for more about this topic in a
future PCR.)
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2
Physician Compensation & Recruitment January 2009
© 2009 HCPro, Inc.
A HealthLeaders Media publication
“Selling a practice is not a panacea for physicians seeking
a huge buyout,” says Witt. Practices are not selling for the
high multiples that were seen in the last buying cycle.
Making adjustments
The cost-revenue disparity and the current economic crisis
have led to other changes, including:
»» Expanding hours. Perhaps driven by competition from
retail clinics, more practices are extending hours, say
Nahm and Witt. Such a move allows a practice to more
fully maximize use of fixed overhead.
»» Booming locum business. Dye, Nahm, and Witt all note
that more physicians are turning to locum tenens work.
»» Delayed retirement. “[Physicians] have lost the ability to
retire early,” says Witt. This could be one factor driving the
locum surge.
»» Call coverage. Economic pressures on practices are one big
reason for the increasing demands for on-call compensation.
Increasingly, physicians believe that if they are going to be
doing work, it needs to generate revenue, says Witt.
‘A pretty good mess’
Even with all the issues raised, Dye says the report is just
that—a report.
It’s not predictive, and he suggests not responding rashly.
Being too reactive and reactionary would only make things
worse, he says. “We don’t want people to freak out.”
This report will require physicians and payers to reexamine
how medicine is practiced, says Witt.
Still, don’t mistake Dye’s call for calm for undue optimism. “We’ve got a pretty good mess on our hands,” he
says. “Ultimately, it is broken.” H
PCR sources
Allen Dye, vice president of marketing, Merritt Hawkins & Associates, 5001
Statesman Drive, Irving, TX 75063; [email protected].
Jim Fuller, vice president of marketing, Delta Physician Placement, 1755
Wittington Place, Suite 175, Dallas, TX 75234; 800/521-5060.
Steven A. Nahm, vice president, The Camden Group, 100 North Sepulveda
Boulevard, Suite 600, El Segundo, CA 90245, 310/320-3990; snahm@
thecamdengroup.com.
Mary J. Witt, vice president, The Camden Group, 100 North Sepulveda Boulevard,
Suite 600, El Segundo, CA 90245, 310/320-3990; [email protected].
Questions to consider
The cost-revenue imbalance is prompting physician practices to
»» When should the practice implement electronic medical records,
analyze operations and business practices to maintain compensa-
and how will the costs of implementation and ongoing operations
tion levels, says Steven A. Nahm, vice president of The Camden
be paid? Should the practice participate in a consortium with
Group in El Segundo, CA. Practice managers are asking questions
other practices or a hospital to implement a common system?
regarding expense control and revenue generation, such as:
»» Can staffing be reduced without harming quality or patient
throughput?
»» How can spending on supplies and other operating expenses
be decreased?
»» What is the appropriate mix and use of RNs versus medical
assistants and other types of personnel?
»» In practices with multiple offices, are there locations that can
be closed and volume consolidated to remaining sites? Is it
time to relocate to an area with a more favorable payer mix?
»» Can physicians reduce non-revenue-producing time in the
practice?
»» Are there new ways to communicate with patients and
providers that can reduce administrative costs?
»» Is physician medical record documentation and charge coding
truly reflective of the services being provided?
»» Is the practice collecting copayments and outstanding balances
as well as updating patient data at the time of service?
»» Does the group have good billing performance?
»» Should the practice terminate low-reimbursement payers who
refuse to increase rates to appropriate levels, or at least close
the practice to new patients from these plans?
»» Will a local hospital assist with the cost of recruiting and establishing a new physician in the practice?
»» Does it make financial sense for an individual physician to maintain outpatient and inpatient practices?
»» Is it time to leave independent practice and join a health
system or merge with other physicians?
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© 2009 HCPro, Inc.
January 2009 Physician Compensation & Recruitment
3
A HealthLeaders Media publication
Lack of ancillary income drives lower compensation for psychiatry
Given the limited opportunities for ancillary income coupled
with various reimbursement challenges, it’s not a surprise that
psychiatry is one of the lowest-paid specialties. But opportunities are emerging that allow some psychiatrists to earn considerably more than average. If they are willing to go directly to jail
(or, more accurately, prison), they can collect—and far more
than $200.
According to the MGMA 2008 Physician Compensation and
Production Survey, the overall median compensation for psychiatrists is $198,653. Median compensation for all specialties is $332,450.
However, that number may be a bit deceiving. Although the
median for general psychiatry is $200,518, it’s $236,998 for
child psychiatry. (The 2008 report does not include figures
for geriatric psychiatry.) Demand is high for psychiatrists in
general, but it’s especially high for child psychiatrists, which
likely accounts for the difference in compensation. But even
child psychiatry comes in below most other specialties.
