2/1/2019 1 Understanding Physician Practice Losses February 6, 2019 › Individuals Participate in entire webinar Answer polls when they are provided › Groups Group leader is the person who registered & logged on to the webinar Answer polls when they are provided Complete group attendance form Group leader sign bottom of form Submit group attendance form to [email protected]within 24 hours of webinar › If all eligibility requirements are met, each participant will be emailed their CPE certificate within 15 business days of webinar To Receive CPE Credit
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Transcript
2/1/2019
1
Understanding Physician Practice LossesFebruary 6, 2019
› Individuals
Participate in entire webinar
Answer polls when they are provided
› Groups Group leader is the person who registered & logged on to the webinar Answer polls when they are provided Complete group attendance form Group leader sign bottom of form Submit group attendance form to [email protected] within 24 hours of webinar
› If all eligibility requirements are met, each participant will be emailed their CPE certificate within 15 business days of webinar
Losses Are Not the Fault of Physicians—Historic Overview of Physician Employment Drivers
Employed Losses Are Often Overstated—Purchased Services Analysis
2
3
4 Four Buckets Framework for Evaluating Physician Spend (Including Losses)
Board Expectations for Employed Physicians
Physician Portfolio Strategy5
Overview of Reasonable Board Expectations
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Hospital systems are integrating physicians into
hospital management
Hospital systems are integrating physicians into
hospital management
Hospital systems are integrating physicians into
hospital management
The physician workforce, whether employed or not, is
every hospital’s greatest asset
The physician workforce, whether employed or not, is
every hospital’s greatest asset
The physician workforce, whether employed or not, is
every hospital’s greatest asset
Systems are losing money on
physician employment (average of $176K per physician)
Systems are losing money on
physician employment (average of $176K per physician)
Systems are losing money on
physician employment (average of $176K per physician)
Physician Losses
The Main Topics &Focus of
Governance
Board Expectations: Physician Employment
Strategic relative to service plan
Appropriate to community needs
Compensation is commensurate with work effort
Appropriate at health system service line level
Budgeted, managed & accountable
Market-based cost levels, including physician pay
Financially sustainable
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Level of Responsibility Expectations Re: Physician Employment
Board Strategic, Sustainable, Supportable
Senior System Management Sound Business Case, Meets Current & Future Community Needs
Compliance Function Fair Market Value, Accuracy in Work Effort
Medical Group Management Performance Is Budgeted, Approved, Monitored & Managed to Reasonable Market Standards
Physicians Fair Pay for Work Performed, Clinical Autonomy, Access to Appropriate Staff, Equipment, Space
Patients Access to Care, Quality Care, Affordable
Outside Stakeholders Done If Necessary, “Equitable,” Compliant
Stakeholder Views
“Thi
s an
d”
Physician Losses Are Not the Fault
of PhysiciansHistoric Overview of Physician
Employment Trends
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Physicians Don’t Want Employment
Control over practice operations
Pride of ownership
Efficiency in operations/less training
Tax benefits
Flat Reimbursement for 20 Years
$36.69 $35.99
3.52%
$1000.00 $1,930.60
MPFS Conversion
Factor in 1999
MPFS Conversation Factor in 2018
Market basket of medical
care in 1999
Equivalent market basket
in 2018 –93% increase!
Medical inflation growth in same period (general
inflation at 2.17%)
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How Practices Have Coped
Seeking Compensation
for Nonclinical
Work
Seeking Compensation
for Nonclinical
Work
Expanding Ancillary Services (Where
Permitted)
Expanding Ancillary Services (Where
Permitted)
Scaling Up
Joint Ventures
Joint Ventures
Selling Out!
Compensation for Nonclinical Work
Clinical Productivity – Traditional
Nontraditional• E.R. Call Pay
• Medical Direction Services
• Profit on Mid-Level Providers/ Supervision
• Teaching/Research
• Co-Management Services
• ACO/Bundled Payments
Seeking Compensation for Nonclinical
Work
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Compensation for Nonclinical WorkIndependent Groups• Revenue - Expense = Compensation• Hospitals: How big of check can we get
them to writeReimbursement• Medicare Physician Fee Schedule
(MPFS)-drivenMedicare Road Map • For “sustainable” expense levels
across functional areas, including labor-all CPT-based
Medicare Cost Profile • Can be extended to an actual payor
mix providing indication on what is “affordable”
Scaling Up
Compensation for Nonclinical WorkSignificant Incentives for Health System Physician Acquisition• On-call coverage• Outreach/collaboration with smaller
health systems• Control over referral network/patient
spendEmployment Compensation Levels• Take into account all expected work
effortPrivate Equity Groups/Other Groups• Aggressively pursuing roll up strategies
as well
Selling Out!
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Employed Losses Are Often
OverstatedPurchased Services Analysis
Health systems often fail to account for physician services provided to the hospital corporation
• Physician call or coverage
• Subsidies (payor mix or low volumes)
• Management services/administrative services
Most systems are not utilizing transfer pricing to assign physician cost proportionally to services provided
Financial Reporting Practices
Presented as a separate physician
corporation in a consolidated
entity
Key Impacts
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Employed physicians are routinely asked to contribute via
• Clinical productivity (assign cost to clinic)
• Call compensation (assign cost to hospital)
• APP supervision (assign cost to clinic)
• Medical direction (assign cost to hospital)
• Clinical quality efforts (assign to ACO/CIN)
• Other time-based services, such as teaching, research, administrative tasks, etc. (assign to “consumer” of time)
Cost Allocations of Physician Work Internal
Pricing ModelRegardless of what the contract calls for in terms of payment mechanisms, an internal pricing model can be used to assign a physician’s cost into appropriate buckets
Accomplish by establishing &
adopting a standard pricing model
RealValue Pricing Model – Inputs
Demographics
Employer Name Health System
Compensation Paid $342,000 ESTIMATED INDIVIDUAL LOSS = $159,500
Specialty Area Gastroenterology
Clinical Inputs Nonclinical Work Effort
WRVUs 5,850 MLP Supervision Hours per Year 100
Clinic Days per Week 3 Administrative Time 100
Weeks Worked per Year 46 Paid Time Off 208
Annual Clinic Days 184 Annual Nonclinical Work Effort Hours 408
Clinic Hours per Day 9
Annual Clinic Hours 1,656
Total Active Work Effort Hours
Call Coverage Inputs Clinical 1,656
Primary call rotation (# of docs) 3 Nonclinical 408
Total On-Call Hours (Primary) 2,920 Active Hours Total 2,064
Activations per Year 100
Clinical Time Once Called In (Hrs) 75 Effective Hourly Rate (without benefits) ~ $170
“Training Doc”• Potential for Superstar status• Quality component increases
future value• Easier to change profitability
than quality
“Superstar Doc”• The “Best” docs• Other hospitals want them• High compensation demands• Maintain “Superstar” status
“Killer Doc”• The worst of all worlds• Physicians need to move
quickly to improve status• Drastic reductions in
compensation or unemployment
“Cash Cow Doc”• Historically valuable to system • Potential retirements• Possible decrease in
compensation• Opportunity to understand quality
measurements & improve status
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Physician Portfolio Scorecard Matrix High Quality
High Profitability
Low Quality
Low Profitability
“Training Doc”High Quality Low Profitability
“Superstar Doc”High Quality High Profitability
“Killer Doc”Low Quality Low Profitability
“Cash Cow Doc”Low Quality High Profitability
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Continuing Professional Education (CPE) Credit
BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.
The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered.
› CPE credit may be awarded upon verification of participant attendance
› For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at [email protected]
The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered.