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How productivity influences compensation in private practice
When starting a career in gastroenterology, physicians tend to work in the hospital, where there is usually high demand for services and productivity goals are easy to meet. This is a little different in private GI groups, where it takes some time to build up your patient base. This might be a significant concern for young physicians considering private practice. But understanding the role that productivity plays in compensation packages can help in choosing the right group to join.
While compensation models may differ from practice to practice, there is usually a base salary provided with a productivity bonus. Some practices may use productivity along with other measures to determine when a physician is eligible to become a partner in the practice. Partnership is often accompanied with the benefits of ancillary services ownership such as ambulatory surgery centers (ASCs) and anesthesia, pathology, and infusion services.
How is productivity measured?
Most practices utilize relative value units (RVUs), a standard used by Medicare to determine the amount to pay physicians according to their productivity. Most public and private payers are utilizing the RVU system first developed for Medicare as a useful, time-saving way to handle physician payments. The RVU defines the volume of work doctors perform for all procedures and services covered under the Medicare Physician Fee Schedule.
The Medicare Physician Payment System has three components:
• The geographic practice cost indices (GPCIs)
• Relative value units (RVUs)
• A conversion factor
It is important to understand the types of RVUs that exist to understand how to calculate them properly – these include the following categories:
• Physician work, which accounts for the time and effort to perform a procedure.
• Practice expense, which is for the costs of nonphysician labor such as rent and supplies.
• Global fees, which includes fees for initial visits, follow-ups, and practice expense, and applies during a predetermined length of time known as the “global periods,” primarily for major surgeries.
• Malpractice expense, such as costs for professional liability insurance.
There is no specific dollar amount attached to an RVU because RVUs are part of a resource-based relative value scale (RBRVS) which uses RVUs to relate medical procedures to each other. Payment for physician work is based on whether the procedure is performed in an ASC or hospital outpatient department or in an office. A separate facility fee payment is made to the ASC or hospital outpatient department for procedures performed there. Other elements include skills and the amount of time needed to perform a procedure. Calculating the reimbursement from an RVU involves several components and a significant amount of complex math.
Meeting goals while building a practice
For many young physicians working in the hospital where patients are plentiful, it might seem daunting to build your practice with productivity goals. Practices should, and many do, design their initial productivity plans to minimum or mean RVUs for young physicians rather than someone 10 years into practice. Younger physicians have fellowship and training, but it takes years to become highly efficient with time and productivity. It’s important for everyone involved to set attainable benchmarks.
The practice should also do its best to support your efforts to grow your patient base. While you should be expected to develop relationships with referring physicians, you’ll benefit from the practice’s marketing efforts. When new patients come in, they usually go to newly hired physicians because more senior physicians are booked weeks or months in advance.
Practice administrators also work hard to time new hires to overlap with expected retirements. Senior partners will always have follow-up colonoscopies and associates will need to take on these cases as their colleagues retire. In some practices, younger physicians are expected to take the hospital on call schedules or respond to emergency department calls, so it shouldn’t be difficult to meet productivity goals.
And once you become a partner and are further along on in your career, your productivity plan will change. Some groups have productivity-based compensation, which allows more senior partners to work when they want to – as long as they are meeting the productivity rates that will cover their portion of the practice expenses.
If a physician is consistently not meeting productivity measures, a practice may exercise the right to terminate the relationship, but this is rare. More often, physicians meet their productivity levels and receive certain bonuses for exceeding their goals. In most practices, the partners you work with will know if you aren’t meeting your goals. In most cases, they will take on a mentorship role to help you succeed.
Ask questions, be engaged
Another thing to be aware of is that all practices worth joining make sure productivity plans do not violate the Stark Law, anti-kickback statutes, or other regulations. A huge red flag to look out for is a productivity plan that is based on the number of procedures – it should never be tied to volume.
It’s also best to consider how often the productivity plan is measured. It might be a red flag if it is measured weekly or monthly or if there are heavy consequences for not meeting RVU goals. Most groups look at productivity on a quarterly basis and integrate those discussions into a standard review process.
The successful early-career GIs we interview in our practices are those who are interested in understanding the ins and outs of our practices and what they can achieve through practicing independently. The practices worth joining will likewise be interested in discussing your level of entrepreneurship, the opportunities for you to grow in your career, and what it takes to be on the track to partner.
Dr. Baig is a practicing gastroenterologist at Allied Digestive Care in New Jersey and is the chair of communications for the Digestive Health Physicians Association (DHPA); Mr. Harlen is the president of PE Practice Solutions and immediate past chief operating officer of Capital Digestive Care in Maryland. He is the executive director of DHPA.