There are several reasons for this, including the lack of opportunity for procedure-based ancillary income and payer mix.
Psychiatry can be heavily dependent on Medicaid and
Medicare, says Peter Callan, executive vice president of
Horton Smith & Associates in Overland Park, KS.
Moreover, most commercial insurance plans provide coverage for a limited number of visits, Callan says. After that, it’s
an out-of-pocket expense for the patient, which can lead to an
increase in bad debt, he says.
The recent parity legislation may help the reimbursement
situation, says Sam Muszynski, director of the Office of
Healthcare Systems and Financing at the American Psychiatric
Association in Arlington, VA. But in reality, although it may
increase compensation, Muszynski says he believes it’s going
to help the patient more than the psychiatrist.
Increasingly, psychiatrists are practicing out of network,
finding that it makes more sense to charge patients directly.
Given the high demand, it’s a workable model, he says.
other specialties, Callan says. “Like all other areas, it will
most definitely continue to deteriorate,” he says. “I looked
at our database, and it seems like there will be approximately 1,800 psychiatrists graduating in 2009.”
Psychiatry is the 10th most requested specialty nationally,
according to the 2007 Review of Physician and CRNA Recruiting
Incentives from Merritt Hawkins & Associates. That’s up from
14th place in the 2006 review.
Delta Physician Placement’s Physician Recruiting Standard Q3
2008 identified it as the sixth most requested specialty from
October 2007 through September 2008, up from seventh in
the 2006–2007 period.
The shortage is expected to continue, says Muszynski, and,
as it does, there should be a heightened effort to coordinate
primary and psychiatric care to ensure that those who need
help the most are seen by a specialist—a triage approach.
Currently, roughly one-third of patients with mental health
issues can be seen in the primary health arena, and about onethird are referred to psychiatrists. For the remainder, primary
care doctors and psychiatrists will need to develop better
ways to determine whether a referral is in order and how to
coordinate it.
Addressing the shortages
In addition to overall shortages, there’s geographic disparity, just as there is in other specialties. One result has been an
increased use of the circuit rider approach: One psychiatrist
travels a circuit, visiting several towns.
However, in terms of satisfaction, that can be frustrating.
The psychiatrist has no colleagues in whom to confide or
with whom to share the load. He or she is, in effect, always
on call, says Muszynski.
Another approach is telepsychiatry, which links underserved
rural areas to areas with a higher concentration of psychiatrists.
Telepsychiatry provides more revenue-generating opportunities.
Prisons and employment
Demand outstrips supply
Due in large part to the relatively low compensation, the
supply of psychiatrists is not meeting demand. There’s a severe
shortage of psychiatrists—one that’s more pronounced than
Compensation is a primary reason for the shortage, says
Kevin Thill, vice president of the psychiatry division at
LocumTenens.com. The available pool is shrinking because
so many are going into prison work, especially in California
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4
Physician Compensation & Recruitment January 2009
© 2009 HCPro, Inc.
A HealthLeaders Media publication
and Florida, Thill says, adding that both states were hit with
lawsuits stemming from the undersupply of psychiatrists in
their prison systems. As a result, both are boosting their prison
psych staff and compensation.
The compensation is so attractive in prisons that many
of his locum psychiatrists end up opting for employment in
these facilities. Muszynski says he expects the prison-system
opportunities to grow; in fact, he sees the employment model
growing across the board.
Another growth area is emergency psychiatry. Increasingly,
hospitals want to have a psychiatrist available to the ED. In
effect, they are emergency psychiatric hospitalists.
The locum pay—and the demand—are growing faster
than in most other specialties, Thill says, adding that in the
past few months, he’s seen increasing numbers of psychiatrists come out of retirement to do locum work, which he
attributes to the poor economy.
Limited opportunities for revenue
One factor depressing psych compensation is the lack of
opportunity to make money from ancillary services.
“There are limited opportunities to generate additional
revenue,” Callan says.
Among the few available are participation in drug trials
and giving lectures and presentations on behalf of pharmaceutical companies.
However, these are under increasing scrutiny from
Congress and the American Psychiatry Association. A July
2008 New York Times article included the contention that
commercial arrangements between doctors and drug companies are more prevalent among psychiatrists precisely
because psychiatrists are among the lowest-paid medical
specialists, and they often take consulting jobs with drug
companies to supplement their income.1
Locum becomes more attractive
The employment model isn’t the only one that’s growing
in psychiatry. So is locum tenens work, says Thill. During
the past two years, it’s been a challenge to find enough qualified candidates, he says. And when he does, they can name
their own salaries.
