Beyond the Benchmarks – Surveys Are a Piece of the Puzzle

Healthcare administrators must proactively seek call arrangements that protect their organizations both legally and financially.  In our last post, we discussed the risks of relying on median payments during fair market value (FMV) analysis.  Here we’ll take a closer look.

Why aren’t the surveys alone sufficient?

On-call compensation benchmarks are problematic when used as the sole indicator of FMV.  Here’s why:

Sample Sizes

Participation in surveys has grown steadily over the past decade but remains quite low.  Even specialties with a high number of physicians are generally not well represented.  Surveys further classify these already small groups of responders into still smaller subclassifications by practice type or geography, rendering the subsequent samples statistically nonrepresentative.  Surveys also group multiple specialties into large data sets, and the commingled data’s applicability to the analysis becomes questionable at best.

Wide Variations Among Benchmark Sources

Even the two most well-conducted and widely cited national call coverage surveys frequently exhibit significant differences in the percentile ranges they report for comparable specialties.  For example, one survey below suggests the payment range for family medicine physicians is 3 to 6 times higher than the other:

  • MGMA’s 2012 survey reported that the 25th to 75th percentile range of daily payments for family medicine was between $100 and $125 per day (six practices).
  • Sullivan Cotter reported a range of $300 to $750 per day for family practice physicians (five practices).

While the call coverage surveys don’t always conflict this much, similar levels of variation don’t exist in traditional compensation surveys (i.e., non-coverage), which show a greater level of consistency across the various published sources and a narrower range between the reported 25th and 75th percentiles.

Reliance on Dated Information

Payment for call coverage is still an emerging trend, with notable variations each year.  However, the most recently published coverage surveys often utilize data that is 2 to 3 years old.  As a result, even the most updated surveys may contain information that is not necessarily representative of the current market.

Limitations of the Benchmark Data Collection Process

Factors that influence the level of stipend required are not adequately measured in the survey because they are often not tracked by survey respondents. These may include the level of professional collections generated while on call, frequency and complexity of required activations and ability to engage in other income-generating activities while on call.

Surveys add value to FMV analyses, but prudent administrators will understand the limitations of these tools and view them in the context of their own facts and circumstances. It is generally considered best practice to also consider non-survey methods for arriving at an appropriate payment rate.

Our next post in the series will discuss the factors to consider in call coverage payments.

If you’d like to know more now, read the Diagnostic available on our Web site.

This entry was posted in Call Coverage, Fair Market Value, Legislative & Regulatory Issues, Physician Compensation and tagged , , , , , , by Adam Klein. Bookmark the permalink.

About Adam Klein

Adam is the head of ECG’s Valuation Services practice. Since 1997, he has conducted valuations and appraisals of business enterprises, physician and executive compensation arrangements, accountable care funds flow arrangements, and capital and intangible assets, as well as conducted economic damages assessments, for taxable and tax-exempt entities. His valuation studies are presented in a manner that allows parties to clearly understand how and why conclusions were reached so that they are best able to achieve fair and defensible agreements. He has conducted industry-leading research on drivers of physician compensation and speaks regularly on a variety of healthcare valuation topics. Adam is a Certified Valuation Analyst (CVA) with the National Association of Certified Valuators and Analysts, a member of the American Society of Appraisers, and qualified by the Institute of Business Appraisers to perform business appraisal reviews. He received a master of business administration degree from the UCLA Anderson School of Management and a bachelor of arts degree in econometrics from the University of Massachusetts Amherst.

2 thoughts on “Beyond the Benchmarks – Surveys Are a Piece of the Puzzle

  1. Pingback: Beyond the Benchmarks – Lifestyle Considerations | ECG Management Consultants, Inc.

  2. Pingback: Call Coverage and the Road Ahead | ECG Management Consultants, Inc.

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