Physician compensation is changing as hospitals rapidly acquire physician practices and reimbursement levels decline. Hospitals are looking for new methods of compensation that tie their pay to productivity, on-call coverage, and quality measures. Below are trends affecting the physician compensation today.
RVU and Bonus Models Vs. Flat Salaries
Physicians are compensated based on a productivity formula in most situations, and typically the structure entails work RVUs. This means that most physicians now receive base compensation in addition to a bonus depending on their productivity. While work RVUs have become standard in physician employment compensation arrangements, the industry is also starting to see the rise of quality indicators tied to compensation. These quality outcome bonuses tend to be aligned with hospital goals and third-party payors incentives. Depending on best practices in your clinics and hospitals, the outcomes tend to change from contract year to contract year. Whatever the source used for the quality measures, it is critically important that the measures are actually measurable and understood by both parties.On-Call Compensation
Historically, physicians were expected to provide on-call coverage as part of their employment or affiliation with the hospital. Today physicians across the country have begun demanding compensation for their time on-call, and the trend is spreading rapidly.Increase in Physician Administrative Duties
As physician employment seeks to align providers more closely with hospital initiatives, physicians are increasingly expected to dedicate some time to administrative duties. The trend has only increased as the physician population ages and older physicians look to move away from clinical duties to physician executive or management positions. Hospitals and physicians need to be cautious that the entire physician compensation is fair market value for all their duties.Guaranteed Compensation
When hospitals acquire physician practices, they generally guarantee compensation for 2-3 years. This hesitance to guarantee compensation long-term is due to the uncertainty of reimbursement over the next several years. Fair market valuators are usually unable to predict more than 2-3 years into the future because changes to reimbursement are unpredictable.Recent News & Insights
Accounting
Corporate Transparency Act + BOI Reporting
The Corporate Transparency Act (CTA), enacted on January 1, 2021, aims to combat money ...
Market Commentary
Higher for Longer? + 5.1.24
April’s market turbulence has served as another stark reminder that predicting the future ...
Data Analytics
Data Analytics for Restaurant Groups
Data analytics plays a pivotal role in the success of businesses across various industries, ...
Manufacturing
Financial Ratios That Improve Manufacturing Efficiency
Financial ratios are a great tool for evaluating the economic health of manufacturing ...
Let’s get you where you want to go.
We work to simplify complexities, help make critical business decisions, and confidently focus on the things that are truly important to you. We embrace your business as our own to spark the right solutions and help you thrive.