Healthcare News - Ph i iPhysician CtiC ompensation · 2014. 10. 17. · • Shortage of PCPs for...

Ph i i C tiPhysician Compensation: Strategies to Pay Specialisth i i iPhysicians in ACOs

PRESENTED BY

Jim Rice, Ph.D., Executive Vice President

May 19, 2011

1Recognizing and Rewarding High Performance Physicians

Physician Compensation

PREMISE FOR THIS SESSION:

• ACO and Integrated Healthcare Systems’ Success Is Dependent Upon Designing And Managing New Strategies And Systems To Move Money to Specialists For Value DeliveredValue Delivered

• Specialists Key to Reduce Re-admissions and Max Quality

• Shortage of PCPs for Disease ManagementShortage of PCPs for Disease Management

• Specialists Pay will be Reduced

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Specialist Physician Compensation

Paradigm Shift:

p y p

Paradigm Shift:

1 Payment For Value Delivered Not Just Quantity1. Payment For Value Delivered, Not Just Quantity

2. Specialist will Feel Squeeze from Accountable Care

3. Effectiveness of Compensation more complex than base pay per procedure:

Levels of Compensation (many compensation charts avaiable)• Levels of Compensation (many compensation charts avaiable)

• Performance Management

3

Value Based Physician Compensation

Clinical ResultsInfrastructure

B h iBehavior

ValueMethods

Levels of Payment

of Payment

ACO’s Compensation

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ACO’s Compensation Philosophy

Insights from Frontline Executives

March 2011 Web Survey January 2011 Polling Arizona AMGA ACO Learning Collaborative

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g

Top Design Philosophies for ACO Physician Pay

1 Ph i i d li i i l h1. Physician engagement and alignment is essential to the success of our ACO (6.6 on 7 point scale of agreement)

2. Physician leaders should be involved in our physician pay for‐y p y p yperformance program design (6.5)

3. Physician compensation is only one aspect of ensuring needed ph sician engagement and alignment (6 2)physician engagement and alignment (6.2)

4. Moving money to physicians in an ACO should be based on measurable value delivered by the physicians (6.1)

5. ACOs need to balance physician pay with modern performance management planning and appraisals (6.0)

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Top 5 Obstacles to New Value Based Comp Design

1 ACO bl f h h l i h i b id f d1. ACO not able to forge consensus on what the value is that is to be paid for under the new compensation arrangements. Physicians need to know clearly what success looks like, and reasonable paths of how to get there from where we are

73 3 %today 73.3 %2. How to survive the transition from predominantly fee‐for‐service to new forms

of pay‐for‐performance, pay‐ for‐ value and pay‐for‐outcomes 60.0 % 3. Difficult to get information sharing across the continuum of care when providers

not in same organization 40.0 % 4. Lack of ACO leadership understanding of where we need to go, how we should

get there, and the skills to helps us get there 33.3 %5. Culture changes too slowly to drive from volume to value toward outcomes and

cost effectiveness 31.1 %

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cost effectiveness 31.1 %

Top 5 Design Metrics to Consider:

1 I d h l h f h d fi d l i1. Improved health status for the defined population being served/ Covered 65.1 %

2. Percent of outpatient/ambulatory patient care p / y pdelivered/managed within accepted protocols 55.8 %

3. Percent of inpatients cared for within accepted li i l t lclinical care protocols

39.5 % 4. Patient satisfaction scores from CMS or from our local

system studies 37.2 %5. Reduction in readmissions 37.2%

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SUCCESSFUL ACOs WILL BE:


Physician centric and patient focused■ Will require physician leaders partnering with hospital leaders

■ Compelling need to reduce duplication and focus on care provided efficiently while maintaining quality and safety of the patientwhile maintaining quality and safety of the patient

■ Hospitals will need to cut operating costs 15% to 20% over the next two to three yearsy

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Organization’s Strategic Plans

Physician Pay for

Strategic Plans

y yPerformance:

New Insights to

Base PayAlignment Philosophy

TrendsIssues

recognize and reward high performance physicians:

DesignSystemsSamples

BenefitsInnovations for:Base Pay, Benefits and

Comp Philosophy

Benefits

Incentive Pay

Incentives


Value Based Physician CompensationValue Based Physician Compensation

MONEY FOR WHAT EFFORT?

