physician employment losses - american health …€¦ · physician employment losses: ... net loss...
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Page 1February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Physician Employment Losses:Alarming Trend or Misunderstood
Performance Metric?
Douglas K. Anning, Jon-David Deeson
Page 2February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Net Loss per FTE PhysicianHospital/IDS Owned – Multispecialty
2005 – 2010
Source: MGMA Cost Survey, 2011.*For 2008, Net income, practices without financial support was used to provide a more accurate data point.
1998 Loss per Physician = $83,000
$0
$50,000
$100,000
$150,000
$200,000
$250,000
2005 (n=105)
2006 (n=99)
2007 (n=97)
2008* (n=83)
2009 (n=242)
2010 (n=189)
Mean
Median
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Page 3February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Net Loss per FTE Physician
Source: MGMA Cost Survey, 2011.
$500,000 $400,000 $300,000 $200,000 $100,000 $0 $100,000 $200,000 $300,000
Not Hospital/IDSOwned
Hospital/IDSOwned
25th %tile
10th %tile
Net Loss, 2000
90th %tile
75th %tile
Median
Standard Deviation
Mean
$189,910
Multispecialty
Page 4February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
10th %tile
Median
90th %tile
Net Loss per FTE Physician
Source: MGMA Cost Survey, 2011.
Eastern(n=39)
Midwest(n=41)
Southern(n=84)
Western(n=25)
Overall 10th %tile = $467,108
Overall Median = $189,910
Overall 90th %tile = $18,273
Hospital/IDS Owned – MultispecialtyGeographic Section
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Page 5February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
≤10 11-25 26-50 51-75 76-150 ≥151
Hospital/IDS Owned – Multispecialty Number of Physician FTEs
10th %tile
Median
90th %tile
Net Loss per FTE Physician
Source: MGMA Cost Survey, 2011.
(n=94) (n=22) (n=13) (n=24) (n=19)
Overall 10th %tile = $467,108
Overall Median = $189,910
Overall 90th %tile = $18,273
(n=17)
Page 6February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Alarming Trend or Misunderstood Performance Metric?
Payer Mix?
Physician Specialty?Capacity?
Culture?
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Page 7February 9, 2012
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Industry Response• Repeat of the 1990’s?
– “Practice losses increasingly untenable” – Health Care Advisory Board (1999)
– “Employment choices physicians make today may not be able to be undone” – NEJM, 2011
Problem versus predicament…
– Financial, operational, strategy and potentially legal matters to consider
– Leadership is critical
Page 8February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Hospital / IDS Owned Employment Trends
70%
30%
Yes
No
Does your hospital/system plan to employ a greater percentage of
physicians in the next 12-36 months?
HealthLeaders Intelligence Report
Top 5 Service Lines
Primary care
Hospitalists
General Surgery
Cardiology
Orthopaedics
71%
71%
51%
50%
39%Source: HealthLeaders Intelligence Report, September 2011
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Page 9February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
U.S. Physician Practice Ownership
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010
Hospital/IDS Owned
Physician Owned
42%
53%
10 Years Ago (2000)
MGMA
AMGA
76% 21%
54% 39%
Source: MGMA Cost Survey, 2006-2011.
Hospital/IDS: 51%
AMGA (2011)
Physicians: 40%
Page 10February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
By the Numbers…
Source: MGMA Cost Survey, 2011.
Median Data Hospital/IDS OwnedNot Hospital/IDS
Owned
Count 190 168
Total physician FTEs 11.10 34.90
Total non-physician provider FTEs 5.28 8.95
Number of branch clinics 14 5
Practice model characteristics are different
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Page 11February 9, 2012
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By the Numbers…
Source: MGMA Physician Compensation and Production Survey, 2011.
Card
FP
Hosp
IM
OB/GYN
Peds
Gen Surg
Ortho Surg
1
1Includes Urgent Care.
68%
Physician specialty does influence multispecialty data
Hospital/IDS Owned
Page 12February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Physician Compensationas a Percent of Collections
Source: MGMA Physician Compensation and Production, and Cost Survey, 2011.
