Hospital-based physician pay formulas factor in more variables

As hospitals move away from contracting with independent groups for hospital-based services and toward physician employment, payment formulas are becoming ever more complex, according to Hospital Review.

In recent years, physician salaries have been based on productivity, which is base salary plus other compensation. The variables used to set a physician's base salary include specialty area, the physician's experience and credentials, and the amount of compensation at risk, Kim Mobley, principal of Sullivan Cotter and Associates, told Hospital Review.

Hospitals, she said, now also consider these key factors for their payment formulas:

  • Clinical services provided
  • Administrative services performed by the group
  • Call coverage
  • Quality measures, which still tend to be process-oriented
  • Measures tied to strategic objectives
  • Professional fees

Unpredictable shift workloads can complicate payment planning. For example, hospitalists, who are employed by hospitals, rather than as contractors, tend to have plenty of work during the day shift, but are starved for work at night, Will Reiser, VP of product development and decision support at Halley Consulting, told Hospital Review.

As a result, a relative value unit (RVU) formula approach doesn't suffice. Instead hospitals can combine RVU for daytime work and pay hospitalists an hourly rate for shift work at night, Reiser said. Another solution is to give them a minimum guarantee and "if they work hard," pay them more, he says. A minimum payment could be $150,000 to $160,000 plus a payment based on the hospitalist's RVU.

To learn more:
- read the Hospital Review article

Related Stories:
The discussion continues: Are physician salaries key to health reform?
Up-to-date pay models are critical to physician recruiting
Physician compensation 69 percent great for medical directors not in hospital-owned practices