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Analyze This

From: The Hospitalist, September 2010

New compensation and productivity data are best yet; experts caution direct correlations to previous reports

by Jason Carris

Editors note: This article features interactive region-by-region breakdowns and Team Hospitalist analysis of the latest compensation and productivity data from SHM and MGMA. Click here to open the interactive feature.

Every January, William “Tex” Landis, MD, FHM, sits in a conference room with key members of his hospital’s administration and presents what he affectionately refers to as the “state of the union” for his hospitalist group. The bar graphs, pie charts, and commentary have changed little in the past decade, Dr. Landis admits, but the information and analysis he has available to him as he begins crafting his 2011 presentation is better than ever.

Dr. Landis, medical director of Wellspan Hospitalists in York, Pa., and hospitalist group leaders across the country will have access to the State of Hospital Medicine: 2010 Report Based on 2009 Data this budget cycle. The new report, which will be available Sept. 10, offers new compensation and productivity information, new layers of detail, and new tools to help group leaders analyze the data.

“This data reflects the best numbers we have in our business,” says Dr. Landis, the chair of SHM’s Practice Analysis Committee. “We have better participation and better quality data analysis than we have ever had before. It’s a more standardized approach, and we are just going to be able to continue to build upon this. It sets the standard for moving forward, as far as I am concerned.”

The new report, which replaces SHM’s biannual survey, is the result of a partnership between SHM and the Medical Group Management Association (MGMA), an industry leader in practice-management resources. The report compiled data about 4,211 hospitalists in 443 groups, a 30% increase in survey respondents over SHM’s 2007-2008 report.

“The collaboration is really driven at providing a single set of benchmarks to the HM community,” says David Litzau, systems analyst at MGMA. “It provides a viewpoint of what’s happening elsewhere in the industry.”

Figure 1: Survey Respondents by Employment Model, Organization Ownership
click for large version
Figure 1: Survey Respondents by Employment Model, Organization Ownership

What’s happening is that hospitalists continue to see increases in compensation. The new report, which uses some different data definitions and survey methodologies, and is based on a new population, shows that median compensation for adult hospitalists is $215,000 per year, a number that doesn’t take into account benefits. Hospitalist median compensation was $183,900, according to SHM’s 2007-2008 survey, and $171,000 in SHM’s 2005-2006 survey. MGMA’s 2009 report on physician compensation showed median compensation at $210,250 per internal medicine hospitalist.

And while the compensation numbers are higher than in previous surveys, the new report also shows adult hospitalists are increasing productivity, are seeing more patients per year (reversing a somewhat declining trend), and are collecting more per encounter.

The Numbers

Although compensation is the most popular survey metric, it’s not the only number worth investigating. A handful of key productivity measures seem to be on the rise, too, according to the new report.

The national median (the midpoint of all survey respondents) for work RVUs per adult hospitalist FTE is 4,107, according to the new data. SHM’s 2007-2008 survey reported wRVUs at 3,715 per adult hospitalist.

The national median for hospitalist wRVUs per encounter is 1.86. That same figure was reported at 1.53 wRVUs per encounter in 2008 and 1.37 in 2006.

Interactive regional breakdowns and analysis by members of Team Hospitalist

State of Hospital Medicine 2010
click for regional breakdowns and analysis

Collections per wRVU is $45.57, according to the 2010 report. The 2008 survey showed collections at $44.97 per wRVU; the 2006 survey did not report the metric.

One thing the new metrics have in common is that they show hospitalists across the nation are becoming more efficient. “The numbers essentially reaffirm the overall trends for hospital medicine, in that the productivity continues to increase and the compensation paid to a provider continues to increase,” says Troy Ahlstrom, MD, FHM, CFO of Traverse City-based Hospitalists of Northern Michigan, which has nearly 50 hospitalists supporting three hospitals. “When you dig into the numbers, hospitalists are producing more work and more RVUs per encounter than they had been in the past.”

Financial support per hospitalist FTE, another key practice-management metric, parallels the compensation growth. Practices receive a median of $98,253 of support per hospitalist FTE, according to 2010 data. The 2008 report did not provide a median figure for support; instead, it published a mean figure of $97,375 of support per FTE. The 2010 mean (average) is $111,486.

Pediatric HM also shows signs of growth; median compensation is $160,038 in the new report. The 2008 report had pediatric hospitalist median compensation at $144,600.

The new data show a spike in HM groups providing “on site” care of patients 24 hours a day, seven days a week. More than 68% have on-site care with a physician, nurse practitioner, or physician assistant. Only 53% of groups had 24/7 coverage in the 2008 report; 51% had round-the-clock coverage in the 2006 report.

Dr. Ahlstrom, a veteran member of SHM’s Practice Analysis Committee, says he expects that trend to continue, especially with the large numbers of young hospitalists in the field interested in set schedules and work-life balance. “That’s the trend,” he says. “Younger physicians are more interested in seeing that split, where the days and nights are clearly set off. Older physicians are more than happy to have a nocturnist around, just as long as it’s not going to cost them a lot of money or productivity.”