ACOs should create a “compensation philosophy” to set pay for administrative work and clinical work

Without a “Safe Harbor”, ACO compensation will need toWithout a Safe Harbor , ACO compensation will need to comply with regulations governing compensation in not-for-profit and physician compensation that deals with self referral and Medicare fraud and abuse

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Compensation Philosophy

Peer Group – Organization designated ACO’s and/or integrated systems of similar size

Job Match – Job descriptions and responsibility comparison to ensure compensation is for equal work

Base Salary and/or Hourly Rate – Where to position within the peer group – 50th, 75thy y p p g ppercentile

Incentive/Bonus – Opportunity to earn additional cash compensation by achieving pre-established performance targets; payment range 10% to 30% of base salaryp g p y g y

Benefit Expenditures – Benefit expenditures can be set as a percent of base salary, i.e., 25% or positioned in the range of the peer group, i.e., 50th percentile

Total Cash Compensation Both base salary and bonus positioned in the peer group i eTotal Cash Compensation – Both base salary and bonus positioned in the peer group, i.e., 75th percentile

Total Compensation – Both cash and benefits positioned in the peer group, i.e., 75th

percentile

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percentile


MONEY FOR WHAT EFFORT? ( t’d)


MONEY FOR WHAT EFFORT? (cont’d)

Medical Directorships for:■ Quality■ Quality■ Utilization■ Network Management■ Payer Contracting■ Payer Contracting

Compliance requires:■ Job Descriptions■ Time Reporting – if less than fulltime■ Performance Appraisals

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Physician Compensation Philosophy

Philosophy Goals

y p p y

The compensation philosophy should■ Guide all compensation planning decisions

■ Guide selection of an appropriate peer group

■ Be consistent with the organization’s mission and strategy

Th d t t f i ti ’The process used to transform an organization’s compensation program is as important to the success of the plan as the plan designplan as the plan designPeer group market data must be reflective of the physicians being measures

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being measures

Physician Compensation PhilosophyTypical Goals of a Total Compensation Philosophy

E t l titi


Ensure external competitiveness■ Enhance recruiting ability

■ Assist in retention of talented individuals

Ensure internal equity

Maintain financial affordability

Align compensation with organization’s business strategy, mission and culture

Achieve the appropriate balance between each element of total compensation (salary incentives benefits)(salary, incentives, benefits)

Provide the foundation for compensation decisions and compliance with legal and regulatory guidelines

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Reward top performance

Physician Compensation Philosophy Roles of the Board/Committee and management

Definition of peer group(s)Definition of peer group(s)

Competitive positioning of total compensation compared to peer organizations

Positioning and mix of individual compensation components:

■ Base salary

■ Incentives

■ Benefits■ Benefits

■ Perquisites

■ Other (e.g., administrative and teaching pay)

Statement of principles underlying the compensation philosophy

■ Support charitable mission, ensure rebuttable presumptions, champion innovation,

■ Define Value Equation

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q

■ Short term or Career Orientation of short and long term dimensions

The Easy Part of Design: Layers for Incentives

Physician Compensation ‐ AReview of Strategies to Pay SpecialistReview of Strategies to Pay SpecialistPhysicians in ACOs

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Issues to Consider in Developing a Compensation Philosophy


p g p p yHow critical is it that the compensation programs be consistent across specialties?

What metric (WRVUs, professional collections, financial performance, etc.) is the most appropriate to measure physician productivity?appropriate to measure physician productivity?

What is the appropriate balance between base salary and variable pay?

Should the rate of pay increase with higher levels of production?p y g p

Should the rate of pay be linked to survey data, be based on the local market factors, supply, or some combination?

Non production criteria must be part of the compensation program What measuresNon-production criteria must be part of the compensation program. What measures should be considered and to what degree is the question.

Given variations in specific physician’s contributions, to what degree should individual versus group performance drive compensation strategy?

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versus group performance drive compensation strategy?

