physician co m p e n s a t oi n re c r u i t m e n t compensation ... a recent report from mgma...

“ We’ve got a pretty good mess on our hands. Ultimately, it is broken.”

—Allen Dye

continued on p. 2

MGMA confirms that costs outpace revenues: What does it mean? And what will it mean?

INSIDE

January 2009Vol. 17 No. 11

A HealthLeaders Media publication

January 2009 Vol. 10 No. 1

Specialty compensationLearn about trends in ■

psychiatric compensation and recruitment on p. 4.

CMS Find out how the CMS ■

2009 Final Physician Fee Schedule differs from the proposed rule on p. 7.

Ask the expertsExperts discuss ■

compensation disclosure on p. 9.

ColumnPhillip Miller asks ■

whether the medical home can save primary care on p. 10.

IndexSee a list of articles that ■

have appeared in PCR during 2008 on p. 11.

A recent report from MGMA confirms that oper-ating costs are rising faster than revenue in many medical group practices. Although the findings are not surprising, the effect of the costs-revenue dis-parity is continuing to unfold, and how practices and health systems are responding could have seri-ous implications for the practice of medicine.

MGMA Cost Survey: 2008 Reports Based on 2007 Data reports that although multispecialty group practices reported a 5.5% increase in median total revenue in 2007, median operating costs rose by 6.5%. Many single-specialty practices reported a similar trend. For example, cardiology practices’ median total medical revenue decreased 0.61%, and operating costs rose 6.3%.

MGMA also reports that during the past decade, operating expenses have risen from 58 cents per dollar of revenue to 61 cents. According to MGMA, the drivers of the trend include the:

Drug supply. » In multispecialty groups, drug supply costs leapt 17% in 2007, compounding a 33% increase from 2006. Support staff. » Family practices reported a 15.8% increase in support staff costs in 2007. OB/GYN and pediatrics groups reported similar hikes—17.2% and 10.1%, respectively.Professional liability. » This varied by specialty. Cardiology groups reported an 8% increase in malpractice insurance premiums in 2007; the increase since 2000 is 132.3%.

No surprise, but …None of this should be a surprise to anyone

who has been running a practice. A declining

economy and escalating pressures from Medicare and other payers mean practices must work harder to maintain the status quo. What is news is that physicians, consultants, hospitals, and others are growing more concerned, and problems that have been brewing for years are receiving more atten-tion, says Mary J. Witt, vice president of The Camden Group in El Segundo, CA.

Allen Dye, vice president of marketing at Merritt Hawkins & Associates in Irving, TX, says margins have been diminishing during the past decade, and hospitals have been particularly hard hit.

But now that practices are affected, the prob-lem is gaining more notice, Dye says. “People are more inclined to listen to doctors than to hospital administrators,” he says. “As if any-thing else was needed to suggest that healthcare is far from recession-proof.”

Too many eggs in one basket? Physicians and groups offset practice over-

head and add revenue streams when they expand into ancillary areas, such as imaging, lab ser-vices, and surgery centers. Although this works for diversified groups, it may have the opposite effect in subspecialty practices, says Dye.

RecRuitmentPhysician comPensation

&


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2 Physician Compensation & Recruitment January 2009 © 2009 HCPro, Inc.

or midlevel providers who do not fully maximize the over-head allocated to them,” Nahm says.

Witt is working with practices that have a few resource-intensive physicians, which directly affects overhead. Eventually, it will have to be factored into compensation, she says, but addressing the issue may be a challenge: “They are having some interesting conversations.”

Recruitment concernsRecruiting efforts remain dependent on location, says Nahm.

For example, in California, reimbursement is low, causing prac-tices to be at a competitive disadvantage, he says, adding that many practices are reluctant to recruit.

Nahm says practices are asking themselves questions such as, “Will adding a new associate be a financial drain or ben-efit to the practice? Can a new physician add ancillary vol-ume, add a new profitable service line capacity, [and] share in overhead expenses?” This is especially true for solo practices. Many of these physicians are not bringing in associates and, accordingly, they are not thinking about succession planning.

“How do you replace those older physicians who don’t want to recruit anybody? That becomes another challenge for hospitals trying to stabilize their medical staff,” says Witt.

From the physician alignment perspective, hospitals and health systems are trying to create other employment vehicles that will recruit new residents without hurting the existing medical staff. And hospitals (as well as organizations such as Kaiser Permanente) have increasing appeal, especially in areas in which reimbursement is low. They are paying well, pro-viding benefits, and insulating physicians against expenses.

Hospitals buying practicesOne way to ensure a steady supply of physicians is for hos-

pitals to purchase practices. And that’s what they are doing, says Fuller. Hospitals often feel compelled to purchase the groups to maintain community stability. Many hospitals that purchase and manage practices are willing to accept a practice loss for the offsetting benefits, such as ED coverage, he says.

Nahm and Witt report a similar trend. A major issue for practices considering selling to a hospital or health system is figuring out how their compensation models would change, say Nahm and Witt. (Look for more about this topic in a future PCR.)

Subspecialization may contribute to some of the financial woes practices are facing, especially with surgical subspecial-ties, as there isn’t the same opportunity to spread out the risk as in a more diversified practice. “They are not as insulated from market change,” Dye says. Moreover, as the practices add surgery centers and make other attempts to “look and feel more like hospitals, they are going to see what [hospital] mar-gins have been doing for a long time,” he says.