A Word of Caution, and Unintended Benefits

Survey Stipulation: Only Fools Rush In

The following are excerpts from Dr. Nelson’s “caveats and caution” in “Interpreting and Using the Survey Data,” which precedes the actual data contained in the State of Hospital Medicine: 2010 Report Based on 2009 Data:

  • Remember that these data do not reflect the position of SHM or MGMA regarding the right, optimal, or appropriate standards for hospitalist practice. In most cases, these numbers should not be regarded as the right targets for any particular practice, but rather as a frame of reference.
  • Like all national surveys of hospitalist data, the responses are not audited or verified independently. Survey staff contacted respondents who reported any data element that was outside of predetermined thresholds to ensure that the respondent understood the questions and responded accurately.
  • Ensure that you evaluate data points from multiple categories, and do not make decisions based solely on numbers such as means and medians for all hospitalists.
  • Review the original questions asked in the survey. To make sense of the survey responses, you will need to clearly understand the questions used to collect the data.
  • Use caution when trending data from previous surveys. This is especially important for this survey because it is the first time SHM and MGMA have collaborated on a joint survey. Many of the questions asked this year are worded differently than they were in previous SHM surveys.

The new report is based on a supplemental set of questions specifically directed at hospitalist practices in MGMA’s annual Physician Compensation and Productivity Survey. The survey is voluntary and is not audited, but it is the “best data” available for hospitalists, according to practice-management experts.

“So many people assume this data is what you should do,” says John Nelson, MD, MHM, co-founder and past president of SHM and a principal in hospitalist-consulting firm Nelson Flores Hospital Medicine Consultants. “It’s not. It is a survey of what’s happening. It’s a starting point, a frame of reference. It is the best data there is, no doubt. But you should not build your practice by trying to match the medians. You might have local data that deviates. You might be starting a program or be in a competitive situation.”

The same experts warn that the new survey population and methodologies will make it difficult to draw direct comparisons to data from previous surveys. For example, the 2007-2008 SHM survey included roughly a quarter of respondents from academic settings; the 2010 report has barely 1% of its respondents from academic settings (see Figure 1, p. 14). Traditionally, compensation and productivity levels for academic hospitalists are lower than nonacademic hospitalists. Most experts agree the “filtering” effect of the survey population factors heavily into the across- the-board increases in compensation and productivity in the 2010 report.

“The survey instrument that we use has been used historically for nonacademic physicians,” Litzau explains. “We also have an academic survey that is performed in the fall [Sept. 13 through Nov. 5], where we collect data specifically for academic faculty. We see very different trends within those two types of practice. It is difficult to draw clear comparisons between the two.”

Dr. Landis refers to the new report as a “baseline” and advises hospitalist leaders to review the caveats and cautions section (see “Survey Stipulation: Only Fools Rush In,” p. 16) before jumping right to the numbers. “This is a new set of numbers. Probably the more important comparison will be this set of numbers compared with the next set of data, next year,” he adds.

Even so, the “filtering” effect should provide nonacademic hospitalist groups a more accurate picture of compensation and productivity trends. One hospitalist leader says it’s a “win-win” for both academic and nonacademic practice leaders.

“As a community-based hospitalist, I always had to drill into those organizations that were similar to me. Being able to have more filtered information, it allows us to drill into the areas that are more important and then present that information to our CEO, CFO, VPMA,” says William D. Atchley Jr., MD, FACP, SFHM, chief of hospital medicine at Sentara Medical Group in Norfolk, Va., and a member of Team Hospitalist.

New Info, Deeper Analysis

In addition to a larger response rate and more filtered approach, the new report will offer greater frequency (annually), new data points, and in-depth breakdowns of key productivity metrics. Some of the new metrics reported include:

  • Staff per FTE hospitalist physician;
  • Staff turnover;
  • Retirement benefits;
  • Compensation to collections ratio;
  • Compensation per encounter;
  • Compensation per wRVU;
  • Collections per encounter;
  • Collections per wRVU; and
  • Work RVUs per encounter.

The report will be available every fall, as compared to biannually for past SHM surveys. It also will offer more “cuts” of the data, including median, mean, 25th percentile, 75th percentile, and 90th percentile reports, along with regional breakdowns for many compensation and productivity metrics.

Practical Applications

William “Tex” Landis, MD, FHMThis data reflects the best numbers we have in our business. We have better participation and better quality data analysis than we have ever had before.
—William “Tex” Landis, MD, FHM, medical director, Wellspan Hospitalists, York, Pa., SHM Practice Analysis Committee chair

Benchmarking data are used to set productivity goals and compensation levels in hospitalist practices throughout the country, and most administrators use multiple sources of data to make those decisions.

“If we are showing our hospitalists are generating 5,000 wRVUs per year, and the national median is 4,100, you can do the math. I can say, ‘We need to bring on another hospitalist. The timing is right, and we need to be recruiting,’ ” says Dr. Atchley, who has worked with benchmarking data for 15 years and currently supervises 45 full-time hospitalists who service five hospitals in southeast Virginia. “It’s always good to have national benchmarks to compare to, because that is always the question that is going to be asked. [Hospital administrators] want regional and national comparisons.”