When starting a career in gastroenterology, physicians tend to work in the hospital, where there is usually high demand for services and productivity goals are easy to meet. This is a little different in private GI groups, where it takes some time to build up your patient base. This might be a significant concern for young physicians considering private practice. But understanding the role that productivity plays in compensation packages can help in choosing the right group to join.
While compensation models may differ from practice to practice, there is usually a base salary provided with a productivity bonus. Some practices may use productivity along with other measures to determine when a physician is eligible to become a partner in the practice. Partnership is often accompanied with the benefits of ancillary services ownership such as ambulatory surgery centers (ASCs) and anesthesia, pathology, and infusion services.
How is productivity measured?
Most practices utilize relative value units (RVUs), a standard used by Medicare to determine the amount to pay physicians according to their productivity. Most public and private payers are utilizing the RVU system first developed for Medicare as a useful, time-saving way to handle physician payments. The RVU defines the volume of work doctors perform for all procedures and services covered under the Medicare Physician Fee Schedule.
The Medicare Physician Payment System has three components:
• The geographic practice cost indices (GPCIs)
• Relative value units (RVUs)
• A conversion factor
It is important to understand the types of RVUs that exist to understand how to calculate them properly – these include the following categories:
• Physician work, which accounts for the time and effort to perform a procedure.
• Practice expense, which is for the costs of nonphysician labor such as rent and supplies.
• Global fees, which includes fees for initial visits, follow-ups, and practice expense, and applies during a predetermined length of time known as the “global periods,” primarily for major surgeries.
• Malpractice expense, such as costs for professional liability insurance.
There is no specific dollar amount attached to an RVU because RVUs are part of a resource-based relative value scale (RBRVS) which uses RVUs to relate medical procedures to each other. Payment for physician work is based on whether the procedure is performed in an ASC or hospital outpatient department or in an office. A separate facility fee payment is made to the ASC or hospital outpatient department for procedures performed there. Other elements include skills and the amount of time needed to perform a procedure. Calculating the reimbursement from an RVU involves several components and a significant amount of complex math.
Meeting goals while building a practice
For many young physicians working in the hospital where patients are plentiful, it might seem daunting to build your practice with productivity goals. Practices should, and many do, design their initial productivity plans to minimum or mean RVUs for young physicians rather than someone 10 years into practice. Younger physicians have fellowship and training, but it takes years to become highly efficient with time and productivity. It’s important for everyone involved to set attainable benchmarks.
The practice should also do its best to support your efforts to grow your patient base. While you should be expected to develop relationships with referring physicians, you’ll benefit from the practice’s marketing efforts. When new patients come in, they usually go to newly hired physicians because more senior physicians are booked weeks or months in advance.
Practice administrators also work hard to time new hires to overlap with expected retirements. Senior partners will always have follow-up colonoscopies and associates will need to take on these cases as their colleagues retire. In some practices, younger physicians are expected to take the hospital on call schedules or respond to emergency department calls, so it shouldn’t be difficult to meet productivity goals.
And once you become a partner and are further along on in your career, your productivity plan will change. Some groups have productivity-based compensation, which allows more senior partners to work when they want to – as long as they are meeting the productivity rates that will cover their portion of the practice expenses.
If a physician is consistently not meeting productivity measures, a practice may exercise the right to terminate the relationship, but this is rare. More often, physicians meet their productivity levels and receive certain bonuses for exceeding their goals. In most practices, the partners you work with will know if you aren’t meeting your goals. In most cases, they will take on a mentorship role to help you succeed.
Ask questions, be engaged
Another thing to be aware of is that all practices worth joining make sure productivity plans do not violate the Stark Law, anti-kickback statutes, or other regulations. A huge red flag to look out for is a productivity plan that is based on the number of procedures – it should never be tied to volume.
It’s also best to consider how often the productivity plan is measured. It might be a red flag if it is measured weekly or monthly or if there are heavy consequences for not meeting RVU goals. Most groups look at productivity on a quarterly basis and integrate those discussions into a standard review process.
The successful early-career GIs we interview in our practices are those who are interested in understanding the ins and outs of our practices and what they can achieve through practicing independently. The practices worth joining will likewise be interested in discussing your level of entrepreneurship, the opportunities for you to grow in your career, and what it takes to be on the track to partner.
Dr. Baig is a practicing gastroenterologist at Allied Digestive Care in New Jersey and is the chair of communications for the Digestive Health Physicians Association (DHPA); Mr. Harlen is the president of PE Practice Solutions and immediate past chief operating officer of Capital Digestive Care in Maryland. He is the executive director of DHPA.