Practices are—or should be—questioning the role of ser-vices and procedures, says Steven A. Nahm, vice president of The Camden Group. Such questions include:

Are ancillary services covering variable expenses and con- »tributing to fixed overhead? Are the ancillary services offered in the practice the high- »est and best use of office space? Are there ancillary services that the practice should be »offering in-house?Is it financially worthwhile to continue to perform in- »office procedures?

Comp modelsAlthough it makes sense to review how compensation mod-

els are structured, “restructuring compensation arrangements or agreements is not the primary response or solution to an economic imbalance,” says Nahm.

“For many years, groups have been forced to adjust com-pensation models to [ones that are] production-based. Most groups offer a fair base salary for a short term—one to two years maximum—and then change to the production model,” says Jim Fuller, marketing vice president of Delta Physician Placement in Dallas.

So what’s left to do? Expect more emphasis on practice style and resource consumption. Practices are becoming more sensi-tive to the expense side of the equation, say Witt and Nahm.

One critical question for practices is simple and complex, says Nahm. “In a multiple-physician practice, how should over-head be allocated among physicians, especially when there are large variances in their usage of office space and staff?” he says.

The issue isn’t restricted to full-time physicians. Practices are also considering whether compensation models should “take into account part-time or underperforming physicians

MGMAcontinued from p. 1



© 2009 HCPro, Inc. January 2009 Physician Compensation & Recruitment 3

“Selling a practice is not a panacea for physicians seeking a huge buyout,” says Witt. Practices are not selling for the high multiples that were seen in the last buying cycle.

Making adjustmentsThe cost-revenue disparity and the current economic crisis

have led to other changes, including:Expanding hours. » Perhaps driven by competition from retail clinics, more practices are extending hours, say Nahm and Witt. Such a move allows a practice to more fully maximize use of fixed overhead.Booming locum business. » Dye, Nahm, and Witt all note that more physicians are turning to locum tenens work. Delayed retirement. » “[Physicians] have lost the ability to retire early,” says Witt. This could be one factor driving the locum surge. Call coverage. » Economic pressures on practices are one big reason for the increasing demands for on-call compensation. Increasingly, physicians believe that if they are going to be doing work, it needs to generate revenue, says Witt.

Questions to consider

The cost-revenue imbalance is prompting physician practices to

analyze operations and business practices to maintain compensa-

tion levels, says Steven A. Nahm, vice president of The Camden

Group in El Segundo, CA. Practice managers are asking questions

regarding expense control and revenue generation, such as:

Can staffing be reduced without harming quality or patient »throughput?

How can spending on supplies and other operating expenses »be decreased?

What is the appropriate mix and use of RNs versus medical »assistants and other types of personnel?

In practices with multiple offices, are there locations that can »be closed and volume consolidated to remaining sites? Is it

time to relocate to an area with a more favorable payer mix?

Can physicians reduce non-revenue-producing time in the »practice?

Are there new ways to communicate with patients and »providers that can reduce administrative costs?

When should the practice implement electronic medical records, »and how will the costs of implementation and ongoing operations

be paid? Should the practice participate in a consortium with

other practices or a hospital to implement a common system?

Is physician medical record documentation and charge coding »truly reflective of the services being provided?

Is the practice collecting copayments and outstanding balances »as well as updating patient data at the time of service?

Does the group have good billing performance? »Should the practice terminate low-reimbursement payers who »refuse to increase rates to appropriate levels, or at least close

the practice to new patients from these plans?

Will a local hospital assist with the cost of recruiting and estab- »lishing a new physician in the practice?

Does it make financial sense for an individual physician to main- »tain outpatient and inpatient practices?

Is it time to leave independent practice and join a health »system or merge with other physicians?

‘A pretty good mess’Even with all the issues raised, Dye says the report is just

that—a report. It’s not predictive, and he suggests not responding rashly.

Being too reactive and reactionary would only make things worse, he says. “We don’t want people to freak out.”

This report will require physicians and payers to reexamine how medicine is practiced, says Witt.

Still, don’t mistake Dye’s call for calm for undue opti-mism. “We’ve got a pretty good mess on our hands,” he says. “Ultimately, it is broken.” H

PCR sources

Allen Dye, vice president of marketing, Merritt Hawkins & Associates, 5001 Statesman Drive, Irving, TX 75063; [email protected].

Jim Fuller, vice president of marketing, Delta Physician Placement, 1755 Wittington Place, Suite 175, Dallas, TX 75234; 800/521-5060.

Steven A. Nahm, vice president, The Camden Group, 100 North Sepulveda Boulevard, Suite 600, El Segundo, CA 90245, 310/320-3990; snahm@ thecamdengroup.com.

Mary J. Witt, vice president, The Camden Group, 100 North Sepulveda Boulevard, Suite 600, El Segundo, CA 90245, 310/320-3990; [email protected].




Lack of ancillary income drives lower compensation for psychiatryGiven the limited opportunities for ancillary income coupled

with various reimbursement challenges, it’s not a surprise that psychiatry is one of the lowest-paid specialties. But opportuni-ties are emerging that allow some psychiatrists to earn consider-ably more than average. If they are willing to go directly to jail (or, more accurately, prison), they can collect—and far more than $200.

According to the MGMA 2008 Physician Compensation and Production Survey, the overall median compensation for psy-chiatrists is $198,653. Median compensation for all special-ties is $332,450.