Thill has seen a dramatic increase in locum pay for psychiatrists. Per diems have doubled from when he started
about 11 years ago. Today, a psychiatrist can demand
$800–$1,000 per day—even higher in some rural areas.
continued on p. 6
Psychiatric median compensation trends
2008 report
2007 report
2006 report
2005 report
% change
% change
Compensation survey
median
median
median
median
2007–2008
2005–2008
AMGA Medical Group Compensation
$206,431
$200,871
$186,786
$177,000
2.77%
16.63%
$170,287
$160,204
$157,588
$155,000
6.29%
9.86%
$198,653
$192,609
$189,409
$182,799
3.14%
8.67%
Sullivan, Cotter and Associates
Not yet
$167,131
$162,718
$157,529
N/A
N/A
Physician Compensation and
available
+
+
+
+
and Financial Survey
HCS Physician Salary Survey Report
(represents only salary and bonus)
MGMA Physician Compensation and
Production Survey
Productivity Survey
+ Survey results are based on the previous year’s data.
Source: Data excerpted from AMGA, Hospital & Healthcare Compensation Service (HCS), MGMA, and Sullivan, Cotter and Associates,
Inc., compensation surveys. Reprinted with permission.
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© 2009 HCPro, Inc.
January 2009 Physician Compensation & Recruitment
5
A HealthLeaders Media publication
Psychiatry
Not so glum
continued from p. 5
Comp issues notwithstanding, psychiatrists generally are
more satisfied with the career they’ve chosen than other medical specialists, Thill says.
In his firm’s 2008 Psychiatrist Compensation & Satisfaction
Survey, 83% of almost 200 respondents said they would
choose medicine as a career again if given the choice.
This compares to 73% of general surgeon respondents,
73% of anesthesiologist respondents, and 71% of radiologist
respondents.
Callan says he is even optimistic about the direction of compensation. The current shortage, coupled with the aforementioned demand, could ultimately lead to increases.
“The real wild card in all of this … is what will happen
in terms of increases in compensation to simply provide for
basic services when there is such a shortage,” says Callan.
“In other words, the bidding war is beginning to occur.”
He says he believes that, ultimately, the laws of supply
and demand will play out in every specialty. “It would not
surprise me to see increases at roughly two times the national
norm.” H
But there are some procedure-related opportunities.
Muszynski points to two relatively new procedures that
may provide ancillary reimbursement:
»» Vagus nerve stimulation. This is an adjunctive treatment
for depression and certain types of epilepsy. Coverage
and reimbursement remain potential roadblocks.
»» Transcranial magnetic stimulation. A noninvasive method
of brain stimulation being used to treat depression, it
recently received FDA approval, but it has yet to be determined how it will be covered by insurers or Medicare.
Medication management compromise
Increasingly, psychiatrists are turning to medication management rather than psychotherapy; the most common psych
code is 90862—medication management, says Muszynski.
The trend is driven by reimbursement rates. It makes more
sense to see a patient for 15–20 minutes to talk briefly and, if
necessary, adjust medication, than to devote an entire hour to
talk therapy.
What’s disappointing is that not only do psychiatrists
prefer psychotherapy in tandem with medication, but
research suggests such an approach is the most effective for
patients, he says. But reimbursement models don’t support
it. “So you do the best you can with medication management.” It is an economic decision, driven by reimbursement
challenges. “Even doctors have a little Adam Smith in them,”
says Muszynski.
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Peter Callan, executive vice president, Horton, Smith & Associates, 7400 West
132nd Street, Suite 350, Overland Park, KS 66213, 800/398-2923.
Sam Muszynski, director of the Office Of Healthcare Systems And Financing,
American Psychiatric Association, 1000 Wilson Boulevard, Suite 1825, Arlington,
VA 22209, 703/907-7300; [email protected].
Kevin Thill, vice president of the psychiatry division, LocumTenens.com, 3650
Mansell Road, # 300, Alpharetta, GA 30022, 770/643-5511.
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Physician Compensation & Recruitment January 2009
© 2009 HCPro, Inc.
A HealthLeaders Media publication
CMS Final Rule includes a few surprises
The CMS 2009 Final Physician Fee Schedule Rule
doesn’t vary much from the proposed rule released this
past summer. But the changes made relating to Stark,
diagnostic testing facilities, and the antimarkup rule are
significant.
Background and MIPPA enactment
CMS published the Final Rule in the Federal Register
November 19. It revises the payment policies and rates for
the Medicare Physician Fee Schedule (MPFS) for 2009.
As required by the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA), the payment rates for
physician-fee-schedule services will increase by 1.1% in 2009.
