Compensation in Times of Change
Compensation in Times of Change
KEEPING UP WITH CHANGES IN PHYSICIAN PAY
If you think the practice of medicine has been changing fast, that’s nothing compared to changes in compensation for the practice of medicine. It used to be, in the not-so-distant past, that physicians would receive a contract outlining an offer with such things as how much call they would take, their allotted vacation time and, yes, their salary. Negotiating, if the doctor chose to do it, was largely a matter of trying to improve the numbers on the contract.
Compensation models are changing
The basics of this process haven’t changed―there’s still a contract, an offer, and items such as vacation and call to review before negotiating or signing. But salary? According to Melissa Yu, MD, FAAN, that model of compensation may no longer dominate. As the current chair of the Academy’s Compensation and Production Survey Work Group, and as vice chair since 2015 of the subcommittee that oversees that group (the Practice Management and Technology Subcommittee), she has observed the changes to neurologists’ pay models through thousands of survey responses. But she has also experienced the changes directly. In less than two decades of practice, Yu says, she has already lived through multiple compensation models in her own career.
To be sure, some of the variations in compensation methodology Yu experienced were tied to changes she initiated. For example, when Yu moved to academia after eight years in private practice, (she’s now an associate professor in Baylor College of Medicine’s Department of Neurology), she naturally entered into a different payment model for her work. Before making that switch in 2012, her compensation was frequently affected by adjustments in how Medicare payments were made. But even in the traditionally stable academic sector, Yu has seen changes. Indeed, in her added role as a trained physician informaticist, she has herself participated in her institution’s compensation planning.
Yu’s conclusion from all of these experiences, direct and indirect? “The age of the guaranteed, straight salary is decreasing,” she says. Replacing it? “We’re seeing more ties to metrics. Whether it’s clinical productivity, quality measures or patient satisfaction, physicians in general are just being measured more.” In short, if you’re not already experiencing this, you can expect at least some of your compensation in the future to be tied to your performance metrics.
What do the salary surveys tell us?
Like Yu, Brad Klein, MD, MBA, FAAN, has devoted significant attention to the topic of physician compensation. As chair of the Academy’s Medical Economics and Practice Committee and as a member of the AAN Board of Directors, his leadership roles have long been entwined with this issue. In particular, he says, he participated in designing some of the early benchmark compensation surveys conducted by AAN in 2013. Although he’s not part of the work committee charged with developing the upcoming biennial survey, Klein says he can empathize with the challenge of revising the questions to match the rapidly evolving compensation picture currently being experienced by physicians. One thing he doesn’t worry about is the breadth of response. The last survey (published in early 2020, using 2019 data) captured information from more than 3,200 respondents, including 2,700 neurologists, 474 advanced practice professionals, and 71 practice managers. “It’s the largest neurology compensation benchmark available,” Klein notes.
This robust response is important on several levels, not the least of which is simple volume. When more people participate, Klein says, “We can communicate with each other that you’re in the ballpark with what you’re earning or what you’re offering.” As chief operating officer of Abington Neurological Associates and medical director of Abington Headache Center in Pennsylvania, Klein relies on the AAN physician compensation survey to provide a reference point for his own work. “I’m in private practice, so I’m always intrigued to see how people are paying their physicians,” he says. “Just running a private practice, as I’ve done for over a decade now, it helps me to see where I’m doing a good job and where I’m not.” Klein explains that he was just as likely to reference the survey when he was an employee as he is now in his role as an employer.
Although questions and categories may shift as the current work committee completes the next survey, doctors who haven’t participated in past years might be surprised at the number and variety of compensation models presented for selection by respondents. In addition to the guaranteed salary that used to be more common, there are several options combining salary with a quality bonus or a production bonus, or both. Physicians can also indicate they are compensated based on productivity alone, or that they are paid an equal share of a practice’s compensation pool.
Even with all of these options, the survey can’t possibly represent every compensation model used by employers in today’s complex market. Indeed, more than one process might exist within the same organization, depending on the level or type of work assigned to the physician. In his practice, Klein has developed three different contracts, reflecting varying scenarios as the individual potentially rises to the partner level. What ties the three contracts together, he says, is an underlying approach of productivity and communal compensation. As he explains, “We want to reward you for working hard―productivity―but we also want you to support each other, since different doctors do different types of neurology and some types pay more than others.” In this system, Klein says, 60 percent of what a doctor generates goes to their productivity credit and 40 percent goes into the communal pot, to be divided among the doctors. While everyone gets paid a lower regular salary that accommodates the practice’s ups and downs, at the end of the year the productivity and communal amounts are calibrated for overhead and paid out appropriately to each doctor.
Advice for physicians, new and experienced
It’s one thing to learn about compensation models, but something else entirely to make good use of the knowledge. For example, how might a doctor who prefers a guaranteed salary negotiate a hospital contract based on productivity? Since compensation structures represent complex organizational decisions in most cases, it’s not likely this candidate will influence a change in the model itself. But it may be possible to negotiate how some of the productivity is measured, or what percentage of the overall compensation will be based on the metrics. Another option? Klein notes that individuals who prefer a specific compensation method might find themselves better served by matching their preferred model to the type of position it’s likely to be found in. This strategy, he notes, can sometimes shift according to the stage someone is at in their career.