However, that number may be a bit deceiving. Although the median for general psychiatry is $200,518, it’s $236,998 for child psychiatry. (The 2008 report does not include figures for geriatric psychiatry.) Demand is high for psychiatrists in general, but it’s especially high for child psychiatrists, which likely accounts for the difference in compensation. But even child psychiatry comes in below most other specialties.

There are several reasons for this, including the lack of opportunity for procedure-based ancillary income and payer mix.

Psychiatry can be heavily dependent on Medicaid and Medicare, says Peter Callan, executive vice president of Horton Smith & Associates in Overland Park, KS.

Moreover, most commercial insurance plans provide cover-age for a limited number of visits, Callan says. After that, it’s an out-of-pocket expense for the patient, which can lead to an increase in bad debt, he says.

The recent parity legislation may help the reimbursement situation, says Sam Muszynski, director of the Office of Healthcare Systems and Financing at the American Psychiatric Association in Arlington, VA. But in reality, although it may increase compensation, Muszynski says he believes it’s going to help the patient more than the psychiatrist.

Increasingly, psychiatrists are practicing out of network, finding that it makes more sense to charge patients directly. Given the high demand, it’s a workable model, he says.

Demand outstrips supplyDue in large part to the relatively low compensation, the

supply of psychiatrists is not meeting demand. There’s a severe shortage of psychiatrists—one that’s more pronounced than

other specialties, Callan says. “Like all other areas, it will most definitely continue to deteriorate,” he says. “I looked at our database, and it seems like there will be approxi-mately 1,800 psychiatrists graduating in 2009.”

Psychiatry is the 10th most requested specialty nationally, according to the 2007 Review of Physician and CRNA Recruiting Incentives from Merritt Hawkins & Associates. That’s up from 14th place in the 2006 review.

Delta Physician Placement’s Physician Recruiting Standard Q3 2008 identified it as the sixth most requested specialty from October 2007 through September 2008, up from seventh in the 2006–2007 period.

The shortage is expected to continue, says Muszynski, and, as it does, there should be a heightened effort to coordinate primary and psychiatric care to ensure that those who need help the most are seen by a specialist—a triage approach.

Currently, roughly one-third of patients with mental health issues can be seen in the primary health arena, and about one-third are referred to psychiatrists. For the remainder, primary care doctors and psychiatrists will need to develop better ways to determine whether a referral is in order and how to coordinate it.

Addressing the shortagesIn addition to overall shortages, there’s geographic dispar-

ity, just as there is in other specialties. One result has been an increased use of the circuit rider approach: One psychiatrist travels a circuit, visiting several towns.

However, in terms of satisfaction, that can be frustrating. The psychiatrist has no colleagues in whom to confide or with whom to share the load. He or she is, in effect, always on call, says Muszynski.

Another approach is telepsychiatry, which links underserved rural areas to areas with a higher concentration of psychiatrists. Telepsychiatry provides more revenue-generating opportunities.

Prisons and employmentCompensation is a primary reason for the shortage, says

Kevin Thill, vice president of the psychiatry division at LocumTenens.com. The available pool is shrinking because so many are going into prison work, especially in California




The locum pay—and the demand—are growing faster than in most other specialties, Thill says, adding that in the past few months, he’s seen increasing numbers of psychia-trists come out of retirement to do locum work, which he attributes to the poor economy.

Limited opportunities for revenueOne factor depressing psych compensation is the lack of

opportunity to make money from ancillary services.“There are limited opportunities to generate additional

revenue,” Callan says.Among the few available are participation in drug trials

and giving lectures and presentations on behalf of pharma-ceutical companies.

However, these are under increasing scrutiny from Congress and the American Psychiatry Association. A July 2008 New York Times article included the contention that commercial arrangements between doctors and drug com-panies are more prevalent among psychiatrists precisely because psychiatrists are among the lowest-paid medical specialists, and they often take consulting jobs with drug companies to supplement their income.1

and Florida, Thill says, adding that both states were hit with lawsuits stemming from the undersupply of psychiatrists in their prison systems. As a result, both are boosting their prison psych staff and compensation.

The compensation is so attractive in prisons that many of his locum psychiatrists end up opting for employment in these facilities. Muszynski says he expects the prison-system opportunities to grow; in fact, he sees the employment model growing across the board.

Another growth area is emergency psychiatry. Increasingly, hospitals want to have a psychiatrist available to the ED. In effect, they are emergency psychiatric hospitalists.

Locum becomes more attractiveThe employment model isn’t the only one that’s growing

in psychiatry. So is locum tenens work, says Thill. During the past two years, it’s been a challenge to find enough quali-fied candidates, he says. And when he does, they can name their own salaries.

Thill has seen a dramatic increase in locum pay for psy-chiatrists. Per diems have doubled from when he started about 11 years ago. Today, a psychiatrist can demand $800–$1,000 per day—even higher in some rural areas. continued on p. 6

Psychiatric median compensation trends

Compensation survey

2008 report

median+

2007 report

median+

2006 report

median+

2005 report

median+

% change

2007–2008

% change

2005–2008

AMGA Medical Group Compensation

and Financial Survey

$206,431 $200,871 $186,786 $177,000 2.77% 16.63%

HCS Physician Salary Survey Report

(represents only salary and bonus)

$170,287 $160,204 $157,588 $155,000 6.29% 9.86%

MGMA Physician Compensation and

Production Survey

$198,653 $192,609 $189,409 $182,799 3.14% 8.67%

Sullivan, Cotter and Associates

Physician Compensation and

Productivity Survey

Not yet

available

$167,131 $162,718 $157,529 N/A N/A

Source: Data excerpted from AMGA, Hospital & Healthcare Compensation Service (HCS), MGMA, and Sullivan, Cotter and Associates,

Inc., compensation surveys. Reprinted with permission.