0%
20%
40%
60%
80%
100%
120%
140%
Card FP IM Hosp OB/GYN Peds Gen Surg Ortho Surg
Hospital/IDSOwned
Not Hospital/IDSOwned
$83,800(n = 18)
$103,234(n = 299)
$226,823(n = 128)
$282,986(n = 68)
$185,861(n = 94)
$265,669(n = 38)
$21,833(n = 40)
$259,645(n = 44)
Net Loss per FTE MD:
Hospital/IDS
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Page 13February 9, 2012
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Per Physician Work RVU
*Note: Median physician benefits for Multispecialty Hospital / IDS Owned and Not Hospital / IDS Owned are reported as $6.22 and $6.21, respectively.
Source: MGMA Cost Survey, 2011.
Median Data Multispec Fam Prac OB/GYN Gen Surg Card Ortho Surg
Hospital / IDS Owned
Total Med Rev $82.78 $80.49 $77.44 $57.90 $100.08 $72.19
Total Opg Cost $65.21 $60.92 $60.76 $42.41 $43.53 $47.79
Total Phys Cost* $52.44 $41.63 $47.23 $50.74 $62.44 $52.55
Not Hospital / IDS Owned
Total Med Rev $120.30 $94.85 $88.02 $75.18 $102.15 $91.19
Total Opg Cost $72.84 $56.06 $49.21 $32.97 $56.33 $41.88
Total Phys Cost* $46.21 $30.54 $34.74 $54.48 $40.99 $44.07
Page 14February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
2000 2005 2010
Physician Practice Financial Performance
Source: MGMA Cost Survey, 2011.
Medical RevenueOperating Costs$866,444
$498,265
Per FTE Physician, Multispecialty – Median Data
($368,180)
Medical Revenue Gap, 2010:Fam Prac ($185,684)OB/GYN ($385,409)Cardiology ($265,049)Gen Surg ($205,771)Ortho Surg ($507,526)
Medical revenue gap increased 138% during
10‐year period
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Page 15February 9, 2012
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Operating Costs
Source: MGMA Cost Survey, 2011.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Mgmt Fee Bldg &Occup
Staff StaffBenefits
ProfLiability
Info Tech
Hospital/IDS Owned
Not Hospital/IDS Owned
Hosp/IDS: 72.99% (O/H)3.46 (FTEs)
Not Hosp: 63.67% (O/H)5.52 (FTEs)
Per FTE Physician, Multispecialty – Median Data
Overhead (O/H) and FTEs
1
1
1Per FTE support staff.
Page 16February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Physician Costs
Source: MGMA Cost Survey, 2011.
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Total Cost Medical Revenue
Hospital/IDS Owned
Not Hospital/IDSOwned
As a Percent of, Multispecialty – Median Data
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Page 17February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Ancillary Services
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
Clinical Lab/Pathology Diagnostic Radiology/Imaging
Not Hospital/IDS Owned
Hospital/IDS Owned
Proc./MD = 4,769GC/Pat. = $81.10
Proc./MD = 2,445GC/Pat. = $33.67
Note: Proc./MD = Procedures per Physician and GC/Pat. = Gross Charges per Patient
Proc./MD = 632GC/Pat. = $55.76
Proc./MD = 282GC/Pat. = $19.04
Source: MGMA Cost Survey, 2011.
Gross Charges per FTE Physician, Multispecialty – Median Data
Page 18February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Surgical and Medical
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Surgery/AnesthesiaProcedures
Surgery/AnesthesiaProcedures
Medical Procedures Medical Procedures
Hospital/IDSOwned
Not Hospital/IDSOwned
(outside practice)(outside practice)
(inside practice)(inside practice)
Source: MGMA Cost Survey, 2011.
Procedures/Physician
Gross Charges/Patient
Gross Charges per FTE Physician, Multispecialty – Median Data
183 166 227 350 629 497 4,325 5,788
$146.14 $94.50 $53.91 $44.73 $67.94 $42.21 $332.31 $371.82
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Page 19February 9, 2012
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Key Performance Metrics
Source: MGMA Performance and Practices of Successful Medical Groups, 2010 and MGMA Cost Survey, 2011.
