Physician EmploymentCurrent Compensation Trends and

Considerations for Establishing FMV

Presented By

Jim Carr, ASA, MBA | PartnerBecker’s Hospital Review 7th Annual Meeting

April 29, 2016

Physician Employment Landscape• Massive number of private practice physicians moved into 

hospital‐affiliated practices over the past six years• Some of the reported drivers of this trend include:

• Reimbursement cuts• Lifestyle/focus on medicine• Hospital‐physician alignment and formation of ACOs• Fear

• Many major specialties stabilizing; “hold‐outs” continue to move• Trend resulted in significant changes in physician comp models• Enforcement activity related to employed physicians increasing• Appraisers continue to refine methods to establish FMV in light 

of these changes

2April 29, 2016 Physician Employment

Private Practice Exodus

April 29, 2016 3Physician Employment

2008 2009 2010 2011 2012 2013 2014Physicians 51.14% 45.96% 40.70% 41.05% 38.96% 33.54% 27.66%Hospital/IDS 34.42% 43.06% 47.11% 49.17% 54.26% 63.36% 68.81%Other 14.44% 10.98% 12.19% 9.78% 6.78% 3.10% 3.53%Average MDs/Practice 22.4 24.6 20.9 21.4 15.8 15.8 18.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Average Practice Size

Percen

tage

 of R

espo

nden

ts

MGMA Respondent Base

Data extracted from MGMA Physician Compensation and Production Report

Private Practice Exodus

April 29, 2016 4Physician Employment

Cardiology

Anesthesiology

Radiology

Urology

GI

Ortho

Hem‐OncNeurologyOB/GYN

Int Med

Pediatrics

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2009 2010 2011 2012 2013 2014

Percen

tage of R

espo

nden

ts in

 Hospital/IDS Practices

Shifts in Major Specialties

Data extracted from MGMA Physician Compensation and Production Report

Who’s Still Moving?

Critical Care - Intensivist

April 29, 2016 6Physician Employment

2009 2010 2011 2012 2013 2014Median Comp ‐ Hospital Practices $281,773 $308,591 $326,587 $338,240 $349,932 $368,442Median Comp ‐ Non‐hospital Practices $254,296 $305,464 $378,172 $399,691 $402,778 $403,500Median Prof Collections/FTE $295,000 $331,000 $293,000 $298,145 $191,102 $244,843Hospital Owned Respondent % 56.5% 64.6% 74.8% 66.4% 80.0% 88.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

 $‐

 $50,000

 $100,000

 $150,000

 $200,000

 $250,000

 $300,000

 $350,000

 $400,000

 $450,000

% Hospital O

wne

d Re

spon

dents

Med

ian Co

mpe

nsation/Co

llections

Data extracted from MGMA Physician Compensation and Production Report

Emergency Medicine

April 29, 2016 7Physician Employment

2009 2010 2011 2012 2013 2014Median Comp ‐ Hospital Practices $258,461 $282,171 $283,267 $302,497 $318,851 $309,048Median Comp ‐ Non‐hospital Practices $272,274 $267,500 $317,053 $304,988 $323,811 $365,230Median Prof Collections/FTE $311,000 $279,000 $317,000 $297,946 $337,424 $348,316Hospital Owned Respondent % 48.0% 50.2% 56.6% 67.5% 64.0% 81.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

 $‐

 $50,000

 $100,000

 $150,000

 $200,000

 $250,000

 $300,000

 $350,000

 $400,000

% Hospital O

wne

d Re

spon

dents

Med

ian Co

mpe

nsation/Co

llections

Data extracted from MGMA Physician Compensation and Production Report

Medical Oncology

April 29, 2016 8Physician Employment

2009 2010 2011 2012 2013 2014Median Comp ‐ Hospital Practices $317,543 $375,000 $401,508 $425,006 $421,093 $429,771Median Comp ‐ Non‐hospital Practices $401,125 $404,412 $443,996 $435,495 $423,515 $451,002Median Prof Collections/FTE $446,050 $397,196 $464,481 $423,448 $368,395 $357,281Hospital Owned Respondent % 39.1% 46.2% 48.9% 55.7% 65.4% 72.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

 $‐

 $50,000

 $100,000

 $150,000

 $200,000

 $250,000

 $300,000

 $350,000

 $400,000

 $450,000

 $500,000

% Hospital O

wne

d Re

spon

dents

Med

ian Co

mpe

nsation/Co

llections

Data extracted from MGMA Physician Compensation and Production Report

9April 29, 2016 Physician Employment

Neurology

2009 2010 2011 2012 2013 2014Median Comp ‐ Hospital Practices $240,899 $250,075 $257,486 $264,863 $264,140 $269,936Median Comp ‐ Non‐hospital Practices $234,653 $247,384 $263,805 $284,170 $289,613 $274,000Median Prof Collections/FTE $409,206 $370,085 $397,594 $394,960 $352,002 $399,976Hospital Owned Respondent % 42.9% 51.2% 51.8% 60.5% 67.7% 72.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