+ Survey results are based on the previous year’s data.




But there are some procedure-related opportunities. Muszynski points to two relatively new procedures that may provide ancillary reimbursement:

Vagus nerve stimulation. » This is an adjunctive treatment for depression and certain types of epilepsy. Coverage and reimbursement remain potential roadblocks. Transcranial magnetic stimulation » . A noninvasive method of brain stimulation being used to treat depression, it recently received FDA approval, but it has yet to be deter-mined how it will be covered by insurers or Medicare.

Medication management compromiseIncreasingly, psychiatrists are turning to medication man-

agement rather than psychotherapy; the most common psych code is 90862—medication management, says Muszynski.

The trend is driven by reimbursement rates. It makes more sense to see a patient for 15–20 minutes to talk briefly and, if necessary, adjust medication, than to devote an entire hour to talk therapy.

What’s disappointing is that not only do psychiatrists prefer psychotherapy in tandem with medication, but research suggests such an approach is the most effective for patients, he says. But reimbursement models don’t support it. “So you do the best you can with medication manage-ment.” It is an economic decision, driven by reimbursement challenges. “Even doctors have a little Adam Smith in them,” says Muszynski.

Not so glumComp issues notwithstanding, psychiatrists generally are

more satisfied with the career they’ve chosen than other medi-cal specialists, Thill says.

In his firm’s 2008 Psychiatrist Compensation & Satisfaction Survey, 83% of almost 200 respondents said they would choose medicine as a career again if given the choice.

This compares to 73% of general surgeon respondents, 73% of anesthesiologist respondents, and 71% of radiologist respondents.

Callan says he is even optimistic about the direction of com-pensation. The current shortage, coupled with the aforemen-tioned demand, could ultimately lead to increases.

“The real wild card in all of this … is what will happen in terms of increases in compensation to simply provide for basic services when there is such a shortage,” says Callan. “In other words, the bidding war is beginning to occur.”

He says he believes that, ultimately, the laws of supply and demand will play out in every specialty. “It would not surprise me to see increases at roughly two times the national norm.” H

1. Benedict Carey, and Gardiner Harris: “Psychiatric Group Faces Scrutiny Over Drug Industry Ties,” The New York Times, July 12, 2008.

PCR sourcesPeter Callan, executive vice president, Horton, Smith & Associates, 7400 West 132nd Street, Suite 350, Overland Park, KS 66213, 800/398-2923.

Sam Muszynski, director of the Office Of Healthcare Systems And Financing, American Psychiatric Association, 1000 Wilson Boulevard, Suite 1825, Arlington, VA 22209, 703/907-7300; [email protected].

Kevin Thill, vice president of the psychiatry division, LocumTenens.com, 3650 Mansell Road, # 300, Alpharetta, GA 30022, 770/643-5511.

Psychiatrycontinued from p. 5

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The CMS 2009 Final Physician Fee Schedule Rule doesn’t vary much from the proposed rule released this past summer. But the changes made relating to Stark, diagnostic testing facilities, and the antimarkup rule are significant.

Background and MIPPA enactmentCMS published the Final Rule in the Federal Register

November 19. It revises the payment policies and rates for the Medicare Physician Fee Schedule (MPFS) for 2009.

As required by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), the payment rates for physician-fee-schedule services will increase by 1.1% in 2009.

Had MIPPA not been enacted, providers would have faced a 15.1% reduction in reimbursement, according to the AMA. (This figure factors in the scheduled 10.1% decrease and the estimated sustainable growth rate formula on which Medicare reimbursement is based.)

Providers could receive up to a 5.1% pay boost for 2009. In addition to the 1.1% hike, the schedule includes a 2% bonus

CMS Final Rule includes a few surprisesfor physicians who e-prescribe for their Medicare patients and 2% for reporting measures under the Physician Quality Reporting Initiative (PQRI).

Robert Bennett, government affairs representative at MGMA, will be watching to see how much of an incentive this is. The bonus represents an increase from 1.5%.

If 1.5% were enough to entice 16% of eligible profes-sionals to attempt the 2007 PQRI, Bennett says he wonders whether “the increase to 2% draws more attempts.” (See “E-prescribing bonuses clarified” below and “PQRI: Will incentives overcome frustration?” on p. 8 for more on e-prescribing and the PQRI.) Other than the MIPPA-related provisions, the Final Rule generally sticks to the proposed schedule. But there are a few changes worth noting.

Delay in Stark exceptionsCMS has postponed plans to create an incentive payment

and shared savings program exception to Stark. According to CMS, it didn’t receive sufficient information or adequate

continued on p. 8

E-prescribing bonuses clarified

The Final Rule includes provisions implementing the MIPPA-

mandated e-prescribing incentive program.

Eligible providers who adopt and use qualified e-prescribing

systems to transmit prescriptions to pharmacies can earn a bonus

of 2% of their total Medicare-allowed charges during 2009. The

e-prescribing incentive is 2% for reporting years 2009–2010,

1% for 2011–2012, and 0.5% for 2013.

