BUSINESS CONSULT
TIM PATMONT and KATHERINE COLLINGS RAY
ECG Management Consultants, Inc.
BENCHMARKS:
The Right Performance Tool?
G
earing up to review cardiologist performance in calendar year 2014? If you rely
on survey benchmarks as a guide, expect
to find some interesting trends in the data. For instance, total compensation reported in the Medical
Group Management Association (MGMA) Physician
Compensation and Production Survey: 2014 Report
Based on 2013 Data has increased 8% on average
across all subspecialties since 2009. Meanwhile,
productivity has decreased across all subspecialties
by an average of 14% over the same time period.
This diverging trend in benchmarking data presents
significant implications for organizations that tie
cardiology compensation to market benchmarks,
leading many administrators to question whether
benchmarks are the right tool for measuring
cardiology service line performance or calculating
compensation.
Trends in Cardiology Benchmarks:
MGMA All Specialty Average (Median)1[1]
What follows here is a discussion of the factors driving changes in the benchmarking data, the impact on
hospital-aligned cardiologists, and an outline of potential solutions for ensuring the sustainability and
market-competitiveness of your cardiology program.
Contributing Factors to Diverging Benchmarks
With challenging independent cardiology practice
economics and hospitals wanting to develop integrated
physician networks, a boom of cardiology employment
and partnerships has taken place during the past 5
years. The benchmark data trends that we see today
(eg, steady compensation despite work relative value
unit [WRVU] productivity declines) are likely the result
of these transactions and ongoing reimbursement
changes. Specifically, there are several factors at play:
1) High Base Salaries: When the market is hot for a
particular specialty, providers have additional leverage to command high base salaries and/or income
guarantees, which do not inherently translate into
increased productivity. In particular, organizations
typically provide an initial base salary as a means of
sheltering physicians from the diminished productiv-
62 CardioSource WorldNews
ity that comes with joining a new system (eg, having
to document in a new medical record). Benchmark
data reveals that this dynamic contributes to the
increase in compensation per WRVU rates.
2) Subsidies: Hospitals can offset losses in one area (ie,
professional services) and make up for them with gains
in another (ie, ancillary services), thus keeping physician compensation at a steady level, despite changes
in reimbursement. This market reality puts medical
groups and physician practices in a difficult position, because they cannot draw from the same pools of revenue.
3) Organizational Shifts to Value: Many hospitals
and health systems are exploring and/or transitioning to a value-based model, which incentivizes cost
reductions, quality improvements, and utilization
decreases. These efforts may reduce WRVU productivity, so the lower WRVU levels could represent a
“new normal” in cardiology.
Given the influence of these factors on recent survey
trends, benchmarks may not accurately reflect
cardiology practice economics. So what baseline
strategies exist to mitigate the impact of fluctuating
benchmarks in the near and long terms?
Baseline Performance Strategies
If your organization is committed to using survey
benchmarks for measuring performance or calculating compensation, it is important to reduce the
variability in the data and minimize organizational
risk by employing a set of baseline risk mitigation
strategies. Examples include using more than one
survey, incorporating a rolling average of benchmark
survey rates, and adding protective contract language
regarding rate decreases/increases.
While these strategies are pragmatic for today’s
practices, the growing complexity of cardiology raises
the following question: Are WRVUs the right target to
measure performance? If compensation levels are dependent on benchmarks, and the benchmarks do not
reflect the realities of the market, then the continued
practice of benchmark-based compensation may exacerbate an existing issue. Organizations are therefore
pressed to take a closer look at how value is defined
(e.g., patient outcomes) and how that can be reflected
in their compensation plans for cardiologists.
Future Performance Strategies
For those moving away from traditional benchmarkbased approaches, there are hybrid models that
incorporate a nonproductivity incentive component
into a WRVU-based model. Under this scenario, a
plan could tie 80% of compensation to productivity
and 20% to nonproductivity measures (e.g., quality, program development). Examples of incentives
include patient engagement, documentation, clinical
measures, and practice efficiency. Additionally, some
organizations are tying incentives to operating budgets, whereby physician compensation is dictated by
the revenues and expenses achieved as a cardiology
business unit. However, setting the value thresholds
(i.e., performance targets) can be tricky, and benchmarks are not available for many nonproductivitybased incentives. As such, it is critical to start with
what an organization can actually track so that
incentives can be monitored and executed upon.
If they haven’t already, conversations around
the executive table will soon acknowledge the need
for value-based incentives. In order to move these
discussions forward, leaders will wrestle with the
following questions: How does our organization
currently define success and measure performance?
How has this changed over time? How will we do
so in the future? These are not easy questions, but
they must be answered in order to develop cardiology performance evaluation tools that accurately
reflect the realities of the market and also align with
your organization’s unique perspective on the value
of cardiology. ■
Tim Patmont is a senior consultant and Katherine
Collings Ray is a manager at ECG Management
Consultants, Inc. Tim can be reached at tpatmont@ecgmc.
com, and Katherine can be reached at [email protected].
December 2014