Cardiologist Compensation 201: Thinking Beyond the WRVU

Let’s talk money. A confluence of factors, including physician integration efforts, a focus on population-based health, and value-based payments, is leading both hospitals and private practice groups to reexamine compensation. Conversations centered on compensation are among the most difficult for hospitals and physicians to engage in, and there is no silver bullet for how to best structure payment. We do know, however, that compensation plans should reflect the culture of the practice, encourage clinical performance, and emphasize quality/care coordination.

Measuring Success Beyond Productivity

Most health systems and providers are thinking about payment reform, but in the current fee-for-service environment, productivity-based compensation plans still dominate. Driving productivity-based plans is the WRVU, the familiar measure of the relative time and intensity associated with each CPT code. In their basic form, WRVU plans tie compensation to work effort, rewarding high producers. However, many hospitals increasingly want greater cardiologist involvement in service line performance efforts, and forward-thinking organizations are incorporating performance incentives beyond the WRVU that reward quality, citizenship, and other non-productivity-related efforts. Data from ECG’s latest National Provider Compensation, Production, and Benefits Survey shows that 52% of all physicians in 2012 had quality-based metrics incorporated into their compensation – up 25% from 2011.

In most of these arrangements, service line incentives are a small percentage of total compensation (e.g., 5% to 10%). Initially, cardiologists are often skeptical about the actual attainability of the proposed performance targets and the hospital’s ability to effectively capture the data. But when these types of incentives are actually implemented, cardiologists often comment to us that service line performance has improved – due largely to greater physician engagement, better care coordination, and substantial cost savings. As the conversation moves away from being entirely about productivity, we often find that there’s also a positive impact on cardiology group culture.

How You Might Be Measured

So what types of performance measures are being incentivized?  This varies by organization, but specific metrics that mirror programmatic objectives and payor contracting strategies will likely have the greatest impact. Performance goals that are manageable in number, easy to measure, and attainable will be the most meaningful, for both physicians and the hospital. Additionally, determining how performance will be paid is a pivotal piece of the compensation puzzle. Compensation plans need to be explicit as to what payments will be made when performance targets are met, and what happens when targets are only partially achieved.

Set Your Expectations

Don’t expect the wholesale incorporation of performance incentives into compensation plans to take place overnight. It will happen eventually, though. The weight given to performance incentives, relative to total compensation, is growing. While we still live in the world of WRVUs, adding non-productivity-based metrics to compensation plans (for both integrated hospitals and private cardiology practices) starts to bridge the gap between the fee-for-service past and the value-based future.

This post is adapted from a column that originally appeared in the June 2014 issue of CardioSource WorldNews, a publication of the American College of Cardiology.

This entry was posted in Cardiology, Physician Compensation, Physician Employment, Physician Strategy and tagged , , , , , by Katy Reed. Bookmark the permalink.

About Katy Reed

In her practice, Katy focuses on the areas of strategic planning, hospital/physician alignment, transaction assistance, and service line development. She has expertise in cardiology and oncology services and has worked with a variety of clients on their service line and programmatic needs. Most recently, Katy facilitated several hospital/physician transactions, including the acquisition and integration of multiple specialty groups and their associated ancillary services (e.g., infusion therapy) into a large medical center. She has substantial experience developing alignment models, designing funds flow and governance structures, conducting fair market value assessments, evaluating provider-based conversions, supporting physician practice valuations, facilitating hospital/physician negotiations, and providing ongoing integration assistance. Katy holds a master of business administration degree from the University of Washington Michael G. Foster School of Business and a bachelor of science degree in biology from The University of Texas at Austin.

3 thoughts on “Cardiologist Compensation 201: Thinking Beyond the WRVU

  1. Pingback: When Employment is Not an Option | ECG Management Consultants, Inc.

  2. Pingback: Becoming a High-Performing Cardiology Practice | ECG Management Consultants, Inc.

  3. Pingback: Are Benchmarks the Right Tool? | ECG Management Consultants, Inc.

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