Had MIPPA not been enacted, providers would have faced
a 15.1% reduction in reimbursement, according to the AMA.
(This figure factors in the scheduled 10.1% decrease and the
estimated sustainable growth rate formula on which Medicare
reimbursement is based.)
Providers could receive up to a 5.1% pay boost for 2009. In
addition to the 1.1% hike, the schedule includes a 2% bonus
for physicians who e-prescribe for their Medicare patients
and 2% for reporting measures under the Physician Quality
Reporting Initiative (PQRI).
Robert Bennett, government affairs representative at
MGMA, will be watching to see how much of an incentive
this is. The bonus represents an increase from 1.5%.
If 1.5% were enough to entice 16% of eligible professionals to attempt the 2007 PQRI, Bennett says he wonders
whether “the increase to 2% draws more attempts.” (See
“E-prescribing bonuses clarified” below and “PQRI: Will
incentives overcome frustration?” on p. 8 for more on
e-prescribing and the PQRI.) Other than the MIPPA-related
provisions, the Final Rule generally sticks to the proposed
schedule. But there are a few changes worth noting.
Delay in Stark exceptions
CMS has postponed plans to create an incentive payment
and shared savings program exception to Stark. According
to CMS, it didn’t receive sufficient information or adequate
continued on p. 8
E-prescribing bonuses clarified
The Final Rule includes provisions implementing the MIPPAmandated e-prescribing incentive program.
Moreover, they must report one of three codes when submitting claims for specified types of medical visits, indicating that
Eligible providers who adopt and use qualified e-prescribing
systems to transmit prescriptions to pharmacies can earn a bonus
of 2% of their total Medicare-allowed charges during 2009. The
e-prescribing incentive is 2% for reporting years 2009–2010,
1% for 2011–2012, and 0.5% for 2013.
Physicians must have a qualified e-prescribing system with
certain capabilities, such as being able to:
»» Communicate with the patient’s pharmacy
»» Help the physician identify appropriate drugs and provide
information on lower cost alternatives for the patient
»» Provide information on formulary and tiered formulary
they either:
»» Did not prescribe any medications during the visit
»» Used e-prescribing for any medications prescribed during
the visit
»» Did not use e-prescribing for a prescription because the law
prohibits e-prescribing for the specific type of drug, such as
a controlled substance
The incentive will be phased out and, effective in 2012, providers who are not successful e-prescribers will be penalized 1.5%
for 2013, and 2% for 2014 and each subsequent year.
medications
»» Generate alerts about possible adverse events, such as
improper dosing, drug-to-drug interactions, or allergy concerns
Editor’s note: To learn more, visit www.cms.hhs.gov/PQRI/
03_EPrescribingIncentiveProgram.asp.
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© 2009 HCPro, Inc.
January 2009 Physician Compensation & Recruitment
7
A HealthLeaders Media publication
CMS Final Rule
continued from p. 7
consensus to move forward and, accordingly, the comment
period will remain open for 90 days after publication of the
MPFS rule in the Federal Register.
CMS has determined it needs additional information to
finalize such an exception, and so it’s seeking additional
comments. In fact, CMS has invited comments on at least
55 elements related to the shared savings concept, says
Michael A. Cassidy, partner in Pittsburgh-based Tucker
Arensberg and the publisher of www.medlawblog.com.
MGMA was among those calling for a delay. In its submitted comments, it stated:
We view the current proposal as a tentative step in the right direction. We are generally concerned, however, that the proposal ... is too
complex and too restrictive for the average group practice or hospital to
want to participate.
So MGMA is pleased with the postponement, says
Amy E. Nordeng, JD, counsel of government affairs at
MGMA in Washington, DC. “We are encouraged that
CMS is attempting to get more in-depth comments from
the healthcare community and hope it reflects a real interest
in developing a workable exception,” Nordeng says. “We also
hope that issues related to the transition don’t prevent the new
exception from being finalized.”
IDTF delay
CMS also delayed action on its proposal that nonhospital
providers of testing services meet performance standards for
independent diagnostic testing facilities (IDTF). As a result,
physicians who perform MRI, CT, or PET/CT in their offices
will not be required to seek facility accreditation in September
2009, as previously proposed. That requirement is expected to
go into effect January 2012 as part of MIPPA. (MIPPA calls
for all facilities providing advanced diagnostic imaging services
to become accredited, beginning in January 2012.)
The American College of Radiology has taken issue with
this change; its position is that all providers in every practice
setting should be required to meet all quality and performance
standards that are required of IDTFs and accredited sites.
Antimarkup rule for diagnostic tests
A proposed antimarkup provision—intended to take the
profit out of reassignment of benefits for diagnostic tests
PQRI: Will incentives overcome frustration?
