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Provider Compensation Rises 2.9%, While Productivity Flattens

Provider compensation modestly increased in 2016, while provider productivity and net collections experienced little change, an AMGA survey showed.

Provider compensation rose by 2.9 percent in 2016, while provider productivity and net collections stagnated

Source: Thinkstock

By Jacqueline LaPointe

- Physicians experienced similar physician compensation increases in 2016 compared to last year, with median compensation rising by 2.9 percent after a 3.1 percent boost in 2015, the most recent AMGA Medical Group Compensation and Productivity Survey found.

The survey of 269 medical groups representing over 102,000 providers revealed that about 77 percent of physician specialists saw an increase in provider compensation, with primary care specialists seeing the greatest compensation boost.

Primary care specialists faced a 3.2 percent increase in compensation, slightly down from 3.6 percent growth in 2015.

The provider group has seen significant changes in their take-home pay in the last couple of years. Primary care specialist compensation was up after a 0.3 percent decrease in 2014, according to last year’s survey. The providers were the only main provider group that year to experience a decline in annual pay compared to other medical specialties and surgical specialties.

Medical specialists also found their provider compensation in 2016 rising at similar rates to those in 2015. The provider group experienced a 2.8 percent boost in annual pay, representing a modest decrease from a 3 percent increase in 2015.

The specialist types that saw the largest provider compensation growth in 2016 were ophthalmologists with a 7.7 percent increase, cardiac/thoracic surgeons with a 7 percent boost, and hematologists and medical oncologists with 6.7 percent growth.

Despite cardiac and thoracic surgeons topping the list of most paid providers in 2016, most other surgical specialists saw modest increases compared to the previous year and other provider groups. Provider compensation earned by the group rose by 2 percent, down from a 3.6 percent increase in 2015.

AMGA added that emergency medicine providers who are considered surgical specialists faced the greatest change in provider compensation. Compensation for these providers fell by 2 percent in 2016 after a 9.6 percent increase the previous year.

While provider compensation continues to increase for the three main provider types, the AMGA survey uncovered that provider productivity remained relatively flat in 2016. About 66 percent of providers reported an increase in median work relative value unit (RVU) production, with an average change of 1.54 percent from 2016 to 2017.

“We are seeing signs of a perfect storm gathering as costs continue to rise, productivity is flat, and collections are flat, with 51 percent of specialties this year reporting a decrease in median net collections,” stated Tom Dobosenski, CPA, AMGA Consulting President. “These trends are driving enhanced efficiency and consolidation, but the cost curve will only bend so much. “

As Dobosenski pointed out, the survey found that net collection rates at medical groups also saw little change. Only about one-half of providers reported an increase in median net collections.

In addition, the weighted average change in median net collections among all providers was 1.14 percent from 2016 to 2017.

Minimal improvements in provider productivity and net collections may spell trouble for the majority of providers who earn their annual pay based on these measures. About 83 percent of medical groups stated that work RVUs was the dominant measure of provider productivity for determining compensation under production-based plans.

The second most common measure was net collections with 24 percent of organizations using it to calculate provider compensation.

Medical groups also reported that they are tying a portion of provider compensation to value-based measures. About 61 percent of organizations used value-based incentives in provider pay arrangements in 2016.

The top value-based measures used to determine provider compensation included:

• Patient satisfaction with 69 percent of organizations

• Individual financial goals with 50 percent of organizations

• Clinical outcomes with 50 percent of organizations

• Care access with 28 percent of organizations

• Surgical Care Improvement Project (SCIP)/Core/Accountable Care Organization measures with 26 percent

AMGA noted that medical groups used a variety of value-based measures and could choose multiple options in the survey, causing values to total over 100 percent.

The road to value-based provider compensation is a long one. Most medical groups may tie value-based measures to annual pay, but only a small fraction of provider compensation stems from measure performance.

A recent Merritt Hawkins survey also found that most provider compensation offers (52 percent) with a production bonus in 2017 based the additional pay on work RVUs, whereas only 39 percent used value-based metrics.

The slow transition to value-based provider compensation may come from healthcare costs concerns, Dobosenski stated.

“With 61 percent of groups responding that some of their physicians’ compensation was based on the achievement of value-based measures, the move to value-based incentives is happening, albeit at a slower pace than anticipated,” he explained. “However, value-based incentives do not lessen the economic pressures on medical groups, as they do not necessarily mean reductions in compensation.”

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