Regional information and well-adapted data from national surveys guide James Gardner, MD, chief medical executive for Pro Health Care Inc., a two-hospital system just west of Milwaukee, when he’s hiring new hospitalists at 300-bed Waukesha Memorial Hospital or launching a new HM program at the system’s smaller, rural facility. In fact, Dr. Gardner currently is weighing options to expand the HM service at 80-bed Oconomowoc Hospital, less than a year after the program started.

“We like to look at a number of sources of data. The MGMA and SHM survey data, historically, have been two of our preferred sources,” Dr. Gardner says. “I think we tend to look at more regional data from the Midwest because the national data varies so much.

“We try to get a sense as to what our local market is.”

Dr. Gardner says he’d like to see a “couple years” to confirm the validity of the new SHM-MGMA report. That said, he says he knows how useful the data can be in regard to benchmarking hospitalist productivity.

“It’s been very helpful; it helps us know where we are at,” Dr. Gardner explains. “It’s one of the guideposts to decide when we are approaching the need for additional resources, whether that is midlevel providers or full-time hospitalists.”

Advice From a Numbers Guy

Dr. Ahlstrom
Dr. Ahlstrom

A self-described “numbers” guy, Dr. Ahlstrom agrees regional data is just as important as, if not more important than, the national numbers. He stresses knowing your market, your competitors, your hospital culture—and using that information along with the benchmarking data to formulate expectations for your group.

“Oftentimes you are measured against the guy next door,” Dr. Ahlstrom says. “You have to know the numbers, because [administrators] are going to know the numbers.”

Dr. Ahlstrom offers these tips for incorporating benchmarking data into your practice:

  • Know your local market. “If you keep in mind your local needs, then you can look at the data and start to evaluate what parts are going to help you better formulate a practice that brings on the right people, does the right work, and continues to produce the amount of workload and compensation that makes sure they are happy in the future,” he says.
  • Evaluate how applicable the data is. Pay attention to the total number of survey respondents in each category, and the standard deviation around the mean. “In other words, what is the central tendency of the data? You might find data in subsections that you find interesting, but it might not be data that has a central tendency,” he says. “Find data sets that are most applicable to your practice while assessing variations from the larger data sets. Consider how and why your practice might vary from the report as part of your evaluation.”
  • Pick out trends and look at them in total. The key is to avoid looking at data points in isolation. “It’s important to look at trends in the data over time, and pick out where those trends are going to go,” he says.
  • Involve your people. “I think that this data being available from the [provider] side and management side is a good thing,” Dr. Ahlstrom explains. “The more we are involved in understanding the trends in HM, the better we are going to plan where we are going in the future.” TH

Jason Carris is editor of The Hospitalist.

Benchmarking Basics

By Jeffrey B. Milburn, MBA, CPME

Jeffrey B. Milburn, MBA, CPME

Benchmarking brings perspective and relevancy to practice issues and can serve as a guide to making effective business decisions. Along with looking at financial trends and ratios, benchmarking is one of the most important techniques well-managed practices use.

What is benchmarking? Whether you are measuring physician productivity or a practice’s financial performance, benchmarking is essentially the comparison of your data to a select peer group.

Why should my practice benchmark? Practice administrators and physician leaders frequently utilize national surveys to “benchmark” hospitalist compensation and production. A practice wants to pay market-level compensation in order to recruit and retain physicians, and also set reasonable production goals for the physicians. For legal and regulatory reasons, hospital executives want to ensure that compensation does not exceed “fair market value.”

How do I benchmark my practice? Benchmarking generally falls into two broad categories: internal and external. Internal benchmarking in a hospitalist practice might be the comparison of the number of patients seen by individual physicians during the standard weekday shift. In addition to developing your own internal data, outside sources include such surveys as the State of Hospital Medicine: 2010 Report Based on 2009 Data published by SHM and MGMA. External benchmarking would be the comparison of patients seen by practice physicians on an annual basis to their hospitalist peers across the nation, as reported in surveys.

What about hospitalist production? Depending on the physician compensation plan, there usually is a strong relationship between the level of compensation and production. When benchmarking hospitalist production, it is important to select the appropriate benchmark for comparative purposes.

Comparing gross charges from practice to practice has little value, since there is no standard methodology for setting charges. On the other hand, work RVUs is a fairly standard metric for measuring physician productivity internally and externally. The work RVUs data are generally reported in the major surveys.

Some hospitalist practices use survey benchmark data adjusted annually to determine how much physicians are paid per unit of productivity. For example, if median survey compensation is $225,000 per year and median work RVUs are 4,000 per year, the practice would pay $56.25 per work RVU to the physician. In this case, the practice has benchmarked both compensation and productivity to arrive at a value per work unit.

What does benchmarking mean for my practice? Benchmarking is a critical component to operating a successful medical practice. Use care in utilizing benchmarks, however. Rather than assuming that your practice’s variance from survey norms means you need to change, evaluate the underlying data to determine if there is a logical reason for the variance related to your practice’s specific circumstances.

Practices that utilize peer group data to benchmark often identify operational concerns and work to make their practices more effective. It has been said you can’t manage what you can’t measure, and benchmarking brings perspective and relevancy to what you measure.


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