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Physician Reimbursement: Comparing Apples to Oranges

Changing jobs is not easy. Though it is something that emergency physicians are thought of as doing regularly, recent studies suggest that board certification in emergency medicine actually reduces job turnover. Never-the-less, when faced with a job hunt, it can be difficult comparing a proposed salary to a current one if the two models are not the same.
Emergency medicine has progressed through several reimbursement models and there are some of each out there. Here is a short list:
  • Straight Hourly: This model involves a flat hourly rate only. There is no financial incentive for a physician to see more patients. However, it is still popular in areas where it is difficult to recruit physicians. Typically, this is advertised as a guaranteed hourly rate with a low volume, so you make more money seeing less patients. The trade of is that the location is typically undesirable. Ultimately, this model can cost an employer more if they are having to subsidize the hourly rate in order to draw candidates.
  • Straight RVU: This model reimburses a physician based on a simple formula – number of RVUs generated in a time period x a multiplier. RVUs generated are based on acuity of the patient, thoroughness of documentation, and number of patient visits. So, the more productive (patients/hr) a physician is and the better he/she documents, the more money reimbursed. This kind of reimbursement is falling out of favor as emergency department volumes climb and patient flow suffers due to holds or other inefficiencies. Physicians complain that they are capable of seeing more patients but cannot due to poor patient flow and their reimbursement is suffering. However, in a steady volume ED with good operation, this model can be adequate.
  • Hourly plus RVU: This model includes two parts – an hourly base and an RVU component. The hourly base is typically set lower in order to provide a safety net or buffer for poor flow or operation in the ED. The RVU multiplier is set at a middle ground so that there is still significant incentive to see patients. This model can also be broken into two subcategories:
  1. Bonus – in this scenario, an hourly rate is paid regularly and the RVU portion is held back as a “bonus” for reaching a goal. This places the RVU portion of the salary at risk. How much risk is based on the bonus goal set and wether or not the goal is personal (physician only) or includes the entire group or company.
  2. No Bonus – in this scenario, both the hourly and RVU portions are paid regularly though not necessarily at the same intervals. The RVU pay is guaranteed and there is no additional risk.
  • Collections percentage: This model is rarely seen anymore. It involves reimbursing the physician based on a percentage of the dollars collected. Each patient seen generates a “physician professional fee” component. Once that money is collected a certain percent is then payed to the physician. Several things make this model less attractive. First, collections lag billing by 60-120 days depending on the insurer. Second, long periods of time spent resuscitating critically ill patients who are uninsured lead to no reimbursement for the physician. Third, this model can lead to unwanted behaviors from physicians like competition over lower acuity insured patients that can be seen rapidly with better reimbursement.
  • Hourly plus Collections: Much like the hourly plus RVU model, this is a two part structure. Each part is paid separately. It is also capable of being subcategorized into a bonus or no bonus model. This model has also been replaced with an RVU structure in most locations.
  • Partnership bonus: This bonus is paid in addition to a regularly structured salary (any one of the above). It involves the entire group reaching a goal, typically a profit margin above administrative costs, at which point the bonus (remainder) is distributed based on a contractual method. It may be an even split, or there may be greater gains for patterns or owners vs new hires. This is common in private groups with partnership tracts.
It is also important to keep in mind benefits packages, especially when looking at academic positions:
  • Retirement plans: Most employers will have a 403b/401k plan available. However, some will make significant contributions on your behalf and match contributions up to a certain percent, especially in an academic setting. Be sure to take into account the value of this benefit when looking at the overall salary.
  • Malpractice insurance: This benefit is costly and is typically covered by most employers. Inquiries should be made regarding continued coverage after you leave the company (aka “tail”). If your new employment requires you to purchase your own insurance, be sure you have priced your options before accepting the position. If you are taking an academic position, inquire about sovereign immunity. Do not assume you have it.
  • Disability insurance: This comes in the form of short and long term disability insurance. Either may be included but if you are counting them as an added value, be sure to examine the policies closely. Few include the type of policy that a physician would purchase on their own. Some employers elect to provide a certain amount as a reimbursement towards a policy of your choosing.
  • Life insurance: Sometimes included as a benefit in certain packages.
  • Childcare expenses: This one is often forgotten. Large organizations may have available childcare for employees. If you have children, these costs can be significant.
  • Paid leave: Rarely included in community practice but still seen in academic settings. This kind of leave can take the form of paid vacation, sabbaticals,  or maternity/paternity leave.
  • Admin time: This is paid protected time for administrative or teaching duties. In academic appointments it may be calculated as a percentage of total time. However, in community settings this takes the form of a stipend for director or assistant director duties. In return, the physician is expected to provide administrative work and availability for a predetermined number of hours weekly or monthly. Keep in mind, depending on the reimbursement rate in your area, this may be paid at a lower rate than clinical time.
  • Taxes: Though not actually a benefit, employee status can make a difference in your total annual salary. I recommend the council of a trusted CPA since your status as an employee or an independent contractor has tax implications, both for you and your employer. Employer payroll taxes have a cost and you may be able to negotiate a higher rate as an independent contractor. That leaves you responsible for paying all of the taxes, but can come with greater ability to invest pre-tax dollars into a retirement account. Be sure to get advice from your tax expert when considering a change in status.
All of the above provide added value to any contract and should be taken into account when evaluating any new position. As is the case in most things in medicine, it is all in the details. If you have questions or would like to share your personal experience, feel free to comment below or use the contact form.

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