Data Insights

The benefits of regularly reviewing provider compensation and productivity

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Benchmarking & Forecasting

Data Analytics & Reporting

Provider Compensation

MGMA Staff Members
The Medical Group Management Association’s most recent MGMA Stat poll asked healthcare leaders: “How often do you analyze your physicians’ compensation with their productivity?” The majority (37%) answered “monthly,” 33% responded “quarterly,” 23% indicated “annually” and 7% reported “other.”

The poll was conducted on February 25, 2020, with 692 applicable responses.

There are many reasons why anyone contracting with and/or employing a physician or advanced practice provider (APP)/nonphysician provider (NPP) should regularly analyze the associated pay-to-production for those providers.

One primary reason is the consideration of fair market value (FMV) and commercial reasonableness under federal law, including the Physician Self-Referral (Stark) Law and Anti-Kickback statute. When there is a disparity between compensation and productivity, it can lead to compliance-related questions on motivations behind those contracts. When these laws have been violated in the past, there often have been serious consequences, including significant fines.

It is also in the best interest of an employer to make sure the wages they are paying are competitive to help keep physician satisfaction high and turnover in check.

Tools to review your data

The MGMA Pay to Production Plotter and industry-leading survey data assist thousands of healthcare organizations and employers throughout the country to analyze and benchmark their data to their peers to help ensure compliance and provide a competitive edge.
 
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The plotter tool displays the distribution of the MGMA database for compensation and production, showing each submitted provider’s actual compensation and work RVU (wRVU) production. Simply plot your theoretical data for your physician (compensation/productivity) and choose a database for comparison to visualize how the provider data stacks up to the spectrum of MGMA’s data. From here you can get a sense of what is fair and back it up with national data.

To provide further clarity, the MGMA Research team interviewed consultants and practice administrators to provide helpful tips for using this tool, including when planning  compensation. Jonathan Sheridan, CVA, Medical Consultant, Medical Management Associates, Inc., Atlanta, explains how he utilizes this tool to help educate his clients on making these vital decisions.

Download: “The Power of the MGMA Pay to Production Plotter”

How do you utilize the MGMA Pay to Production Plotter?

It's a great illustration of where a physician’s compensation and productivity lines up with MGMA’s actual respondents within the same specialty, which we use often in conjunction with fair market valuations of physician compensation for medical groups, hospitals and health systems.
 
The tool also allows the user to further refine the MGMA data points to only include respondents with similar practice characteristics (e.g., size, location, employment arrangement, etc.) to that of the subject physician; something that is lacking in other commonly referenced benchmark surveys. By clicking on a data point on the plotter, you can see the actual respondents’ compensation and productivity, not just data normalized into quartiles. I use it when conducting compensation valuations as a kind of gut check to see whether I need to dive into greater detail on the relationship between the physician’s compensation and productivity.
 
The first thing I do is research the general benchmarks from MGMA for productivity and compensation for a given specialty and see how those figures line up to the subject physician. I will then plot the physician’s compensation and productivity to see its matchup to his or her peers. From the plot we can ask: Is the physician’s compensation and productivity commensurate with his or her peers based on data parameters selected? Is he or she within one standard deviation of MGMA’s best fit line? If not, then let's analyze why not. If so, okay, the compensation appears to be reasonable based on the productivity.

Watch this three-minute overview of the MGMA Pay to Production Plotter
 
Understanding the complex relationship of provider production and compensation is key to financial decision-making in modern medicine administration. All decisions should stem from good data backed up with reliable evidence. Utilizing the MGMA Pay to Production Plotter in conjunction with other data tools and benchmarking will help healthcare leaders craft better compensation plans tailored to their practice.
 

Additional resources:

 
Would you like to join our polling panel to voice your opinion on important practice management topics? MGMA Stat is a national poll that addresses practice management issues, the impact of new legislation and related topics. Participation is open to all healthcare leaders. Results of other polls and information on how to participate in MGMA Stat are available at: mgma.com/stat  

MGMA Consulting can help you understand the optimal compensation model for your providers. If you have questions for our consultants, send a message to consulting@mgma.com.
 

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