Physicians must have a qualified e-prescribing system with

certain capabilities, such as being able to:

Communicate with the patient’s pharmacy »Help the physician identify appropriate drugs and provide »information on lower cost alternatives for the patient

Provide information on formulary and tiered formulary »medications

Generate alerts about possible adverse events, such as »improper dosing, drug-to-drug interactions, or allergy concerns

Moreover, they must report one of three codes when submit-

ting claims for specified types of medical visits, indicating that

they either:

Did not prescribe any medications during the visit »Used e-prescribing for any medications prescribed during »the visit

Did not use e-prescribing for a prescription because the law »prohibits e-prescribing for the specific type of drug, such as

a controlled substance

The incentive will be phased out and, effective in 2012, provid-

ers who are not successful e-prescribers will be penalized 1.5%

for 2013, and 2% for 2014 and each subsequent year.

Editor’s note: To learn more, visit www.cms.hhs.gov/PQRI/

03_EPrescribingIncentiveProgram.asp.




the healthcare community and hope it reflects a real interest in developing a workable exception,” Nordeng says. “We also hope that issues related to the transition don’t prevent the new exception from being finalized.”

IDTF delayCMS also delayed action on its proposal that nonhospital

providers of testing services meet performance standards for independent diagnostic testing facilities (IDTF). As a result, physicians who perform MRI, CT, or PET/CT in their offices will not be required to seek facility accreditation in September 2009, as previously proposed. That requirement is expected to go into effect January 2012 as part of MIPPA. (MIPPA calls for all facilities providing advanced diagnostic imaging services to become accredited, beginning in January 2012.)

The American College of Radiology has taken issue with this change; its position is that all providers in every practice setting should be required to meet all quality and performance standards that are required of IDTFs and accredited sites.

Antimarkup rule for diagnostic testsA proposed antimarkup provision—intended to take the

profit out of reassignment of benefits for diagnostic tests

consensus to move forward and, accordingly, the comment period will remain open for 90 days after publication of the MPFS rule in the Federal Register.

CMS has determined it needs additional information to finalize such an exception, and so it’s seeking additional comments. In fact, CMS has invited comments on at least 55 elements related to the shared savings concept, says Michael A. Cassidy, partner in Pittsburgh-based Tucker Arensberg and the publisher of www.medlawblog.com.

MGMA was among those calling for a delay. In its submit-ted comments, it stated:

We view the current proposal as a tentative step in the right direc-tion. We are generally concerned, however, that the proposal ... is too complex and too restrictive for the average group practice or hospital to want to participate.

So MGMA is pleased with the postponement, says Amy E. Nordeng, JD, counsel of government affairs at MGMA in Washington, DC. “We are encouraged that CMS is attempting to get more in-depth comments from

CMS Final Rulecontinued from p. 7

PQRI: Will incentives overcome frustration?

Among the provisions of the Medicare Improvements for

Patients and Providers Act of 2008 (MIPPA) is a 2% incen-

tive payment for physicians who successfully report measures

under the Physician Quality Reporting Initiative (PQRI). MIPPA

finalizes 153 quality measures and seven measures groups for

the 2009 PQRI.

MGMA will continue to work with CMS “to help evolve this

voluntary program into one that rewards the improvement of

clinical outcomes,” says Robert Bennett, government affairs

representative at MGMA.

And a recent MGMA survey reveals why such work may be

required. In fall 2008, MGMA issued a report indicating that prac-

tice leaders were frustrated with the PQRI. They cited the lack of

data for improving patient outcomes, the administrative burden of

participation, the difficulty in accessing and downloading the 2007

feedback reports, and the delay from the time data were submitted

to the time reports were available.

Physician practices spent an average of five hours trying to

locate and download their reports, and more than 28% of respon-

dents were unsuccessful in their attempts. (The full report is avail-

able at http://mgma.com/WorkArea/showcontent.aspx?id=21972.)

“It will be interesting to see how the 2008 and 2009 PQRI

reporting periods play out, based on the largely negative experienc-

es with the 2007 PQRI,” says Bennett. “On one hand, many prac-

tices that have participated, or are contemplating participating,

see the rather low payments made to successful 2007 PQRI par-

ticipants as not worth the effort. On the other hand, CMS’ efforts to

integrate the use of clinical registries could increase participation

by removing the duplicative reporting requirements that participa-

tion in both a clinical registry and the PQRI currently require.”




certain group practice arrangements and is applying the pay-ment restriction to certain services performed within a group.

Given the approach adopted in the Final Rule, fewer groups will be affected than originally proposed. “That being said, everyone will need to analyze their operations to see if they are impacted. For those who are, calculating the net charge and/or restructuring will be a significant burden,” Nordeng says. H

PCR sourcesRobert Bennett, government affairs representative, MGMA, 1717 Pennsylvania Avenue NW, # 600, Washington, DC 20006, 202/293-3450, Ext. 1378.

Michael A. Cassidy, partner, Tucker Arensberg, 1500 One PPG Place, Pittsburgh, PA 15222-5401, 412/594-5515; [email protected].

Amy E. Nordeng, JD, counsel, government affairs, MGMA, 1717 Pennsylvania Avenue NW, # 600, Washington, DC 20006, 202/293-3450.

billed by one entity and provided by another—didn’t make it to the final version. In effect, the current antimarkup rule is a simpler version of the 2008 and 2007 proposals, says Cassidy.