Among the provisions of the Medicare Improvements for
Patients and Providers Act of 2008 (MIPPA) is a 2% incentive payment for physicians who successfully report measures
feedback reports, and the delay from the time data were submitted
to the time reports were available.
Physician practices spent an average of five hours trying to
under the Physician Quality Reporting Initiative (PQRI). MIPPA
locate and download their reports, and more than 28% of respon-
finalizes 153 quality measures and seven measures groups for
dents were unsuccessful in their attempts. (The full report is avail-
the 2009 PQRI.
able at http://mgma.com/WorkArea/showcontent.aspx?id=21972.)
MGMA will continue to work with CMS “to help evolve this
“It will be interesting to see how the 2008 and 2009 PQRI
voluntary program into one that rewards the improvement of
reporting periods play out, based on the largely negative experienc-
clinical outcomes,” says Robert Bennett, government affairs
es with the 2007 PQRI,” says Bennett. “On one hand, many prac-
representative at MGMA.
tices that have participated, or are contemplating participating,
And a recent MGMA survey reveals why such work may be
see the rather low payments made to successful 2007 PQRI par-
required. In fall 2008, MGMA issued a report indicating that prac-
ticipants as not worth the effort. On the other hand, CMS’ efforts to
tice leaders were frustrated with the PQRI. They cited the lack of
integrate the use of clinical registries could increase participation
data for improving patient outcomes, the administrative burden of
by removing the duplicative reporting requirements that participa-
participation, the difficulty in accessing and downloading the 2007
tion in both a clinical registry and the PQRI currently require.”
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Physician Compensation & Recruitment January 2009
© 2009 HCPro, Inc.
A HealthLeaders Media publication
billed by one entity and provided by another—didn’t make it
to the final version. In effect, the current antimarkup rule is a
simpler version of the 2008 and 2007 proposals, says Cassidy.
As articulated in the final version, the antimarkup rule will
not apply when the service is supervised by a physician in the
ordering physician’s group who spends at least 75% of his or
her professional time providing services to that group practice.
This approach allows for locum arrangements because the services of the substitute physician will be billed in the name of
the billing physician being replaced, Cassidy says.
“The changes that were adopted in the Final Rule are less
restrictive than any of CMS’ previous proposals, which we
appreciate,” says Nordeng. However, CMS is still looking at
certain group practice arrangements and is applying the payment restriction to certain services performed within a group.
Given the approach adopted in the Final Rule, fewer groups
will be affected than originally proposed. “That being said,
everyone will need to analyze their operations to see if they are
impacted. For those who are, calculating the net charge and/
or restructuring will be a significant burden,” Nordeng says. H
PCR sources
Robert Bennett, government affairs representative, MGMA, 1717 Pennsylvania
Avenue NW, # 600, Washington, DC 20006, 202/293-3450, Ext. 1378.
Michael A. Cassidy, partner, Tucker Arensberg, 1500 One PPG Place, Pittsburgh,
PA 15222-5401, 412/594-5515; [email protected].
Amy E. Nordeng, JD, counsel, government affairs, MGMA, 1717 Pennsylvania Avenue
NW, # 600, Washington, DC 20006, 202/293-3450.
Ask the experts
Should a practice disclose to patients its compensation approach?
Editor’s note: PCR asked our experts whether a practice should disclose its
compensation approach to patients. If so, how should they go about doing this?
If not, why? If you have a question you would like to ask our experts, send it
to Roxanna Guilford-Blake at [email protected].
Kenneth T. Hertz, CMPE, principal, MGMA
My answer would be no: I don’t think there is any reason to
disclose a practice’s compensation system to patients. It should
have no effect on how the patient is treated by the practice or
the provider. The compensation system is an internal process
for the practice. I wouldn’t disclose the physician compensation
methodology to a patient any more than I would tell the patient
that the receptionist is being paid $X or the nurse is being paid
$Y. If the practice has done its job properly, the compensation
system will not encourage gaming the system or aberrant behavior. I believe the practice should emphasize to the patients such
qualities as its patient-centric approach, commitment to the
quality of care for the patients, and access. But disclose the physician compensation methodology? I sure don’t see any reason to
do that.
James W. Lord, principal, ECG Management Consultants
The manner in which a physician is paid within a practice
should not be open to review by its patients. If possible, the
healthcare consumer is better served by understanding the price
for care and the historic outcomes of care over the contribution
to a physician’s income. Today’s incentives are largely productivity-driven, which is due to the simple reality that it continues to be the most objective data available and, thus, the best
method for distribution of monies. Once the industry begins
to pay for outcomes, there may be some rationale to share the
alignment of incentives that serve the patient, but I doubt many
patients want to know that their physicians are paid largely on
productivity. As compensation planning experts, one of our
challenges is to find the right balance between quality, service,
and productivity and to objectify this information into a formula that aligns the complex incentives of healthcare delivery.
