Although formulaic compensation models integrating quality and payment are quickly becoming the norm in healthcare systems across the United States, such models may fail to account for the breadth of contributions made by physicians, including surgeons.
In a panel session during the 2021 virtual American College of Surgeons Clinical Congress, surgeons representing the academic and rural community settings explored the different models to ensure they and their colleagues are adequately compensated for their efforts.
“As surgeons, we are often asked to be leaders with various roles within our organizations,” began session co-moderator Jason P. Wilson, MD, MBA, the medical staff president at the Morton Plant North Bay Hospital, in New Port Richey, Fla. “How do we reimburse surgeons for important activities that do not have direct ties to volume-based payment methods?
“And as we go down the road of value-based care, how do we measure and reimburse surgeons for these metrics?” Dr. Wilson continued. “How do we choose which measures should impact surgeons’ compensation? And how much of our compensation should be tied to these measures?”
L. Arick Forrest, MD, MBA, the vice dean of clinical affairs at The Ohio State University College of Medicine, in Columbus, explored the issue of compensation from an academic perspective, using his institution’s compensation model as a springboard for the discussion. As Dr. Forrest explained, the model considers the four primary responsibilities that comprise an academic physician’s time: clinical, administrative, research and teaching.
The clinical component of the model is largely productivity-driven, and measured in work relative value units (wRVUs). Physicians’ salaries are standardized by their specific department or division, and set at a base salary percentile plus 15%. As such, if base compensation is established at the 45th percentile, then the wRVU target is the 60th percentile. These targets are adjusted according to billable clinical full-time equivalents; benchmarks are updated on an annual basis using a three-year rolling average.
“There’s still opportunity for supplemental pay,” Dr. Forrest explained. “If you do work above and beyond and it gets approved by a compensation committee, you can get additional pay above your benchmark and your bonus incentive.”
With respect to administrative responsibilities, the model seeks to compensate physicians for the value of the time they contribute in this role rather than setting a flat rate.
“So, if you’re buying 10% time from a cardiovascular surgeon, it’s a lot different than buying 10% time from an emergency department physician,” Dr. Forrest explained.
The compensation model also recognizes research and academic accomplishments for clinicians that contribute to three areas: funded research, investigator clinical trials and team clinical trials. Finally, all faculty at the academic center are expected to engage in mentoring, supervision and teaching activities. In these cases, expectations are set at the beginning of each academic year, and physicians’ performance against these expectations is reviewed annually to retain appointed positions and protected time.
These components come together in an X-Y-Z compensation model, where X represents the physician’s base salary according to academic rank. The Y factor is a supplemental base salary amount, the product of the physician’s specialty, rank and clinical productivity. Together, X and Y represent the physician’s total base compensation. Finally, the Z component represents incentive bonuses, which are awarded for clinical productivity, quality and academic accomplishments to faculty who exceed external performance benchmarks.
For surgeons, incentive bonuses are tied to completing the wound classification at the time of surgery and in critical care by CLABSI (central line–associated blood stream infection) rates, as well as surgical site infection rates in colon, hip, knee and spine operations. Finally, surgeons are evaluated according to rates of cardiac mortality and kidney injury after cardiac surgery.
“So, where are we going with all this?” Dr. Forrest asked. “If you look at the sustainability of healthcare in the United States, it’s simply not sustainable. The government payors and the commercial payors are shifting to value and volume. As surgeons, we’re still going to have to maintain the volume, but now we have to deliver it at a higher value to get the reimbursement we want.
“We feel that our compensation model is fulfilling this mission, while also rewarding all aspects of the academic and clinical mandate here at the medical center.”
Danny R. Robinette, MD, the former chief medical officer at Fairbanks Memorial Hospital, in Alaska, offered the perspective of physician compensation in a rural community setting. The basis of Dr. Robinette’s discussion was Foundation Health Partners, a community-owned healthcare foundation comprising a 150-bed hospital, a 60-physician multispecialty clinic, and a 90-bed long- and short-term care facility.
For physicians employed by the foundation, there are five primary types of compensation: base compensation, bonus compensation, compensation for administrative time, paid time off and benefits. Base compensation guarantees physicians their lowest possible salary, and is set by each specialty within the organization.
“We use a data set from the Medical Group Management Association [MGMA] to determine the base salary by specialty,” Dr. Robinette said. “We set our base at the 75th percentile of the range of specialty compensation for this data set.” This percentile, he added, can be adjusted to reflect local market conditions. Currently, the base salary is reassessed every three years.
Bonus compensation can take one of two forms: physician bonus and productivity bonus. The physician bonus—which is set to the same maximum dollar amount for all physicians—uses an organizational financial target as a door opener, and then adds individual physician amounts, if applicable. These individual amounts are tied to productivity standards, timely medical records, patient satisfaction and departmental quality goals.
“As we move forward and payment changes, we would expect to see this bonus become a progressively larger component of the physician compensation plan and more dependent on quality goals,” he explained.
The plan’s productivity bonus is not tied to organizational financial targets. Instead, this aspect of compensation is based on RVU production in excess of 60% of MGMA production by specialty.
“Some physicians with high productivity are adding an additional 30% to 40% to their income above their base salary,” Dr. Robinette said.
Physicians are also compensated for administrative time, as the organization recognizes the need for physicians to perform nonclinical duties that do not directly generate RVUs or revenue. This includes time spent managing other providers, quality and safety functions, peer review, credentialing, and medical direction for a wide variety of service lines.
Finally, the compensation package includes paid time off and benefits, which comprise four to six weeks of vacation time, two weeks for continuing medical education (CME), parental leave, and an annual CME allowance of up to $10,000 annually to cover travel and/or registration fees. Employed physicians also receive malpractice insurance for employment-related work, along with health insurance, and retirement benefits.
Yet as the clinicians recognized, changing societal expectations will demand flexibility in these compensation models to ensure the financial well-being of the healthcare system as a whole, as well as individual physicians.
“We have seen a transition of payment from usual, customary and reasonable fees to the Medicare Physician Fee Schedule or RVU-based compensation,” Dr. Wilson said. “Now, we are seeing a transition from volume-based RVU compensation to more value-based compensation, and many institutions are still early in their journey from volume- to value-based compensation.”
This article is from the February 2022 print issue.
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Most quality measures are challenging to validate--and the people collecting data often have a very rudimentary knowledge of medicine.
General Surgeons are in a small group of physicians with a large call burden, managing extremely ill patients and are "on" all of the time to help almost every other specialty.
Given that, we are poorly compensated.
Formulaic compensation models have been around a long time and ,on the surface, appear fairly straight forward as presented in the above article. As with all human endeavors, however, the accompanying "Fine Details" contained therein often lack clarity leading to significant physician frustration. As stated in the preceding comment, quality/value metrics are difficult to validate, frequently "adjusted" and challenging to discern by reviewers. A culture of distrust emerges leading to greater dissatisfaction for surgeon and administrative stakeholders. A most timely article in JACS by Drs. Satiani and Ellison regarding physician engagement masterfully addresses this issue (and others) by describing a more transparent dual-governance model for health care organizations thus engendering the culture of TRUST that is so desperately needed to move forward together.
Patrick A. Cleary, MD, PhD, FACS