Ins and Outs of Compensation in the
By John Watson
By having all relevant caregivers in one room prospectively reviewing cases, multidisciplinary cancer clinics make it possible to impact patient care from the very beginning. Getting all those separate caregivers into the room in first place, however, remains a significant challenge. At the 2009 Cancer Center Business Summit in Dallas, Texas, attendees were given an overview of the different ways of incentivizing physicians to dedicate the time and energy required in the multidisciplinary setting.
Physician Compensation Models
According to Mano Mahadeva, CPA, executive director of North Texas Operations at US Oncology, there is no perfect model for physician compensation. However, all good models share certain characteristics, such as promoting teamwork amongst colleagues, being easily understandable and flexible enough to accommodate new specialties.
There are three basic compensation models: an equal split model, a full production model, and a hybrid of these two. Equal split models have the advantage of being easy to understand, and since everyone receives the same payment, do not require complex formulas. However, this payment method can be seen as a disincentive to productive physicians.
“If I see 20% less patients than my colleague, well that could be an issue in the practice,” said Mahadeva.
Conversely, full production models reward physicians for increased efforts, but rely on complex, potentially time-consuming formulas to do so. Additionally, this model can create an overly competitive environment.
Hybrid models are the most popular, according to Mahadeva, because the full production element recognizes added value, while the equal split aspect compensates for other issues. Splits for this model are usually in the range of 60/40 to 70/30.
Bruce Cutter, MD, a medical oncologist and hematologist at Cancer Care Northwest (CCNW), shared his group’s experience choosing between these different models. CCNW was a group of six medical oncologists with a compensation model based on gross productivity, until the late 1990s when they decided to add additional specialties.
“We couldn’t do things based on gross revenue any longer, because the contractual allowances for each specialty are all different,” said Cutter. “Medical oncologists might get 50 cents for every billed dollar, while radiation oncologists get 28 cents, and surgeons get 25 cents.”
CCNW eventually settled on a fairly simple model using a 60% productivity/40% equal share split of practice income. This system is applied to the specialties within the practice based on total specialty professional net revenue, taking into account varying contractual allowances. Income is then split within each specialty based on the chosen systems of the doctors in these subgroups. For example, the medical oncologists decided to split their pool of money based on productivity, while the radiation oncologists are sharing their money equally.
Models for Hospital-Employed Groups
Doctors looking into hospital-based medical groups will typically encounter a handful of specific features to any potential employment offer, according to Jessica Turgon, MBA, senior manager at ECG Management Consultants, Inc. There continues to be a component of a base salary within a compensation plan, whether it is 50% or 80%, but it is now offered with an incentive payment based on a production component using relative value units related to a physician’s work (WRVUs). However, as hospitals “also want to hold physicians responsible for some of the expense categories that they wouldn’t get under a WRVU model,” said Turgon, they’re also implementing an expense or budget component (i.e., clinical expenses). Many hospitals also use quality measures to incentivize physicians—where performance as a group or system may also be measured and rewarded.
Lastly, Mark Krasna, MD, medical director of the Cancer Institute at St. Joseph Medical Center in Towson, Maryland, took attendees through the four employment models for hospital-based cancer centers.
According to Krasna, no matter what system an oncologist chooses to join, simply being part of a multi-disciplinary care system can yield significant rewards, not only in revenue but in improving patients’ quality of care.
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