Max Reiboldt, CPA, managing partner and CEO, The
Coker Group
The compensation plan for a physician practice, whether private or owned and managed by a hospital, should be the private
concerns of the physicians and owners of the business. Patients
should not be privy to the compensation structure. The physicians’ actions should not change or vary in any way based on the
incentive compensation structure. Moreover, if this compensation structure were known by patients, there could easily be a lot
of misconception. As patients are becoming better informed and
may surmise that physicians are on incentive compensation
plans, much care and caution is needed. H
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© 2009 HCPro, Inc.
January 2009 Physician Compensation & Recruitment
9
A HealthLeaders Media publication
Can the medical home save primary care?
by Phillip Miller
Primary care is in trouble, and there may be no way to
save it. That was the conclusion of a 2004 report conducted by the American Academy of Family Physicians (AAFP),
which projected that family medicine would not exist in the
United States in 20 years unless major changes are made to
delivery models and compensation.
Since then, the news has not improved. In 2007, 16% of
first-year family practice (FP) residency slots went unfilled.
More than 50% of the 2007 FP slots that were filled were
taken by international medical graduates, underscoring the
lack of interest U.S. medical graduates have in primary care.
Merritt Hawkins & Associates recently conducted a survey
of 12,000 physicians—of which about 9,000 are in primary
care—for the Physicians’ Foundation, a doctor advocacy group.
Almost half of the doctors surveyed indicated that they are
going to take steps that would reduce patient access to their
practices by retiring, seeking nonclinical jobs, closing their
practices to new patients, working part-time, or working
locum tenens. Physician recruiters are acutely aware that
primary care doctors—general internists in particular—are
becoming increasingly hard to find.
The most visible solution to the primary care crisis being
put forward is the medical home. The medical home is still
a somewhat vaguely described model in which a primary care
physician, working closely with the patient, leads a team of
healthcare professionals who provide for or facilitate all the
patient’s needs. The idea is to expand patient access and
communication with physicians.
The model is data-driven and relies on electronic medical
records to help doctors make evidence-based decisions. It may
feature expanded doctor hours, open scheduling, group visits,
interactive Web sites, and secure e-mails, providing timely and
frequent doctor-patient communication. The hope is that the
medical home will, through a more preventive approach, lead
to cost savings and better outcomes.
These savings can be used to pay primary care doctors more.
Usually, the primary care model features a three-tiered payment system. Reimbursement is based on a management fee
to reward the primary care doctor as leader of the healthcare
team. The doctor also receives a fee for services provided and
additional reimbursement based on the quality of outcomes
achieved. More pay—in tandem with a more prestigious role
in the delivery system—will keep doctors in primary care and
attract new physicians to the field.
From theory to practice
That is the theory, which soon will be tested. In July
2008, Congress approved 12 three-year Medicare medical
home demonstration projects to take place in eight states,
starting this year.
Medicare’s payment guidelines for practices participating
in these pilot programs could mean an extra $50 per patient
per month. The AAFP has already completed a medical
home demonstration project featuring 36 practices nationwide; the results are expected to be released in early 2009.
The concept seems promising, but there are challenges,
such as that there may be too few primary care doctors available to implement medical homes in any broad way. Many
primary care doctors must already limit time spent per patient
to less than 10 minutes to merely tread water financially.
Coordinating care and communicating more thoroughly with
patients online or by e-mail takes time, which primary care
doctors already lack.
The medical home model also depends on the widespread
implementation of electronic medical records (EMR). Of the
physicians Merritt Hawkins surveyed, 77% of those who have
not implemented EMR in their practices said they do not have
the money to do so. Many primary care doctors are struggling
with increasing overhead and a significant number do not have
the time, resources, or expertise to implement EMR.
Despite these obstacles, the medical home concept deserves
a try, and it will be interesting to see how the Medicare pilot
project comes out. Without this—or some other fundamental
rethinking of how primary care is delivered and paid for—
recruiting primary care doctors will become even more challenging than it is now. H
Editor’s note: Miller, vice president of communications at Merritt Hawkins
& Associates in Irving, TX, (a national physician search and consulting
firm and a division of AMN Healthcare) can be reached at pmiller@
mhagroup.
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Physician Compensation & Recruitment January 2009
© 2009 HCPro, Inc.
A HealthLeaders Media publication
PCR 2008 index
Ask the experts
Calculate compensation for medical directors and chiefs. Oct., p. 11.
