Creative Compensation for Hospitalists

John Nelson, MDPrincipal, Nelson Flores Hospital Medicine Consultants

Medical Director, Hospitalist PracticeOverlake Hospital, Bellevue, WA

john.nelson@nelsonflores.com(425) 467-3316

Part 1:the amount of compensation…

Compensation*

*Non-academic hospitalists caring for adults; includes bonuses

$246,000

$213,000$224,000

$212,000

N=726

~3% increase over prior year

1,745 enc3,892 wRVUs

1,928 enc3,858 wRVUs 2,297 enc

4,092 wRVUs

2,747 enc4,931 wRVUs

Annual Productivity per FTE

enc = billable encounters

Minimal change from prior year

*Compensation per wRVU

$55$56

$52

$54

Juice to Squeeze Ratio*

Compensation as a Function of Productivity

Comp per wRVU

Less productive hospitalists

More productive hospitalists

Part 2:The method of compensation

Mix salary components as you see fit

Mix salary components as you see fit

My bias:•Largest component based on production

•Significant performance (quality) component (at least 15 – 10% of total comp)

•Small (or 0) fixed component (instead put in place a 1 or 2 yr. minimum salary guarantee for new docs)

Reasons hospitalists are averse to significant production compensation

The Fear An alternative viewCan’t control daily patient volume Reasonably precise control of

workload/compensation over long period of time by managing staffing levels

Will disrupt cohesive culture - will lead to competing with one another for the next patient

Makes it much easier to trade work between group members – promotes cohesion

It is just a way to get hospitalists to work unreasonably hard, leading to poor patient care and burnout

It provides each doctor some flexibility to make individual choices about how hard he/she wants to work

Will lead to increased LOS, since hospitalists can increase income by keeping pts in hospital longer

A legitimate concern, but not likely to happen unless the practice is overstaffed

Will adversely affect recruiting It will unless you can explain to recruits why the hospitalists believe it is a good thing

Quality incentive• Use metrics you’re already measuring• Rotate metrics (annually?)• Compensate on a sliding scale rather than all

or none• Most quality metrics lend themselves to group

(vs. individual) payment• Not worth implementing if too easy/difficult

to achieve

ReferencesResults of SHM 2008 survey of incentive compensation and discussion of designing a quality incentive:http://www.the-hospitalist.org/details/article/184556/Bonus-Pay_Bonanza.html

Meeting on November 4, 2011, in Las Vegas on implications of the adoption of the hospitalist model of practice by many specialties in medicine:http://www.hospitalmedicine.org/Content/NavigationMenu/Events/HospitalFocusedPractice/home.htm