Physician Compensation: Cannot Ignore Pressure to Shift to PCPMONEY FOR WHAT EFFORT? (cont’d)

Cannot Ignore Pressure to Shift to PCP

CLINICAL PROVIDERS■ Primary Care services■ Primary Care services

Primary Care physicians provide access and are the primary distribution system for the ACO

Primary Care physician compensation components should include:

≈ Base pay

≈ Production incentive (bonus)

≈ ACO savings

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MONEY FOR WHAT EFFORT? (cont d)

CLINICAL PROVIDERS■ Subspecialists and Surgeons

Subspecialists and surgeons will experience the greatest paradigm shift from high producers to managing care, utilizing more efficient ancillary serviceshigh producers to managing care, utilizing more efficient ancillary services and fewer procedures

Subspecialists’ and surgeons’ compensation components:

≈ Base salary

≈ Bonus (savings from specialty pool)

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≈ ACO savings




MONEY FOR WHAT EFFORT? (cont d)

CLINICAL PROVIDERS■ Hospitals■ Hospitals

Hospitals traditionally earn money based on bed occupancy and outpatient technical. ACO will require a major shift to ambulatory care and reduced bed occupancy

Hospitals will derive income from

I ti t ti t i d t ti t t h i l≈ Inpatient patient services and outpatient technical

≈ ACO savings

≈ How to share with specialists and PCPs?

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≈ How to share with specialists and PCPs?

MEDICARE ACO ILLUSTRATION

Number of Members 5 000Number of Members 5,000

Annual Payment per Member $ 12,000

T t l P t t ACO $ 60 000 000Total Payment to ACO $ 60,000,000

Compensation Allocation:

Administration 12% $ 7,200,000

Clinical Services 88% $ 52,800,000

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• MEDICARE ACO ILLUSTRATION

CLINICAL SERVICESH H l h Skill d N i 17% $ 8 976 000Home Health, Skilled Nursing 17% $ 8,976,000 Hospitals 48% $ 25,344,000 Physicians 20% $ 10,560,000 Other 15% $ 7,920,000Other 15% $ 7,920,000

100% $ 52,800,000

PHYSICIAN ALLOCATIONPrimary Care 20% $ 2,112,000

*Subspecialty & Surgery 80% $ 8,448,000 $ 10 560 000$ 10,560,000

*

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*Actuarial tables can be utilized to allocate the pools by specialty

• MEDICARE ACO ILLUSTRATION

SAVINGS ALLOCATION SHARE PERCENTAGES

Hospital 60% Hospital, 40% Physicians

Physician Specialty 100% Specialty Physicians

Other, Skilled Nursing, Home Health 50% Hospital, 50% Physicians

Payment of savings to Physicians as: Additional CompensationContribution to a Retirement PlanDeferred Compensation

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• SPECIALIST SAVINGS (Bonus)• Savings $800,000• 50% Production $400 000• 50% Production $400,000 • 50% Non Production $400,000• 20 FTE Specialists/Surgeons 150,000 WRVUp g ,• Base Compensation per FTE $376,000

Threshold Target

Reduced Re‐Admissions 25% $2,500 $5,000

Reduced Surgical Infections 25% $25,00 $5,000

f $ $Patient Satisfaction 40% $4,000 $,8000

PCP Satisfaction 10% $1,000 $2,000

Opportunity $10,000 $20,000

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pp y $ , $ ,

• Example – Surgeon• Produced 8,800 WRVU ($2.67)• Earned 100% Non-Production Bonus (Target)•• Base Pay $376,000• Non-Production 20 000• Non-Production 20,000• Production Days 23,500•• *Total Cash Compensation $419,500

26• *Before ACO Savings

• ACO SAVINGS – TEAM BONUSHospital 40% $ 700 000• Hospital – 40% $ 700,000

• Other – 50% $ 400,000 • Total Savings $1,100,000Total Savings $1,100,000

• Eligible: Primary Care: Doctors, Mid-Levels, Others• Specialty: Doctors Mid-Levels OthersSpecialty: Doctors, Mid Levels, Others