Communicate to avoid common recruiting mistakes. March, p. 12.
Comp can be contentious issue for hospitals and physicians.
April, p. 12.
Generational differences present compensation challenges. Jan., p. 12.
How are organizations addressing 07-10? Dec., p. 11.
How to avoid pitfalls when implementing compensation plan. Feb., p. 12.
Mine surveys to find relevant compensation data. May, p. 12.
Pay for malpractice, relocation, or loans to help recruit doctors.
July, p. 12.
Physicians receive more offers in competitive recruitment environment. Aug., p. 12.
Revisit comp plan periodically to ensure productivity, alignment.
June, p. 12.
What is the best method to calculate fair market value? Sept., p. 12.
When to seek a third-party opinion on physician compensation.
Nov., p. 12.
Compensation models
Applying the group practice exception to physician compensation.
Oct., p. 12.
Build flexibility into compensation packages. July, p. 11.
Choose the right on-call comp model for your hospital. Aug., p. 6.
Combine local, national data when developing comp plan.
May, p. 10.
Consider revenue, compensation to calculate ROI for locums.
May, p. 8.
Integrating comp plans key to practice merger success. June, p. 9.
Massachusetts payer combines capitation, quality incentives.
March, p. 11.
Measurement key to pay-for-performance success. May, p. 6.
Pay physicians for call with nonqualified deferred compensation.
Feb., p. 6.
Prepare to integrate payments for online consultations. March, p. 6.
Scrutinize FMV in a performance-based environment. April, p. 1.
Seven tips for part-time physician compensation plans. June, p. 11.
Soft incentives in compensation plans. Dec., p. 12.
Top 10 signs of a successful compensation plan. Feb., p. 10.
Top 10 signs of a well-structured hospital comp plan. April, p. 10.
IPPS, fee schedule contain new Stark changes. Sept., p. 1.
OIG, CMS promise increased scrutiny. Are you prepared yet?
Dec., p. 8.
OIG offers more kickback guidance. Nov., p. 10.
Physicians, insurers at odds over tiering programs. July, p. 10.
Proposed EMTALA change may ease burden of ED call. Sept., p. 8.
Recent OIG approvals provide guidance. Dec., p. 9.
Support for universal healthcare varies by specialty, comp level.
May, p. 9.
Management/comp planning
Comp rises as physician executive market matures. Jan., p. 1.
Offer compensation to encourage medical staff leadership. Feb., p. 8.
Recruitment/retention
Calculate break-even point to choose in-house or external recruiter.
Jan., p. 6.
Do physicians trust professional recruiters? April, p. 11.
‘Float pool’ offers alternatives to locum tenens. Aug., p. 10.
IMG physicians can ease looming shortage. Aug., p. 4.
In debt, heavily recruited, and aware of their value, residents are
making their career decisions earlier. Nov., p. 1.
Merge recruitment, retention efforts to keep top physicians.
April, p. 8.
Physicians’ reasons for relocating: 1987 and today. April, p. 3.
Real estate slump hinders doctor recruitment. July, p. 1.
Recruiters seek efficiency in ailing economy, tight market. Sept., p. 10.
The recruiting challenge for internal medicine. Sept., p. 9.
Rural facilities struggle to recruit female physicians. March, p. 1.
Rural recruitment challenges. July, p. 9.
Sharing recruits helps rural hospitals find specialists. July, p. 8.
Structure education loan forgiveness to attract, retain docs.
March, p. 10.
Survey reveals competitiveness of recruitment. June, p. 1.
Reimbursement
Reimbursement cuts will skew wRVU-based comp plans. Aug., p. 9.
Western groups continue to outperform the rest of United States.
Jan., p. 10.
Specialty-specific (including primary)
Government/regulations
Additional gainsharing opinions offer little clarification. March, p. 11.
CMS: Hospitals may use community call plans. Nov., p. 8.
CMS issues new draft of telehealth codes. Oct., p. 10.
CMS looks to fine-tune financial relationship reporting process.
June, p. 8.
CMS may open the door to future gainsharing arrangements.
June, p. 4.
CMS releases revised stand-in-the-shoes Stark provision. June, p. 8.
CNS revises DFRR process. Sept., p. 3.
The current state of gainsharing. June, p. 4.
Address the four pillars of hospitalist career satisfaction. March, p. 7.
Dermatology compensation increases more than skin deep. Jan., p. 4.
General surgery comp lags behind that of subspecialties. Feb., p. 4.
Growing demand and steady profits keep orthopedic compensation high. Aug., p. 1.
Low comp creates geriatrician shortage as population ages. Sept., p. 6.
Need for critical care boosts pulmonary medicine comp.