As he explains, “If a guaranteed salary is important to you, that’s more likely to happen in academia, but if you’re in a private practice, it’s more likely you’ll be offered salary plus a productivity bonus. Or, if you’re young and wanting to engage in a non-revenue-producing role such as research―not to say that research doesn’t produce revenue, but when you’re just starting out, it’s not as likely to―you might want to search for a straight salary position. Whereas, if you’re further along in your career and can leverage your ability to generate productivity, the bonus model might work better for you.”
For the majority of neurologists who work in patient care, quality metrics are bound to play a role in compensation. As Klein puts it, “This is where it gets dicey. When their compensation is being based on quality, individuals need to understand how those measures are made and that they’re accurate.” He adds, “It’s a very challenging prospect to demonstrate quality in a meaningful way. Ideally the employer is working off of AAN guidelines, but most often quality is going to be measured off of the primary care doctor’s care.”
To navigate a system in which the neurologist’s metrics might be enmeshed with those of other care providers, Klein recommends that candidates learn more about the department they’re planning to join. For example, how did the department or the average neurologist do in terms of quality metrics or bonuses in the past year? As he says, “That will give you a good sense. If everyone’s getting a 98-percent response and a 98-percent bonus, that’s a good sign. But if it’s spread out all over the place, that can be a bad sign.”
Yu recommends that candidates take the time to assess their risk tolerance at different stages of their career. “Starting out,” she says, “you’re not going to be as productive, as efficient, so there’s risk in a productivity-based plan.” On the other hand, she warns against the lure of a high starting salary in the offer “because sometimes there’s a catch to that. If there was an income guarantee and you decided to leave, you may have to pay it back.”
Like Klein, Yu notes the challenge in being compensated according to metrics. In her role as a physician informaticist, she acts as an interpreter to the IT staff, helping them ask for the data in a way that honors the actual work being performed by the doctor. As she explains, it’s easier to report procedure measures―“Yes, I did this, I counseled the patient with epilepsy about this medication”―than it is to report outcome measures, such as less eye damage for a patient whose diabetes is under control.
While doctors may not be able to control which measures are requested and compensated for, Yu advises they can educate themselves on how to bill and document appropriately, so that they are accurately claiming the measures they are achieving. “That’s not taught to a huge degree in residency,” she says, “but the AAN has lots of resources on that. You need to be sure that you’re capturing what you’re actually doing and billing to the most appropriate level that you can.”
It’s not all about the paycheck
As a final piece of advice, Yu recommends a closer look at the overall contract before choosing one position over another. “Look at all the other, non-salary ways you’re going to be compensated, such as CMEs, paid vacation, tuition reimbursement, insurance, health, and dental. If practice A is going to give you X dollars and practice B is offering 10 percent more but without the extra benefits, you can’t compare those as apples to apples.”
Along the same lines, Klein advises tracking monthly expenses for the first year or two in a new job, to ensure that it’s financially viable. This exercise will help sound the alarm if the income isn’t meeting expenses such as student loans. On the other hand, it may also demonstrate something unexpected—the ability to work fewer days, for example.
Trends and disrupters
No matter what a physician may learn about compensation, or which models an organization may employ, something will always come along to upset the apple cart. Some disrupters happen in slow motion, while others―think COVID-19―strike like an out-of-the-blue lightning bolt. And sometimes a disrupting force will attach to a slower-moving trend. That’s the scenario playing out with telemedicine and the coronavirus pandemic. While neurologists and other health care providers have conducted remote health care services for decades, it has always been a small piece of the puzzle―and one that was difficult to monetize besides. Now, in a matter of only a few weeks, telemedicine has become a primary conduit for delivering neurological health care―and those in charge of compensating for medical services are scrambling to keep pace.
Yu explains it this way: “Up until March 15 or so, the use of telemedicine in outpatient neurology was pretty limited because of insurance rules and reimbursement models. Then it exploded in terms of temporary coverage by insurers when we wanted everybody to stay home. Now we’re all holding our breath to see what’s going to happen with that coverage.” While Yu feels certain that the coverage is here to stay (“I think the genie is out of the bottle on virtual services.”), Klein anticipates that the rate of reimbursement may drop in the future, which would affect the compensation received by neurologists.
Another compensation trend Yu has been tracking may be less affected by the pandemic, except that it may be slowed somewhat in developing. “We keep hearing that value-based care for different payment models may be coming, for the things that may not lend themselves to productivity compensation models. These would be like, ‘I kept the patient out of the hospital.’ That’s good, but now the neurohospitalist won’t see that patient. As those models become more prominent, we’re going to be looking again at compensation. How will the neurohospitalist be compensated if they don’t see the patient in the hospital?”
While some trends and disrupters may be prompted by health care practices or broader compensation issues, Klein is paying attention to a quickening change rooted in justice issues: parity in pay regardless of gender or race. As he notes, there is work to be done in both areas. “There is data that there is a gender differential in compensation,” he says. “Trying to understand that better is a critical detail that we have to address. We, as a society, I know we haven’t done due diligence in racial bias and that’s way overdue to be looked at in compensation.”
This short list undoubtedly doesn’t cover all of the changes bubbling just above or below the visible surface of compensation for neurologic care, but it does exemplify one point made by both Klein and Yu: health care and the way it’s compensated is undergoing rapid and constant change, making it critical that doctors maintain the ability to adjust to new realities. And, regardless of how a doctor is compensated, now or in the future, it seems clear that the days of simply negotiating a higher salary every year or two are long past. Paying attention to the organization’s bottom line and the market in general will have to become second nature as doctors build their careers in the years to come.