Advantages to hospital employment?

Here are a few of the most common advantages I hear out there for a physician’s employment by a hospital:

 

§  A stable financial circumstance, including, but not limited to guaranteed or fixed competitive base compensation and benefits;

§  Access to continuing and reliable malpractice coverage and, in many cases, tail insurance;

§  A practice environment free from the day-to-day burden and administrative tasks of operating and managing an independent practice; and

§  More regular work hours and shared call responsibility.

 

Oh really? What about THE major disadvantage – the hospital controls your compensation now and in to the future. I just hope hospitals have learned from their mistakes in the past but from what I see so far, that is doubtful. Are physicians really better off employed by a hospital rather than go at it as an independent practice? It’s going to be interested to see how all of this is going to shake out.

Pay partners for taking on extra duties

Aside from your top physician leader, the increasing complexity of medical practice creates the need for physicians in all size groups to kick in with various aspects of running the practice. From sitting in on an executive committee to heading an important group committee to a major short-term job like selecting a new computer system, one of your own should receive extra pay for doing extra duties.

Often, for small and mid-sized groups, these extra jobs come as part of the partnership territory. But increasingly, partners begin paying for some extra duties as groups grow larger and extra duties become more critical.

FMV compensationand work RVUs

Suppose a hospital is proposing a new method compensating its physicians based upon a WRVU (work relative value unit) model. The physicians will be paid a base salary based upon an MGMA survey.  Each physician will be expected to meet the WRVU's associated with that Base Salary and may also bonus by generating WRVU's in excess of the threshold.  Hospital will monitor the physician's production and if at the end of the year it is determined the a physician did not generate the threshold WRVU's to attain the base salary, then he or she will have to repay the excess.

An argument could be made fair market value compensation is determined at the beginning of the contract and therefore if the method of determining compensation is based upon reasonable data from the physician's past production, there should be no pay back if the physician does not meet his/her WRVU threshold.  Does Stark require ongoing monitoring of FMV, just a FMV at the begging of the contract year?

To me, the most important question given these facts below is:  Is the base salary at FMV to begin with?  If so, I do not see the need to have the physician pay back the "excess" should they fail to produce threshold WRVUs.  Yes, there is an economic consequence to allowing the physician's production to fall below the threshold without any impact on the base salary.

It is also extremely impractical to think that the doctors will pay back the “excess” without a fight that will certainly damage the relationship between the hospital and the physicians, as well as other physicians on the medical staff. The best solution is to have a clause in the contract reviewing and re-adjusting the base salary as necessary each year to reflect the FMV for WRVUs produced the prior year.

In other words, any compensation adjustment should be on a prospective basis, not retroactive.

Technical revenues, incident to, and Stark

Keep in mind there is an "incident to" aspect of the Stark in office ancillary services exception, the exception that applies to the technical component. As I understand it, if the technical service is "incident to" the physician's professional service, then it can be included in the physician's personal productivity part of the formula. If the technical service is not "incident to" the physician's professional service, then it must be included in the Designated Health Services earnings that are distributed in a manner which does not take into account the volume or value of the physicians' referrals. In distinguishing between technical services that are "incident to" a physician's professional service and ones that are not, one must navigate the "supervision" requirements.

Stark generally defers to the Medicare billing rules on the level of supervision required, although it does specify that the physician(s) who must supply the appropriate level of supervision for billing must be either the physician who orders the test or another physician in the same group practice. The levels of supervision required by the billing rules are something I have to revisit each time I'm faced with this issue for a client. My head is beginning to hurt just laying this much out, and I'm doing it primarily to hear from others on your thoughts on this subject.

The soundest advice I can give is that if you want to give direct credit to any physician for technical revenues, you might want to retain legal counsel experienced in the Stark law as it applies to physician practices to ensure that whatever compensation formulas/methods you devise will be Stark compliant.