March, p. 4.
Neurology: Low compensation continues to create challenges. Oct., p. 6.
continued on p. 12
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© 2009 HCPro, Inc.
January 2009 Physician Compensation & Recruitment
11
A HealthLeaders Media publication
Index
continued from p. 11
Neurology and locum tenens. Oct., p. 8.
OB/GYNs struggle with malpractice insurance costs. May, p. 4.
Oncologists explore new models to prepare for shortage. June, p. 5.
Ophthalmologists strive for efficiency to meet rising demand. July, p. 3.
Ophthalmology at a glance. July, p. 4.
Pediatric medicine: Low reimbursement depresses compensation.
Dec., p. 5.
Practice overhead: Another strike against primary care. Nov., p. 11.
Primary care reports bigger compensation increases than normal as
specialists struggle to keep pace with inflation. Sept., p. 4.
Survey: CRNA compensation surpasses primary care. Aug., p. 8.
Tension with hospitals doesn’t slow radiology comp climb. April, p. 5.
Urology: High demand, increased procedures drive compensation.
Nov., p. 5.
Surveys and studies
Female physicians satisfied despite earning less. July, p. 6.
Hospitals turn to employment model as on-call solution. Nov., p. 8.
On-call pay trends begin to stabilize, survey finds. Oct., p. 1.
Stipend/hourly pay for employed doctors. Nov., p. 9.
Survey: Physician income changes affect Medicaid patients. May, p. 9.
Tables/graphs
2008 MGMA Physician Compensation and Production Survey.
Sept., p. 5.
First-year and total compensation by practice type. Feb., p. 2.
A framework for hospitalist career satisfaction. March, p. 7.
Locum tenens staffing decisions. May, p. 8.
Male and female physician base salaries. July, p. 7.
Motivations for relocating. April, p. 4.
On-call expenditures, 2006–08, Oct., p. 2.
Overall on-call pay rates. Oct., p. 3.
Part-time assessment by age and gender. May, p. 3.
Percentage of respondents implementing or considering various
approaches to on-call coverage. Oct., p. 2.
Physician compensation by demographic classification. May, p. 11.
Physician recruitment data. June, p. 3.
Sample recruitment cost calculations. Jan., p. 7.
Editorial Board
Marc Bowles, CPC-PRC,
CMSR, FMSD
Chief Marketing Officer
Group Publisher: Matt Cann
The Delta Companies
Irving, TX
Executive Editor: Rick Johnson
Editor: Roxanna Guilford-Blake
[email protected],
404/297-0885
James W. Lord
Principal
ECG Management
Consultants, Inc.
St. Louis, MO
David A. McKenzie, CAE
Reimbursement Director
American College of
Emergency Physicians
Dallas, TX
What causes you the most concern as you enter your first professional practice? Nov., p. 2.
What is important to you as you consider practice opportunities?
Nov., p. 3.
What level of compensation do you anticipate achieving in your
first professional practice? Nov., p. 4.
Which of the following practice settings would you be most open
to? Nov., p. 3.
Tables/graphs (specialty-specific)
CRNA vs. primary care compensation. Aug., p. 8.
Dermatology compensation trends. Jan., p. 5.
Diagnostic radiology compensation trends. April, p. 7.
General surgery compensation trends. Feb., p. 5.
General surgery on-call compensation. Dec., p. 11.
Geriatrics median compensation trends. Sept., p. 7.
Neurology compensation trends, 2004–07. Oct., p. 7.
OB/GYN compensation trends. May, p. 5.
Oncology compensation trends. June, p. 7.
Ophthalmology compensation trends. July, p. 5.
Orthopedic surgery compensation trends. Aug., p. 2.
Pediatric median compensation trends—includes subspecialties.
Dec., p. 7.
Physician executive compensation trends. Jan., p. 3.
Pulmonary medicine compensation trends. March, p. 5.
Urology compensation trends. Nov., p. 7.
Trends
Experts: Economic woes, physician demand, wRVUs to figure prominently in 2009. Dec., p. 1.
Physician supply: Surplus or shortage? Jan., p. 8.
Practices prepare for more part-time physicians. May, p. 1.
Private practices catch up to hospital-owned starting salaries.
Feb., p. 1. H
Questions? Comments? Ideas?
Contact Editor Roxanna Guilford-Blake
Kim Mobley
Principal
Sullivan, Cotter and
Associates, Inc.
Detroit, MI
Max Reiboldt, CPA
Managing Partner
and CEO
The Coker Group
Alpharetta, GA
Ron Seifert
Senior Healthcare
Consultant
Hay Group, Inc.
Philadelphia, PA
E-mail: [email protected]
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