SCORECARD Points Dollars

Patient Satisfaction 5 $8,270

Reduced Re‐Admission 4 6,616

d $Fewer Medication Errors 5 $,270

Improved Health Status 3 4,962

*17 $28,118

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$ ,

* Point Value = $1,654

• Example – SurgeonP d d 8 800 WRVU ($2 67)• Produced 8,800 WRVU ($2.67)

• Earned 100% Non-Production Bonus (Target)•• Base Pay $376,000• Non-Production 20,000• Production Days 23,500• ACO Savings 28,118•• *Total Cash Compensation $447,618•

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What performance criteria should be included in the Physician Leader Incentive Comp Plan (PLICP)?Physician Leader Incentive Comp Plan (PLICP)?

Sample Measures for PLICP:Should physician leaders

1. Organizational Goals (Quality, Long‐term Goals, Growth, Executive Enterprise Goals)

2. Patient Satisfaction

remain clinically active to some extent (i.e., minimum productivity threshold should be set

3. Referring Physician Satisfaction4. Recruit and Retain Physician Talent5. Quality of Care Indicators/Processes

for each leader; conversely a minimum administrative time requirement should be

6. Productivity (Department and/or Individual)7. Performance Relative to Budget8. Service measures

set)?

If allowed to also stay in a current staff/clinical

9. Promoting medical education and research10. Ability to Execute strategy (oversee process and take an active role)11. Professional growth and development of physician staff

incentive plan, it will be important not to duplicate the same quality and service goals.

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g p p y

Recognizing and Rewarding High Performance Physicians

Staff Physician Non-Production IncentivesKey Performance Indicators:y

Patient Satisfaction: measured by Press GaneyPatient Satisfaction: measured by Press Ganey Office Survey Referring Physician Satisfaction: measured by mail survey

Healthcare organizations incorporate a “Group Balanced Scorecard Incentive” into mail survey

Performance to Budget for the Group (if employed): FY11 Net Income (Loss)G S i G l % f ll

Incentive into compensation for staff physicians, and more recently the respective

Group Service Goal: % of Call Coverage, response time, etc.Quality of Care Indicators

physician leaders plan

Adoption of Information Technology Cost Efficiency Measures: expense per procedure, test, case, etc.

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test, case, etc.


Group Quality Incentivesp Q y

Should be evidence‐based, broadly accepted, andShould be evidence based, broadly accepted, and clinically relevantOften derived from clinical guidelines and quality measures from government agencies:

Evidence‐based benchmarks – national standards as determined by independent g g

Agency for Healthcare Research and Quality; National Institutes of Health; Centers for Disease Control and

by independent professional associations, health quality organizations, and quality

Prevention); health quality organizations (e.g. Joint Commission on Accreditation of Health Organizations, Leapfrog Group, National Quality Forum, Health Watch); and professional medical societies (e g CAP

regulatory agencies

Watch); and professional medical societies (e.g. CAP, American Academy of Pediatrics, American Heart Associations)


Examples of Physician Quality Measures

Family or General Practice ‐ Percentage of patients who received an influenza

Endocrinology/ Diabetes/Metabolism ‐P t f ti t ith di b t ithpatients who received an influenza

immunization; percentage of patients who received a pneumococcal immunization; percentage of patients with diabetes with

A1C t t( ) d t d d i

Percentage of patients with diabetes with one or more A1C test(s) conducted during the measurement year.Gastroenterology ‐ Appropriate attention to

one or more A1C test(s) conducted during the measurement year; hypertension.Internal Medicine Heart disease: coronary artery disease‐ percentage of patients who

patient monitoring before, during and after the procedure when using conscious sedation measures; the percentage of patients who had appropriate colorectal screening.

were prescribed a lipid‐lowering therapy based on current ATP III guidelines; hypertension (percentage of patient visits with either systolic blood pressure >140 mm

pp p gHema‐Oncology ‐ Percentage of patients reporting pain; percentage of patients reporting nausea/vomiting; percentage of patients reporting fatiguey p

Hg or diastolic blood pressure >90 mmHg with documented plan of care for hypertension).

patients reporting fatigue.Nephrology ‐ Regular measurement of the delivered dose of hemodialysis.