Make sure getting off call schedule is addressed

Make sure your physician employment agreements address when a physician can request to be removed from the call schedule and any related reductions to his or her compensation. Most groups I see either require a length of service requirement to get off call or when a physician reaches a certain age. The penalty for coming off call is usually a 20-30% reduction in compensation, depending of course on the medical specialty and the intensity of getting called out after hours. Any reduction in compensation is divided equally among the physicians who remain on the call schedule.

Stark and allocation of ancillary income

Stark dictates that ancillary income cannot be allocated based on referrals to the ancillary service.  As long as the ancillary income distribution formula is set in advance, is not based on referrals, and is of reasonable duration, it should pass muster.  As an example, your group could agree in advance that all physicians, including those who are not partners will share ancillary income (you could even say that 90% will be split by owners and 10% will be split by non-owners). 

 

A distribution formula that in essence produced the same result as distribution based on referrals would probably not pass a smell test.

 

Many physician group practices have gone the distribution by ownership route because it is easy and has already passed scrutiny by the feds, making it essentially a safe harbor.  It also tends to be more readily accepted by the physicians in the group as being fair since the equipment used is generally an equal asset of all owners.

 

If you haven’t looked at it in a while, make sure your group compensation formulary is in compliance with Stark. If you are looking for a good resource (it requires an annual fee), take a look at MGMA’s www.starkcompliance.com website.

A few ways to tackle patient tardiness head-on

Every medical practice has them -- the chronic latecomers and the consistently inconsistent. They are the patients who try your patience by testing the limits of your schedule and asking to be "squeezed in" after arriving a half-hour past the appointed time. Do you know how best to handle them? Or how to keep their perennial tardiness from muddling your schedule and pushing other patients’ appointments back? Here are some tips straight from medical offices themselves.

1. Set a Time Trap

Ever set your clock 10 minutes fast to fool yourself into getting out the door on time in the morning? A similar tactic can work when addressing patients who run behind every time. I know of one medical office that usually writes the patient’s appointment time 30 minutes to an hour earlier [on their appointment card] than what they have in the book. You may not be teaching these latecomers to change their ways, but this is an easy and often effective way to guard your schedule from backups.

2. Send Them to the Waiting Room

In school, we were taught that those who cut in line are sent back to the end. So it goes for patients who don’t keep their place in line by turning up on time - So make them wait. I know of one medical office that if a patient had a 3:00 and didn’t show up until 3:30, they usually had to wait until the last patient was seen (at 4:30) before they would see them. Everybody else who showed up on time should not be punished because of someone else. If patients cannot or do not want to wait, allow them to reschedule. But tell them if they are late again, the same thing will happen.

3. Say ‘No Go’ to the Late Show

Sometimes, you just have to draw the line. Every office will have a different threshold, but it’s a good practice to set an appropriate time limit. If a patient arrives beyond that limit, he cannot be seen.-But be sure to check with your practice manager first before refusing a patient service.

On office no-shows patients after they are 20 minutes late, and they are not seen if they show up after that 120-minute period.

Remember to inform patients of your tardiness policy -- whatever it is -- when they call to make their appointments. Even the knowledge that there is such a policy can help cut down on lateness. And for those who just can’t keep time no matter what, you have a firm set of guidelines to deal with the tardy factor each and every time.

Seeing more and more production-based compensation plans

As medical group practices face changing reimbursement structures and increased operating costs, aligning physician compensation plans with organizational goals is critical. Many practices achieve this alignment by using productivity-based compensation models.

As practices struggle to improve the bottom line, it is clear that instituting production-based compensation plans encourages physicians to work harder and allows them to earn more. By aligning physician incentives with those of the group, physicians and administrators are empowered to make decisions in their best interests and help the organization succeed.

But remember this………if you have or do implement a pure productivity-based compensation plan, make sure you don’t create an “environment” whereby you end up having a bunch of “solo practitioners” masquerading as a group practice. In other words, you need to make sure that somewhere there is “glue” within the group practice to keep in together.