PHYSICIAN PAY RAISES may be on the small side this year because of factors including tight margins and claims denials. That will probably be the case even for hospitalists who are expecting a big bump because their group hasn’t renegotiated its compensation plan for several years.
They may not want to get their hopes up for a big pay hike, according to Martin Buser, MPH, founding partner of the national hospitalist consulting firm Hospitalist Management Resources LLC, which has helped more than 400 hospitalist programs. That’s because, says Mr. Buser, hospital administrators right now may be too skittish to entertain a big raise
That’s due in part to uncertainty related to a new administration coming in, he notes. Another major factor making administrators nervous: Hospitals are being increasingly squeezed by health plans accelerating claim denials, which slows down cash flow, wipes out margins and freezes raises for hospital personnel.
“I don’t think big comp changes are in the cards here for at least the next half-year,” he points out. Mr. Buser, whose consulting concentrates primarily on California groups. spoke with Today’s Hospitalist.
This year’s Today’s Hospitalist survey found that two-thirds of hospitalists didn’t get any raise last year. Is that business as usual?
“Hospitals are tightening their belts.”
Martin Buser, MPH
Hospitalist Management Resources LLC
We typically see hospitals go a maximum of three years on a contract, and most want to wait three years because it takes a lot of time and energy to renegotiate. Some hospitals just decide to bump up physician pay 2% every year between renegotiations so it’s not such a big shock to the hospital on year three, when they might have to go up 6%.
But the timing right now is a little peculiar for increases. Hospitals got this nice bump from federal funds for covid, which then expired or at least trailed off significantly. Most hospitals went from getting by to now being underwater by many millions of dollars, and we’re seeing situations
where even the hospital managers aren’t getting raises and there is a freeze on hiring, where people who leave aren’t replaced.
So hospitals are tightening their belts.
Do you anticipate that belt-tightening ending any time soon?
Not in the short term. The most dramatic factor we see is health plans really increasing their number of claims denials, requiring hospitals to appeal the decision. So the atmosphere in hospitals last year and this year is more conservative. The administrators I work with are going through every proposal line by line, scrutinizing it more, so I think compensation prospects are going to be closely reviewed and become tighter and tighter.
That makes the leadership of your hospitalist program even more important because hospitalist groups play a key role in insurer appeals to make sure hospitals can get bills out and not have their cash flow drag. You must organize group members to think how groups can add value and be a strong partner.
For doctors, if they have to maybe take more shifts or see more patients per day occasionally, instead of calling in locums, they’re trying to get through it if they can. The trend I see now in proposals is bidders using language like, “We’re your partner in increasing operational efficiency” and “We will look for cost savings for sustainable financial improvements.” In other words, more alignment with the hospital.
We’re also seeing more and more hospitalists in California switching over to being employed now, which can help administrators and hospitalists get on the same page. Something else that forces alignment is putting more of physicians’ potential bonus income at risk. Two years ago, I negotiated a contract where the bonus potential for each hospitalist went from $30,000 to $50,000—and that $50,000 is at increased risk and contingent on meeting certain enhanced metrics.
Are hospitalist groups interested in more potential risk?
It’s slow. We may be a proponent of it and hospitals buy into the idea. But some physicians aren’t interested in such arrangements.
At the same time, putting incentives at risk can get physicians’ attention and drive behavioral change. If hospitalists can code charts more effectively and move a hospital’s case mix index just 0.1, just one-tenth of a point, that can add millions of dollars to the bottom line. So accurate charting can be much more important than, say, chasing more RVUs.
We know that patients being hospitalized now are sicker, so when I consult for a group and see rounders charting a lot of 99231s for subsequent visits and not predominantly 99233s, something’s wrong. That’s the kind of behavior that an at-risk bonus can help improve. Noting all of a patient’s medical issues helps the hospital code accurate DRGs, which impacts their reimbursement.
Another big incentive now to boost the bottom line is readmits within 30 days. Hospitalists are trying to figure out how to effectively reduce 30-day readmissions for the same diagnosis. That’s something to even consider using a third party or AI for: communicating with patients at home, making sure they were able to get follow-up or any equipment, supplies, or medications they need. Simply making sure they get timely follow-up with their PCP can have a big impact.
Effective hospitalist programs can always prove their value, but they need to continually look for more added value over time to justify significant compensation increases.
If more physicians on the West Coast are opting to be employed, are they less aggressive with compensation?
What we see is that hospitalists who become employed see their quality of life improve. That’s because most administrators go ahead and add vacation time, which groups didn’t have before.
Right now, employed hospitalists on the West Coast work about 168 shifts per year. Their mentality is that their personal financial bottom line is important, but maybe not as important as more time for themselves and their families. They are perhaps a little more satisfied and that takes some pressure off wanting more compensation.
They also see that, if they can help the hospital increase collections by, say, 15% or 20%, they’ll have better benefits, like more money for CME or better reimbursement if they go after another degree. So they end up with more clout than a stand-alone group.
When we spoke last year, one trend you were seeing in California cities was that hospitals and health systems were no longer offering less compensation because doctors want to live in those cities. Is that continuing?
If you’re hiring in San Francisco or San Diego, you can still offer candidates 10% or 15% less than what you’d pay to fill a slot in Los Angeles. That’s because those communities right now are more desirable.
But overall, the idea that you can discount compensation 20% off national figures for an urban position is just way too much. That gap is now down to 5% or 10%, and we’re seeing it evaporate. The fact is that you may have to use national compensation figures now in urban locations because you have to recruit nationally.
Related articles:
Hospitalist compensation continues its steady rise, survey shows
Hospitalist pay incentives: a look at bonuses and risk
Paying hospitalists for experience: a look at retention bonuses
Phyllis Maguire has been Executive Editor of Today’s Hospitalist since 2006. Based in Bucks County, Pa., her health care interests are hospital medicine and long-term care options. She also likes zydeco, hiking, and reading memoirs and romances.