MultispecialtyMedian Data
Hospital/IDS OwnedNot Hospital/IDS
OwnedAll Owners –
Better Performers
120+ Days in A/R 24.91% 15.01% 10.23%
Days in A/R 49.53 34.79 30.56
Net Collection % 96.59% 98.32% 99.28%
Overhead % 72.99% 63.67% 61.97%
Payer Mix
Commercial 42.70% 46.39%
Medicare 24.08% 25.30%
Medicaid 9.16% 3.53%
Self-Pay 3.30% 2.80%
Financial performance and payer mix variances do exist
Page 20February 9, 2012
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Better Performers
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
MedicalProcedures
MedicalProcedures
SurgicalProcedures
SurgicalProcedures
LabProcedures
RadiologyProcedures
Hospital/IDSOwned
Not Hospital/IDSOwned
(inside practice) (inside practice)(outside practice) (outside practice)
Source: MGMA Performance and Practices of Successful Medical Groups, 2010.
Activity Charges to Total Gross Charges Ratio, Multispecialty ≥ 50% Primary Care
15.46%8.62%
2.52%1.13%
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Page 21February 9, 2012
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Better Performers
Multispecialty:Hospital/IDS Owned –BETTER Performers compared to…
Hospital/IDS Owned – Others
(Variance)
Not Hospital/IDS Owned –
Better Performers(Variance)
Not Hospital/IDS Owned – Others
(Variance)
Medical Revenue $113,049 ($270,172) ($188,449)
Overhead % -12.55% (4.63)% (1.19%)
Total RVUs 1,414 (3,950) (1,594)
Work RVUs 693 (1,797) (481)
Source: MGMA Performance and Practices of Successful Medical Groups, 2010.
Key Performance Indicators Gap Analysis
Better performers close the gap but not in all areas
Page 22February 9, 2012
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Preliminary Focus Areas
Revenue, expense and physician compensation environment (both pre- and post-employment)
Performance variance explanations
Impact of post-employment performance on legal matters (e.g., FMV and Commercial Reas.)
Other unintended consequences
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Page 23February 9, 2012
Prepared for AHLA Physicians and Physician Organizations Law Institute
Alarming Trend orMisunderstood Performance
Metric?
Page 24February 9, 2012
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Mitigating the Debate• Identify root causes*
– Uncontrollable – payer mix, JCAHO, etc.
– Accounting – system overhead, ancillary services
– Controllable – best practice targets, physician compensation impact
• Educate with a purpose of minimizing the impact on culture and finger pointing
• Establish integration process, trip wires
• Focus on realization of ROI – strategic value* Stopping the Bleed, Health Care Advisory Board, 1999
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Page 25February 9, 2012
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Mitigating the DebateUncontrollable
(System Induced)
Payer Mix
Strategic
Accounting
(System Induced)
Ancillary Services
Overhead
Controllable
Revenue, collections and A/R
Physician Comp
OverheadDo not neglect the importance of having a pre‐versus post‐employment financial analysis
Page 26February 9, 2012
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Focusing on the Controllable
Strategy, Vision, Culture and Leadership
Integration Process
Compensation On Boarding
Revenue Expense
Return on Investment
[ “It All Matters” ]
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Page 27February 9, 2012
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Designing a Disciplined Integration Process
ContinuousImprovement
Monitoring &Measurement
Goals &Budget
• Discuss values, culture and strategic goals
• Due diligence including financial analysis
• Terms of agreement
• FMV analysis
Planning &Partnering
Coordination & Integration
Management & Growth
Pre-Alignment Post-AlignmentOnboarding
Physician Integration Process
• Finalize agreement(s)
• Operational transition
• Work plans and checklists
120 to 360 days 90 to 180 days Effective Date +
Page 28February 9, 2012
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Educating the Board
• Our strategy, vision and culture
• Anatomy of employed physician losses– Uncontrollable, accounting, controllable*
• Our financial performance
• Our integration process
• Our trip wires
* Employed losses have varied contributing factors; whatever the nomenclature, organizations should work to define them and explain them accordingly
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Page 29February 9, 2012
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Take Home – Questionnaire • #1 – Mitigating the debate
• #2 – Building the culture
• #3 – Designing the integration process
• #4 – Targeting performance excellence
• #5 – Maximizing the ROIWhat is not showing up in the numbers?
– Differences in values and culture
– Lack of clarity and agreement on strategic goals