 $‐

 $50,000

 $100,000

 $150,000

 $200,000

 $250,000

 $300,000

 $350,000

 $400,000

 $450,000

% Hospital O

wne

d Re

spon

dents

Med

ian Co

mpe

nsation/Co

llections

Data extracted from MGMA Physician Compensation and Production Report

Orthopedic Surgery: General

April 29, 2016 10Physician Employment

2009 2010 2011 2012 2013 2014Median Comp ‐ Hospital Practices $516,413 $526,398 $544,579 $529,360 $554,600 $567,596Median Comp ‐ Non‐hospital Practices $452,128 $482,928 $493,095 $546,671 $563,568 $562,533Median Prof Collections/FTE $775,017 $784,985 $799,302 $795,395 $810,328 $769,838Hospital Owned Respondent % 31.0% 38.5% 42.9% 48.1% 51.2% 55.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

 $‐

 $100,000

 $200,000

 $300,000

 $400,000

 $500,000

 $600,000

 $700,000

 $800,000

 $900,000

% Hospital O

wne

d Re

spon

dents

Med

ian Co

mpe

nsation/Co

llections

Data extracted from MGMA Physician Compensation and Production Report

Plastic & Reconstructive Surgery

April 29, 2016 11Physician Employment

2009 2010 2011 2012 2013 2014Median Comp ‐ Hospital Practices $360,033 $374,512 $413,470 $449,106 $417,473 $404,243Median Comp ‐ Non‐hospital Practices $413,548 $391,733 $451,779 $465,626 $437,048 $527,029Median Prof Collections/FTE $648,938 $730,114 $703,194 $865,168 $771,486 $715,759Hospital Owned Respondent % 38.9% 42.8% 50.0% 42.7% 52.7% 58.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

 $‐

 $100,000

 $200,000

 $300,000

 $400,000

 $500,000

 $600,000

 $700,000

 $800,000

 $900,000

 $1,000,000

% Hospital O

wne

d Re

spon

dents

Med

ian Co

mpe

nsation/Co

llections

Data extracted from MGMA Physician Compensation and Production Report

Compensation Model Trends

Recent Compensation Trends

• I’m fed up with wRVUs• Higher guaranteed bases or longer guarantee periods• Larger portion of total compensation being shifted to 

“quality bonus”• Compensation requested for previously uncompensated 

activities• Midlevel supervision• “Windshield” time• Resident oversight• Committee participation

April 29, 2016 13Physician Employment

Recent Compensation Trends

• Quality Incentives• Typically represents 5%‐20% of total income potential• “Quality” generally represents only a fraction

• Patient Satisfaction• Citizenship• Outcomes

• Many employers still appear to be struggling how to define and measure “quality”• Core measures and HEDIS are common benchmarks

April 29, 2016 14Physician Employment

Recent Compensation Trends

• Increasing use of One‐Time Payments• Signing, commencement, and retention bonuses• Student loan repayments• Relocation “stipends” (not reimbursement of expenses)

• Models based primarily on collections or EBIT continue to decline

• Tiered wRVU models continue to survive

April 29, 2016 15Physician Employment

Related Enforcement Activity

Enforcement Activity• Along with the rise of physician employment, there has been a 

corresponding increase in qui tam cases related to employed physicians

• Notable 2015 settlements included:• United States ex rel. Barker v. Columbus Regional System ($35 million)• United States ex rel. Reilly v. North Broward Hospital District ($69.5 

million)• United States ex rel. Payne v. Adventist Health System/Sunbelt, Inc. and 

United States ex rel. Dorsey v. Adventist Health System Sunbelt Healthcare Corp. ($115 million)

• All complaints included allegations that the practice of the employed physician(s) incurred substantial losses• DOJ seems to be advocating that compensation cannot be FMV or an 

agreement cannot be commercially reasonable if a practice loses money• Courts seem to be willing to hear that argument 

April 29, 2016 17Physician Employment

Practice Losses

April 29, 2016 18Physician Employment

1,267 Groups

660 Groups

620 Groups

256 Groups

‐$300,000

‐$250,000

‐$200,000

‐$150,000

‐$100,000

‐$50,000

$0Primary Care Medical Specialty Surgical Specialty Multispecialty

Median Practice "Income" per FTE Physician

Data extracted from MGMA 2015 Cost and Revenue Report: Based on 2014 Survey Data

FMV Considerations

Recurring Themes Regarding FMV

• “Stacking” issues• Productivity v. production compensation

• Shouldn’t my 90th P producer should earn 90th P comp per wRVU?

• Shouldn’t quality pay be added on top of FMV comp?• Doesn’t the _____ survey really set the market?• Opportunity cost• Annual inflation factors

April 29, 2016 20Physician Employment

Impact of Stacking

April 29, 2016 21Physician Employment

Comp/wRVU vs Production

April 29, 2016 22Physician Employment

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

1Q 2Q 3Q 4Q

Radiology: Interventional Hospitalist: Internal Medicine Surgery: Cardiovascular

Cardiology: Invasive Cardiology: Noninvasive Neurology

Cardiology: Invasive‐Interventional Emergency Medicine Cardiology: Electrophysiology

Surgery: General

Data extracted from MGMA 2015 Physician Compensation and Production Report

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

Staff Physician Program or Medical Director Chief or Department Chair Division Chair or Section Head

Axis Title

Median Quality Incentives (% of TCC)

Quality Compensation

April 29, 2016 23Physician Employment

Data from Sullivan Cotter & Associates’ 2015 Physician Compensation and Productivity Survey Report

Physician EmploymentCurrent Compensation Trends and

Considerations for Establishing FMV

Presented By

Jim Carr, ASA, MBA | PartnerBecker’s Hospital Review 7th Annual Meeting

April 29, 2016