Healthcare Provider Compensation and Production Surveys: What’s Really in the Data?
Perhaps the most critical element of effectively and responsibly utilizing data is understanding the underlying information. This is especially true when it comes to the provider compensation and production data that valuators and contract teams rely on to help make important provider alignment decisions that impact organizational success and compliance. With that in mind, here’s a look at what information is included – and excluded – in key ratios, percentiles, and other data in the most commonly utilized provider compensation surveys.
There are three provider compensation and production survey data sources that are most frequently relied upon today:
- Medical Group Management Association (MGMA)
- SullivanCotter (SC)
It is important to note that these organizations have been collecting, analyzing, and publishing data for decades and are generally viewed as the survey experts. Although they go through painstaking analysis and review to help ensure that the data reported by the survey respondents is accurate, the data is ultimately only as good as what is reported. Reporting organizations must maintain and provide accurate data that strictly follows the specific instructions within each survey questionnaire in order to provide data users with the best possible insight into the market practices.
Total Cash Compensation per Full-Time Equivalent (FTE)
Total cash compensation per FTE is consistently the most compelling data for both providers and organizational management alike. Many may assume that what is included in this data is straightforward, but it is more nuanced than the title suggests. Generally, the three referenced surveys publish cash compensation for full-time clinical and administrative (e.g., medical director) services provided to the employer organization from W-2s or K-1s, but they do not include employer contributions to fringe benefits, expense reimbursements, or professional development expenses.
The primary difference in the survey methodologies is that SC distinguishes and excludes cash compensation paid for call coverage and extra work (e.g., moonlighting). Based on documentation provided by the other two surveys, MGMA and AMGA include these pay components in their respective published total cash compensation.
Common compensation components included in the published total cash compensation data for all three surveys include:
- Salary and/or production-based compensation
- Bonuses and incentives, including compensation paid for quality/performance-based incentives as well as retention or sign-on bonuses
- Paid out profit sharing, short-term/annual incentives, or long-term incentives
- Administrative pay, which includes compensation for medical director services
The published total cash compensation survey benchmark metric is intended, by definition, to represent employed provider relationships (or practice owners). Independent contractor relationships may also need to consider additional costs such as benefits, taxes, and professional liability insurance.
Work Relative Value Units (wRVUs) per FTE
The wRVUs-per-FTE provider production metric is published across the three referenced surveys consistently and includes personally performed wRVUs appropriately adjusted for modifiers using the resource-based relative value units published by CMS for the calendar year identified by the surveys. This production metric reflects the professional component of the physician’s personally performed services and should not be confused with total RVUs or the components for practice expense or malpractice RVUs. Further, wRVUs do not represent the technical component of service or wRVUs that have been weighted by a conversion factor.
This commonly referenced compensation-to-production rate is one of the most consistently misunderstood and misapplied elements published by the surveys. What is actually published is the calculation of each individual provider’s total cash compensation divided by their wRVU productivity over the same time period. By definition, only providers that have reported data for both benchmark sets are included in the effective compensation-per-wRVU rate dataset. This data element is sometimes mistakenly interpreted as the conversion factor that organizations contractually pay through production-based compensation plans. Instead, this published rate reflects total compensation from all sources (e.g., base/draw, production incentive, quality incentive, supervision, administrative, call coverage, etc.).
A common misconception is that there is a direct relationship between compensation and/or production on per-FTE levels and the effective compensation-per-wRVU rate level. For example, 90th percentile compensation earners or 90th percentile wRVU producers do not earn compensation at the 90th percentile compensation-per-wRVU rate. In fact, much has been written over the years that expresses the inverse relationship between compensation and/or production on per-FTE levels and compensation-per-wRVU rate levels.
Professional Collections per FTE
This provider financial production measure represents the actual dollar amount collected for professional services, which includes fee-for-service, capitation payments, and the administration of immunizations and chemotherapy. This metric is commonly defined across the three referenced surveys. The surveys define an extensive list of collections to be excluded from reporting, such as the collections related to the technical component of ancillary services, collections on drug charges, collections from retail services, infusion-related collections, and collections from services performed by physician extenders.
Compensation to Professional Collections Ratio
The ratio of compensation to professional collections is the calculation of each provider’s total cash compensation divided by their net professional collections over the same time period. By definition, and similar to compensation-per-wRVU rate, only providers that have reported data for both benchmark sets are included in the effective compensation to professional collections ratio dataset.
While the concept of published percentiles is fairly straightforward, the application of mean versus median is still sometimes debated. By definition, the mean is the average of the reported values, or the measure of central tendency. By contrast, the median is the middle reported value in the dataset. Valuators tend to place primary reliance on the median for analytical purposes, as the mean can be influenced more directly by outliers at the low end or high end of the dataset.
In addition to the preceding commonly utilized market benchmarks for provider services, there are also commonly referenced survey benchmark datasets for more specialized provider pay and work effort, such as the following:
- Medical director services (e.g., hourly rates, annual cash compensation, annual hours worked)
- Call coverage services (e.g., cash compensation per hour and/or per day, restricted nature of call coverage, trauma designation of facility, number of shifts provided, primary and/or backup coverage)
- Physician leadership services (e.g., annual cash compensation, annual hours commitment)
All three surveys publish data for physician medical director services, and MGMA and SC also publish data for physician call coverage services. Another nationally recognized survey source, Gallagher, publishes data for physician medical director, call coverage, and executive services. These additional benchmark sources help to supplement the information provided in the more general clinical specialty benchmarks, particularly total cash compensation. They also provide useful information in regard to compensation and associated work effort for these specific services because they are provided separately and distinct from traditional full-time or part-time roles.
While provider clinical production measures, such as wRVUs or professional collections, are intended to provide a uniform basis to measure and compare provider clinical work effort, other contractual services, such as medical director, call coverage, and physician leadership, are typically unique to that provider, practice setting, and the needs of the contracting party.
How to Use the Data
When assessing any published survey market data, keep in mind that numerous variables affect the compensation and production data generated by individual providers. Published benchmarks provide a good place to start, but educated and reasonable assessment of specific facts and circumstances needs to be employed when reaching conclusions about degrees of fair market value and commercially reasonable market alignment of provider compensation and production (or other service) levels.
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