Hospitalist Quizomercial – “Make more money! Here’s how…”

Provided below are a few compensation and productivity tables.  The data is fictitious to protect the hard work of our colleagues from those of you who are, shall we say, obsessively frugal.  Yet, it resembles the most recent MGMA-SHM Hospitalist Survey fairly closely.  Here we go…

1)      Which of the following groups most closely resembles your current compensation calculated using the formula: Compensation = Salary + Bonuses + Retirement Plan?

2)      Which of the following groups would you like to represent your compensation and productivity?

3)      Which of the following groups does your employer currently want you to emulate?

4)      Which of the following groups should your employer seek to have you emulate?

WAIT!  C’mon now, no cheating.  Take a position and note your answer on each question. I learn the most when I take a stand and allow myself to fail.  I learn a lot that way…

OK, here’s my answers based on what I see from Hospitalists’ perspectives:

1)      My current compensation/productivity is at Median.

2)      I’d like my compensation/productivity to be 75th or 90th Percentile.

3)      My employer currently wants me to emulate the 25th Percentile or Median.

4)      I believe my employer should want me to emulate the 75th or 90th Percentile, but they don’t want to pay for that!!!  They probably want me to be at 25th Percentile to Median.

How close are we?  Regardless, let’s keep moving for now and concentrate on question #4… Based on the relationship of compensation to productivity, what should my employer want me to emulate?

This requires us to derive some benchmark numbers from the data to get to a reasonable conclusion as follows:

First, note that the charges are thrown out and that the $/wRVU are the same in each group.  That’s because charges vary widely from practice to practice as to be a useless comparison.  Meanwhile, the fact that Net Receipts/wRVU are the same throughout means that all the groups have the same collections rate and payor mix.  In other words, they’re a good “apples to apples” sample.

Now, working backwards, the answer to number four should be clear if we take a look at the compensation ratios.

My employer probably wants me to be at the 75th to 90th percentile for compensation and productivity! The reason is because my cost per encounter seen or wRVU produced is lowest in those groups. Therefore, when I’m more productive, I should make more money and lower the cost per case for the hospital at the same time. But guess what, many of our employers haven’t figured this out.  They just can’t get past the high compensation to see the cost savings hidden in the numbers.  More compensation must cost more overall!

Meanwhile, other employers have this down to a science.  They seem to run every one of us into the ground rather than hire a few more people.  Hiring costs more money and lowers everyone’s productivity somewhat, and besides, Hospitalists are in short supply anyway.  And if I don’t have a productivity based pay incentive, then extra work is free!

Yet having more Hospitalists also provides time to spend with patients, families, performance improvement projects, and even to improve documentation.  That helps to improve the receipts on each case, even if I see fewer of them.  Moving us back down toward median might also provide for better throughput, higher patient satisfaction, and a host of other issues that Mike referred to a few weeks back on September 20th.  But that will probably cost more on the blessed bottom line…

Want to learn more about this concept?  Type “Diminishing Marginal Returns” into your favorite search engine.  Next time, I’ll attempt to go through the implications of this data a bit more.  (Hopefully, Dr. Radzienda resists the urge to tackle and crush me in the meantime.)

2 Comments

  1. Mike Radzienda on November 4, 2010 at 4:46 pm

    Dear Troy,
    Over 20 years ago I realized that deadlifting a volkswagon was not very conducive to academia. But, after reading your post, I feel that I must remobilize my axioms.
    If I do tackle and crush you, know that it is with deep respect and admiration.
    Mike

  2. […] those who have 71-90% or more than 90% of their compensation structured into their base salary.  Looking back at my nauseatingly numerical blog from last month, we already know that the basis for this effect stems from the law of diminishing marginal returns […]

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