As articulated in the final version, the antimarkup rule will not apply when the service is supervised by a physician in the ordering physician’s group who spends at least 75% of his or her professional time providing services to that group practice. This approach allows for locum arrangements because the ser-vices of the substitute physician will be billed in the name of the billing physician being replaced, Cassidy says.

“The changes that were adopted in the Final Rule are less restrictive than any of CMS’ previous proposals, which we appreciate,” says Nordeng. However, CMS is still looking at

Ask the experts

Should a practice disclose to patients its compensation approach? Editor’s note: PCR asked our experts whether a practice should disclose its

compensation approach to patients. If so, how should they go about doing this? If not, why? If you have a question you would like to ask our experts, send it to Roxanna Guilford-Blake at [email protected].

Kenneth T. Hertz, CMPE, principal, MGMAMy answer would be no: I don’t think there is any reason to

disclose a practice’s compensation system to patients. It should have no effect on how the patient is treated by the practice or the provider. The compensation system is an internal process for the practice. I wouldn’t disclose the physician compensation methodology to a patient any more than I would tell the patient that the receptionist is being paid $X or the nurse is being paid $Y. If the practice has done its job properly, the compensation system will not encourage gaming the system or aberrant behav-ior. I believe the practice should emphasize to the patients such qualities as its patient-centric approach, commitment to the quality of care for the patients, and access. But disclose the phy-sician compensation methodology? I sure don’t see any reason to do that.

James W. Lord, principal, ECG Management ConsultantsThe manner in which a physician is paid within a practice

should not be open to review by its patients. If possible, the healthcare consumer is better served by understanding the price

for care and the historic outcomes of care over the contribution to a physician’s income. Today’s incentives are largely produc-tivity-driven, which is due to the simple reality that it contin-ues to be the most objective data available and, thus, the best method for distribution of monies. Once the industry begins to pay for outcomes, there may be some rationale to share the alignment of incentives that serve the patient, but I doubt many patients want to know that their physicians are paid largely on productivity. As compensation planning experts, one of our challenges is to find the right balance between quality, service, and productivity and to objectify this information into a for-mula that aligns the complex incentives of healthcare delivery.

Max Reiboldt, CPA, managing partner and CEO, The Coker Group

The compensation plan for a physician practice, whether pri-vate or owned and managed by a hospital, should be the private concerns of the physicians and owners of the business. Patients should not be privy to the compensation structure. The physi-cians’ actions should not change or vary in any way based on the incentive compensation structure. Moreover, if this compensa-tion structure were known by patients, there could easily be a lot of misconception. As patients are becoming better informed and may surmise that physicians are on incentive compensation plans, much care and caution is needed. H




Can the medical home save primary care?by Phillip Miller

Primary care is in trouble, and there may be no way to save it. That was the conclusion of a 2004 report conduct-ed by the American Academy of Family Physicians (AAFP), which projected that family medicine would not exist in the United States in 20 years unless major changes are made to delivery models and compensation.

Since then, the news has not improved. In 2007, 16% of first-year family practice (FP) residency slots went unfilled. More than 50% of the 2007 FP slots that were filled were taken by international medical graduates, underscoring the lack of interest U.S. medical graduates have in primary care.

Merritt Hawkins & Associates recently conducted a survey of 12,000 physicians—of which about 9,000 are in primary care—for the Physicians’ Foundation, a doctor advocacy group.

Almost half of the doctors surveyed indicated that they are going to take steps that would reduce patient access to their practices by retiring, seeking nonclinical jobs, closing their practices to new patients, working part-time, or working locum tenens. Physician recruiters are acutely aware that primary care doctors—general internists in particular—are becoming increasingly hard to find.

The most visible solution to the primary care crisis being put forward is the medical home. The medical home is still a somewhat vaguely described model in which a primary care physician, working closely with the patient, leads a team of healthcare professionals who provide for or facilitate all the patient’s needs. The idea is to expand patient access and communication with physicians.

The model is data-driven and relies on electronic medical records to help doctors make evidence-based decisions. It may feature expanded doctor hours, open scheduling, group visits, interactive Web sites, and secure e-mails, providing timely and frequent doctor-patient communication. The hope is that the medical home will, through a more preventive approach, lead to cost savings and better outcomes.

These savings can be used to pay primary care doctors more. Usually, the primary care model features a three-tiered pay-ment system. Reimbursement is based on a management fee to reward the primary care doctor as leader of the healthcare team. The doctor also receives a fee for services provided and

additional reimbursement based on the quality of outcomes achieved. More pay—in tandem with a more prestigious role in the delivery system—will keep doctors in primary care and attract new physicians to the field.

From theory to practiceThat is the theory, which soon will be tested. In July

2008, Congress approved 12 three-year Medicare medical home demonstration projects to take place in eight states, starting this year.

Medicare’s payment guidelines for practices participating in these pilot programs could mean an extra $50 per patient per month. The AAFP has already completed a medical home demonstration project featuring 36 practices nation-wide; the results are expected to be released in early 2009.

The concept seems promising, but there are challenges, such as that there may be too few primary care doctors avail-able to implement medical homes in any broad way. Many primary care doctors must already limit time spent per patient to less than 10 minutes to merely tread water financially. Coordinating care and communicating more thoroughly with patients online or by e-mail takes time, which primary care doctors already lack.