Neurology ‐ Appropriate treatment of Surgery – General ‐ % of patients who have an ischemic stroke; stroke rehabilitation; diagnosis of dementia.Pulmonology ‐ Percentage of patients with COPD who had a spirometry evaluation

autogenous arteriovenous fistula for dialysis vascular access; prophylactic antibiotic received within one hour prior to surgical incision; surgical patients with recommended p y

documented; percentage of patients with systemic corticosteroids for acute exacerbation.Rheumatology Osteoarthritis: functional

thromboembolism prophylaxis.Ophthalmology ‐ Appropriate management of primary angle open glaucoma; appropriate post‐op care for filtering surgery patients;Rheumatology Osteoarthritis: functional

assessment ‐ % of patients diagnosed with symptomatic osteoarthritis assessed for function and pain annually.l h l

post op care for filtering surgery patients; complete post‐op examination post cataract surgery; glaucoma screening.Orthopedic ‐ Prophylactic antibiotic received within one hour prior to surgical incision;Plastic &Reconstructive ‐ Prophylactic

antibiotic received within one hour prior to surgical incision; surgical patients with recommended thromboembolism

within one hour prior to surgical incision; surgical patients with recommended thromboembolism prophylaxis; appropriate diagnosis and treatment of back pain.


prophylaxis.


Thoracic/Cardiac ‐ Percentage of patients Emergency Medicine ‐ Aspirin and beta bl k t t t t i l f tundergoing isolated coronary artery

bypass graft (CABG) who received an internal mammary artery graft; prophylactic antibiotic received within one hour prior to surgical incision; surgical

blocker treatment at arrival for acute myocardial infarction.Obstetrics/Gynecology ‐ Rate of mammography screening; rate of cervical cancer screeningone hour prior to surgical incision; surgical

patients with recommended thromboembolism prophylaxis.Anesthesiology ‐ Prophylactic antibiotic received within 1 hour prior to surgical

cancer screening.Pathology ‐ Appropriateness of tests and appropriate communication of results.Physical Medicine and Rehabilitation ‐Stroke rehabilitation and the pre entionreceived within 1 hour prior to surgical

incision; surgical patients with recommended thromboembolismprophylaxis; appropriate evaluation of the patient – pre, during, and post procedure.

Stroke rehabilitation and the prevention of complications.Radiology ‐ Appropriateness criteria for various diagnosis procedures such as chest x ray; computed tomography (CT)p p g p p

Critical Care ‐ Prevention of intra‐vascular catheter‐related infections; treatment of intra‐vascular catheter‐related infections; appropriate weaning from mechanical

l

chest x‐ray; computed tomography (CT) for detection of pulmonary embolism in adults) and appropriate communication of results.


ventilator support.

Design Factors

Common design approaches:Many organizationIncentive criteria links back directly to the performance accountabilities/requirements outlined in the new job descriptions

Many organization continue to tie performance only to the base salary of the

Incentive measures based on group performance (Physician collectively in their department/service line) on qualitative and productivity measure

the base salary of the position; annual performance review ) q p y

Incentive measures highly aligned with the organization's executive plan (financial, patient satisfaction, service excellence), )Best Practice to incorporate all three approaches and set individual, department, and organizational goals

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goals



Conclusions:Depending on ACO participants, ACO revenue and income could be a small percentage of a physician’s practice or hospital volume; ACOs will be phased in

Conclusions:

p p ; p

Main challenge is managing multiple systems in the integrated system:■ WRVU/Net Revenues/Larger portion non-productivity and shared savings■ WRVU/Net Revenues/Larger portion non productivity and shared savings

Will require strong management and a representative Governance structure

Developing a compensation philosophy is imperative for long-term success and regulatory compliance

Remain resilient – there will be many challengesRemain resilient there will be many challenges

Investing more focus on performance/value planning and review structure and systems as in executives of the past decade.

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p

Questions and Answer Session


Contact Integrated Healthcare Strategies

Websitewww.ihstrategies.com

Mary [email protected]‐337‐1360

James [email protected]: 612 703‐4687

Tom [email protected]

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[email protected]‐836‐1452



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