When starting a career in gastroenterology, physicians tend to work in the hospital, where there is usually high demand for services and productivity goals are easy to meet. This is a little different in private GI groups, where it takes some time to build up your patient base. This might be a significant concern for young physicians considering private practice. But understanding the role that productivity plays in compensation packages can help in choosing the right group to join.
While compensation models may differ from practice to practice, there is usually a base salary provided with a productivity bonus. Some practices may use productivity along with other measures to determine when a physician is eligible to become a partner in the practice. Partnership is often accompanied with the benefits of ancillary services ownership such as ambulatory surgery centers (ASCs) and anesthesia, pathology, and infusion services.
How is productivity measured?
Most practices utilize relative value units (RVUs), a standard used by Medicare to determine the amount to pay physicians according to their productivity. Most public and private payers are utilizing the RVU system first developed for Medicare as a useful, time-saving way to handle physician payments. The RVU defines the volume of work doctors perform for all procedures and services covered under the Medicare Physician Fee Schedule.
The Medicare Physician Payment System has three components:
• The geographic practice cost indices (GPCIs)
• Relative value units (RVUs)
• A conversion factor
It is important to understand the types of RVUs that exist to understand how to calculate them properly – these include the following categories:
• Physician work, which accounts for the time and effort to perform a procedure.
• Practice expense, which is for the costs of nonphysician labor such as rent and supplies.
• Global fees, which includes fees for initial visits, follow-ups, and practice expense, and applies during a predetermined length of time known as the “global periods,” primarily for major surgeries.
• Malpractice expense, such as costs for professional liability insurance.
There is no specific dollar amount attached to an RVU because RVUs are part of a resource-based relative value scale (RBRVS) which uses RVUs to relate medical procedures to each other. Payment for physician work is based on whether the procedure is performed in an ASC or hospital outpatient department or in an office. A separate facility fee payment is made to the ASC or hospital outpatient department for procedures performed there. Other elements include skills and the amount of time needed to perform a procedure. Calculating the reimbursement from an RVU involves several components and a significant amount of complex math.
Meeting goals while building a practice
For many young physicians working in the hospital where patients are plentiful, it might seem daunting to build your practice with productivity goals. Practices should, and many do, design their initial productivity plans to minimum or mean RVUs for young physicians rather than someone 10 years into practice. Younger physicians have fellowship and training, but it takes years to become highly efficient with time and productivity. It’s important for everyone involved to set attainable benchmarks.
The practice should also do its best to support your efforts to grow your patient base. While you should be expected to develop relationships with referring physicians, you’ll benefit from the practice’s marketing efforts. When new patients come in, they usually go to newly hired physicians because more senior physicians are booked weeks or months in advance.
Practice administrators also work hard to time new hires to overlap with expected retirements. Senior partners will always have follow-up colonoscopies and associates will need to take on these cases as their colleagues retire. In some practices, younger physicians are expected to take the hospital on call schedules or respond to emergency department calls, so it shouldn’t be difficult to meet productivity goals.
And once you become a partner and are further along on in your career, your productivity plan will change. Some groups have productivity-based compensation, which allows more senior partners to work when they want to – as long as they are meeting the productivity rates that will cover their portion of the practice expenses.
If a physician is consistently not meeting productivity measures, a practice may exercise the right to terminate the relationship, but this is rare. More often, physicians meet their productivity levels and receive certain bonuses for exceeding their goals. In most practices, the partners you work with will know if you aren’t meeting your goals. In most cases, they will take on a mentorship role to help you succeed.
Ask questions, be engaged
Another thing to be aware of is that all practices worth joining make sure productivity plans do not violate the Stark Law, anti-kickback statutes, or other regulations. A huge red flag to look out for is a productivity plan that is based on the number of procedures – it should never be tied to volume.
It’s also best to consider how often the productivity plan is measured. It might be a red flag if it is measured weekly or monthly or if there are heavy consequences for not meeting RVU goals. Most groups look at productivity on a quarterly basis and integrate those discussions into a standard review process.
The successful early-career GIs we interview in our practices are those who are interested in understanding the ins and outs of our practices and what they can achieve through practicing independently. The practices worth joining will likewise be interested in discussing your level of entrepreneurship, the opportunities for you to grow in your career, and what it takes to be on the track to partner.
Dr. Baig is a practicing gastroenterologist at Allied Digestive Care in New Jersey and is the chair of communications for the Digestive Health Physicians Association (DHPA); Mr. Harlen is the president of PE Practice Solutions and immediate past chief operating officer of Capital Digestive Care in Maryland. He is the executive director of DHPA.