The medical home model also depends on the widespread implementation of electronic medical records (EMR). Of the physicians Merritt Hawkins surveyed, 77% of those who have not implemented EMR in their practices said they do not have the money to do so. Many primary care doctors are struggling with increasing overhead and a significant number do not have the time, resources, or expertise to implement EMR.

Despite these obstacles, the medical home concept deserves a try, and it will be interesting to see how the Medicare pilot project comes out. Without this—or some other fundamental rethinking of how primary care is delivered and paid for—recruiting primary care doctors will become even more chal-lenging than it is now. H

Editor’s note: Miller, vice president of communications at Merritt Hawkins & Associates in Irving, TX, (a national physician search and consulting firm and a division of AMN Healthcare) can be reached at pmiller@mhagroup.




PCR 2008 indexAsk the expertsCalculate compensation for medical directors and chiefs. Oct., p. 11.Communicate to avoid common recruiting mistakes. March, p. 12.Comp can be contentious issue for hospitals and physicians.

April, p. 12.Generational differences present compensation challenges. Jan., p. 12.How are organizations addressing 07-10? Dec., p. 11.How to avoid pitfalls when implementing compensation plan. Feb., p. 12.Mine surveys to find relevant compensation data. May, p. 12.Pay for malpractice, relocation, or loans to help recruit doctors.

July, p. 12.Physicians receive more offers in competitive recruitment environ-

ment. Aug., p. 12.Revisit comp plan periodically to ensure productivity, alignment.

June, p. 12.What is the best method to calculate fair market value? Sept., p. 12.When to seek a third-party opinion on physician compensation.

Nov., p. 12.

Compensation modelsApplying the group practice exception to physician compensation.

Oct., p. 12.Build flexibility into compensation packages. July, p. 11.Choose the right on-call comp model for your hospital. Aug., p. 6.Combine local, national data when developing comp plan.

May, p. 10.Consider revenue, compensation to calculate ROI for locums.

May, p. 8.Integrating comp plans key to practice merger success. June, p. 9.Massachusetts payer combines capitation, quality incentives.

March, p. 11.Measurement key to pay-for-performance success. May, p. 6. Pay physicians for call with nonqualified deferred compensation.

Feb., p. 6.Prepare to integrate payments for online consultations. March, p. 6.Scrutinize FMV in a performance-based environment. April, p. 1. Seven tips for part-time physician compensation plans. June, p. 11.Soft incentives in compensation plans. Dec., p. 12.Top 10 signs of a successful compensation plan. Feb., p. 10.Top 10 signs of a well-structured hospital comp plan. April, p. 10.

Government/regulationsAdditional gainsharing opinions offer little clarification. March, p. 11.CMS: Hospitals may use community call plans. Nov., p. 8.CMS issues new draft of telehealth codes. Oct., p. 10.CMS looks to fine-tune financial relationship reporting process.

June, p. 8.CMS may open the door to future gainsharing arrangements.

June, p. 4.CMS releases revised stand-in-the-shoes Stark provision. June, p. 8.CNS revises DFRR process. Sept., p. 3. The current state of gainsharing. June, p. 4.

IPPS, fee schedule contain new Stark changes. Sept., p. 1.OIG, CMS promise increased scrutiny. Are you prepared yet?

Dec., p. 8.OIG offers more kickback guidance. Nov., p. 10.Physicians, insurers at odds over tiering programs. July, p. 10.Proposed EMTALA change may ease burden of ED call. Sept., p. 8.Recent OIG approvals provide guidance. Dec., p. 9.Support for universal healthcare varies by specialty, comp level.

May, p. 9.

Management/comp planningComp rises as physician executive market matures. Jan., p. 1.Offer compensation to encourage medical staff leadership. Feb., p. 8.

Recruitment/retentionCalculate break-even point to choose in-house or external recruiter.

Jan., p. 6.Do physicians trust professional recruiters? April, p. 11.‘Float pool’ offers alternatives to locum tenens. Aug., p. 10.IMG physicians can ease looming shortage. Aug., p. 4.In debt, heavily recruited, and aware of their value, residents are

making their career decisions earlier. Nov., p. 1.Merge recruitment, retention efforts to keep top physicians.

April, p. 8.Physicians’ reasons for relocating: 1987 and today. April, p. 3.Real estate slump hinders doctor recruitment. July, p. 1.Recruiters seek efficiency in ailing economy, tight market. Sept., p. 10.The recruiting challenge for internal medicine. Sept., p. 9.Rural facilities struggle to recruit female physicians. March, p. 1.Rural recruitment challenges. July, p. 9.Sharing recruits helps rural hospitals find specialists. July, p. 8.Structure education loan forgiveness to attract, retain docs.

March, p. 10.Survey reveals competitiveness of recruitment. June, p. 1.

ReimbursementReimbursement cuts will skew wRVU-based comp plans. Aug., p. 9.Western groups continue to outperform the rest of United States.

Jan., p. 10.

Specialty-specific (including primary)Address the four pillars of hospitalist career satisfaction. March, p. 7.Dermatology compensation increases more than skin deep. Jan., p. 4.General surgery comp lags behind that of subspecialties. Feb., p. 4.Growing demand and steady profits keep orthopedic compensa-

tion high. Aug., p. 1.Low comp creates geriatrician shortage as population ages. Sept., p. 6.Need for critical care boosts pulmonary medicine comp.

