Dr. Hospitalist: Multiple Variables Factor into HM Compensation

Dr. Hospitalist

I work with a number of health systems on determining full-market-value (FMV) compensation related to stipends paid to hospital-based specialists. What is your opinion on how compensation should be determined for the physicians to staff hospitals? Would you say that the busier the location, the higher the compensation? Would you say that the more hours the physician works (regardless of productivity), the more pay they receive? Would you say that the more years of experience that a physician has should result in higher compensation?
Curtis H. Bernstein, CPA/ABV, ASA, CVA, MBA,
director, valuation services,
Sinaiko Healthcare Consulting Inc.,
Los Angeles

Dr. Hospitalist responds:

The topic of physician compensation and workload comes up frequently, but this question frames it a bit differently. Namely, what are the external and internal factors at work in determining compensation? Let’s tackle the response in two parts: 1) How do you account for the variability across sites? and 2) How does physician pay vary within a single site? The crux of the first question comes down to trying to interpret physician workload across disparate locations. It’s not laden with quite the same complexity as Gordian’s knot, but it’s close. One could easily answer this question with a lot of “Yes, but … ” in reference to the all the factors that go into determining compensation. Yes, a busier site would generate more encounters, thus more revenue, and thus more pay. However, that same site might also be so busy as to require more than one physician on at night. A higher-paid, but lower-volume, nocturnist would then skew the workload/pay scale. Same thing with the ICU; if it is fully staffed with intensivists (more likely in a higher-volume setting), then that would remove the single highest paying code for a hospitalist (the 99291: critical care time 35-74 minutes, 4.50 wRVU), and that has the potential to drop reimbursement. Practice management columnist John Nelson, MD, MHM, has written more than a few fantastic columns addressing just these sorts of issues, but let’s concentrate on just the key factors:

  • Volume;
  • Payor mix/collections;
  • Ratio of day shifts to night shifts (optimal is 4:1), assuming that there are dedicated night shifts; and
  • Value-added services.

Volume is fairly straightforward, with most hospitalists seeing around 15 patients per day. Now, an average is just that, and practices exist where the daily number is 10 and where the census is 25. Still, it’s an easy number to understand.

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