At the 2011 SHM annual meeting in Dallas, I served on an expert panel that reviewed the latest hospitalist survey data. Included in this review were the latest compensation and productivity figures. As the session concluded, I was satisfied that the panel had discussed important information in an accessible way; however, the keynote speaker who followed us to address an entirely different topic began his talk by pointing out that the data we had reviewed, including things like wRVUs, would very soon have little to do with compensation for any physician, regardless of specialty. He implied, quite persuasively, that we were pretty old school to be talking about wRVUs and compensation based on productivity; everyone should be prepared for and embrace compensation based on value, not production.
I hear a similar sentiment reasonably often. And I agree, but I think many make the mistake of oversimplifying the issue.
Physician Value-Based Payment
Measurement of physician performance using costs, quality, and outcomes has already begun and will influence Medicare payments to doctors beginning in 2015 for large groups (>100 providers with any mix of specialties billing under the same tax ID number) and in 2017 for smaller groups.
If Medicare is moving away from payment based on wRVUs, likely followed soon by other payors, then hospitalist compensation should do the same. But I don’t think that changes the potential role of compensation based on productivity.
Compensation Should Include Performance and Productivity Metrics
Survey data show a move from an essentially fixed annual compensation early in our field to an inclusion of components tied to performance several years before the introduction of the Physician Value-Based Payment Modifier program. Data from SHM’s 2010, 2011, and 2012 State of Hospital Medicine reports (www.hospitalmedicine.org/survey) show that a small, but probably increasing, part of compensation has been tied to performance on things like patient satisfaction and core measures (see “Distribution of Total Hospitalist Compensation,” below). Note that the percentages in the chart refer to the fraction of total compensation dollars allocated to each domain and not the portion of hospitalists who have compensation tied to each domain.
Over the same three years, the percentage of compensation tied to productivity has been decreasing overall, while “private groups are more likely to pay a higher proportion of compensation based on productivity, and hospital-employed groups are more likely to pay a higher proportion of compensation based on performance.”
Matching Performance Compensation to Medicare’s Value-Based Modifier
It makes sense for physician compensation to generally mirror Medicare and other payor professional fee reimbursement formulas. But, in that regard, hospitalists are ahead of the market already, because the portion of dollars allocated to performance (value) in hospitalist compensation plans already exceeds the 2% or less portion of Medicare reimbursement that is influenced by performance.
Medicare will steadily increase the portion of reimbursement allocated to performance (value) and decrease the part tied solely to wRVUs. So it makes sense that hospitalist compensation plans should do the same. Who knows, within the next 5-10 years, hospitalists, and potentially doctors in all specialties, might see 20% to 50% of their compensation tied to performance. I think that might be a good thing, as long as we can come up with effective measures of performance and value—not an easy thing to do in any business or industry.