March, p. 4.Neurology: Low compensation continues to create challenges. Oct., p. 6.

continued on p. 12




What causes you the most concern as you enter your first profes-sional practice? Nov., p. 2.

What is important to you as you consider practice opportunities? Nov., p. 3.

What level of compensation do you anticipate achieving in your first professional practice? Nov., p. 4.

Which of the following practice settings would you be most open to? Nov., p. 3.

Tables/graphs (specialty-specific)CRNA vs. primary care compensation. Aug., p. 8.Dermatology compensation trends. Jan., p. 5.Diagnostic radiology compensation trends. April, p. 7.General surgery compensation trends. Feb., p. 5.General surgery on-call compensation. Dec., p. 11.Geriatrics median compensation trends. Sept., p. 7.Neurology compensation trends, 2004–07. Oct., p. 7.OB/GYN compensation trends. May, p. 5.Oncology compensation trends. June, p. 7.Ophthalmology compensation trends. July, p. 5.Orthopedic surgery compensation trends. Aug., p. 2.Pediatric median compensation trends—includes subspecialties.

Dec., p. 7.Physician executive compensation trends. Jan., p. 3.Pulmonary medicine compensation trends. March, p. 5.Urology compensation trends. Nov., p. 7.

TrendsExperts: Economic woes, physician demand, wRVUs to figure prom-

inently in 2009. Dec., p. 1. Physician supply: Surplus or shortage? Jan., p. 8.Practices prepare for more part-time physicians. May, p. 1.Private practices catch up to hospital-owned starting salaries.

Feb., p. 1. H

Neurology and locum tenens. Oct., p. 8. OB/GYNs struggle with malpractice insurance costs. May, p. 4.Oncologists explore new models to prepare for shortage. June, p. 5. Ophthalmologists strive for efficiency to meet rising demand. July, p. 3.Ophthalmology at a glance. July, p. 4.Pediatric medicine: Low reimbursement depresses compensation.

Dec., p. 5.Practice overhead: Another strike against primary care. Nov., p. 11.Primary care reports bigger compensation increases than normal as

specialists struggle to keep pace with inflation. Sept., p. 4.Survey: CRNA compensation surpasses primary care. Aug., p. 8.Tension with hospitals doesn’t slow radiology comp climb. April, p. 5.Urology: High demand, increased procedures drive compensation.

Nov., p. 5.

Surveys and studies Female physicians satisfied despite earning less. July, p. 6.Hospitals turn to employment model as on-call solution. Nov., p. 8.On-call pay trends begin to stabilize, survey finds. Oct., p. 1.Stipend/hourly pay for employed doctors. Nov., p. 9.Survey: Physician income changes affect Medicaid patients. May, p. 9.

Tables/graphs 2008 MGMA Physician Compensation and Production Survey.

Sept., p. 5.First-year and total compensation by practice type. Feb., p. 2.A framework for hospitalist career satisfaction. March, p. 7.Locum tenens staffing decisions. May, p. 8.Male and female physician base salaries. July, p. 7.Motivations for relocating. April, p. 4.On-call expenditures, 2006–08, Oct., p. 2.Overall on-call pay rates. Oct., p. 3.Part-time assessment by age and gender. May, p. 3.Percentage of respondents implementing or considering various

approaches to on-call coverage. Oct., p. 2.Physician compensation by demographic classification. May, p. 11.Physician recruitment data. June, p. 3.Sample recruitment cost calculations. Jan., p. 7.

Indexcontinued from p. 11

Editorial BoardMarc Bowles, CPC-PRC, CMSR, FMSDChief Marketing Officer The Delta Companies Irving, TX

James W. LordPrincipal ECG Management Consultants, Inc. St. Louis, MO

David A. McKenzie, CAE Reimbursement Director American College of Emergency Physicians Dallas, TX

Kim MobleyPrincipalSullivan, Cotter and Associates, Inc. Detroit, MI

Max Reiboldt, CPAManaging Partner and CEOThe Coker Group Alpharetta, GA

Ron Seifert Senior Healthcare ConsultantHay Group, Inc. Philadelphia, PA

Physician Compensation & Recruitment (ISSN: 1937-7576 [print]; 1937-7584 [online]) is pub-lished monthly by HCPro, Inc., 200 Hoods Lane, Marblehead, MA, 01945, 781/639-1872, www.hcmarketplace.com. Copyright © 2009 HCPro, Inc. All rights reserved. No part of this publication may be reproduced or transmitted by any means, electronic or mechanical, including photocopy, fax, electronic storage, or delivery without the prior written permission of the publisher. Physician Compensation & Recruitment is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Subscription rate: $399/year (25 copies maximum); back issues are available for $30 each. • Printed in the USA. Except where specifically encouraged, no part of this publication may be reproduced, in any form or by any means, without prior written consent of HCPro or the Copyright Clearance Center at 978/750-8400. Please notify us immediately if you have received an unauthorized copy. • For editorial comments or questions, call 781/639-1872 or fax 781/639-2982. For renewal or subscription information, call customer service at 800/650-6787, fax 800/639-8511, or e-mail: [email protected]. • Occasionally, we make our subscriber list available to selected com-panies/vendors. If you do not wish to be included on this mailing list, please write to the marketing department at the address above. • Opinions expressed are not necessarily those of PCR. Mention of products and services does not constitute endorsement. Advice given is general, and readers should consult professional counsel for specific legal, ethical, or clinical questions.

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